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The holiday season is upon us, and as company decision-makers and HR leaders, you might be asking yourself the yuletide question: what do our employees really want for the holidays?  

While the old classics like company swag, free lunch and holiday cards may be tempting – your employees might not be as excited about traditional company gifts as you are. Let's be honest, nobody wants a partridge in a pear tree this year.  

Let’s dive into the holiday gifts your employees really want, and how they can make the most impact to end the year on a high note.  

The ho-ho-horrible gifts your employees don’t want.

Firstly, let’s talk about the gifts your employees don’t want. When it comes to holiday gifts for employees, it's essential to strike the right balance between thoughtful and practical. While the gesture is always appreciated, there are some gifts that are dated, thoughtless and don’t deliver the right message to your hard-working employees.  

• One-size-fits-all presents: such as desk calendars, company swag, or pre-selected gift cards. These items, while well-intentioned, can come across as uninspired and lacking personalization.  
• Regifted items: such as leftover gifts from vendors or promotional giveaways. This can feel like an afterthought and lacks sentiment. Employee gifts should not come from your team’s stock room.  
• Free lunch or snacks: while offering a company-wide lunch is always appreciated, it doesn’t consider remote employees, and it shouldn’t be your only gift.  

To truly make employees feel valued and appreciated, it's essential to consider their individual tastes and preferences, ensuring that the chosen gifts resonate with the spirit of the season and the unique contributions each team member brings to the table.

Time off: the gift that keeps on giving.

There's no better gift than the gift of time. Your employees work hard year-round, and what they crave most might just be a little extra time to relax, recharge, and revel in the holiday spirit. Consider offering extra paid time off during the holiday season.  

While this time of year brings joy to many people, it can also be overwhelming and stressful for some. Offering time off can bring relief to those struggling with their overall mental health and well-being. Make sure to check in with your employees, offer support and encourage the right resources.  

It’s also important to remember there are many different cultural and religious celebrations happening this time of year. Offer your employees the opportunity to take time off when they want to and not just around the most popular holidays in your region.  ‍

Rockin’ around the rewards catalogue.

A recent survey revealed that 86% of employees feel gifts or rewards would make them feel appreciated during the holiday season. Why not give your employees the freedom to spend as they please on something they truly want or need?  

Employee reward programs are initiatives that recognize and reward employees for their hard work and dedication. Organizations need to offer curated and customizable reward options to meet the demands of what all your employees truly value.  

Kudos Rewards provides a rewards catalogue that can be customizable and personalized and offers a world-class suite of options with merchandise, events, travel, charities, gift cards and more.  

If you’re unsure of handing out money or bonuses, you can always top up your employees’ rewards with extra points so they can select a gift of their choosing that’s meaningful to them.  

Sing carols and recognition, too.  

While you’re planning out your holiday gifts, don’t forget about the power of a simple “thank you.” Employee recognition during the year-end and holiday season is of paramount importance as it serves as a powerful means to convey gratitude and celebrate the collective achievements of the past year.  

Acknowledging your employees for their hard work and dedication reinforces their value to the organization and sets a harmonious tone for the year ahead. Encourage your leaders and managers to set an example and give well-deserved recognition to their teams.  

If you need help crafting the perfect holiday message, here’s holiday message examples, to help spread holiday cheer to your employees.

Make a list and check it twice.

Don’t wait until the last minute to plan your holiday gifts this year. Make sure you have budget set aside, you have all the necessary approvals, and no one is left out – everyone should be on the nice list!  

If you’re still unsure about what to give your employees, don’t hesitate to ask them. There’s nothing wrong with sending around a survey to gather deeper insights into what your employees would prefer as a token of appreciation.  

So, as you gear up for the holiday season, remember that the best gifts are the ones that show you truly understand your employees' desires.  

When it comes to today's recognition and rewards (R&R) vendor landscape, there are a few dark corners that demand our attention. We did some detective work to uncover the secrets behind the scenes for you. Join us as we reveal 8 sneaky signs that your rewards and recognition partner could be quietly taking more from your budget than you realize, and discover how to navigate this complex world with clarity.  

1. Over-Emphasis on Rewards

Many of the most prominent R&R vendors started as companies that sold awards such as plaques, rings, and the proverbial gold watch. Today, while most of these vendors have migrated to offering a software solution, their business models are still based on selling rewards.

Because of this, many vendors design their software to maximize the redemption of rewards versus encouraging meaningful recognition and building employee engagement. As a result, system usage may look good because employees want to redeem their points, but the actual impact on your workplace culture remains questionable.

We've designed the Kudos platform to maximize meaningful recognition and everything from how recognition looks on your Kudos wall, to the way that users are nudged to take action reflects these choices.

2. Poor Controls to Prevent Gaming the System

One common reason why businesses switch to Kudos is that our platform has built-in, automatic controls to prevent users from gaming the system. When users game the system, they may attempt to cheat by sending all of their rewards points to one person in exchange for the same. This is a costly problem for many businesses, and one that many R&R vendors avoid fixing because they earn big bucks on all the rewards redeemed.

For clients that use rewards, Kudos includes a safeguard which we affectionately call the "too much love rule." This safeguard prevents users from abusing the system - if a user has sent more than a certain number of recognition with points to another user, any further recognition sent will be sent without points.

3. “Usage-based” Pricing

Usage-based pricing sounds excellent in theory, however in the R&R industry, this typically looks like the vendor taking a higher fee on rewards and reward redemptions. In most cases, if you do the math on usage-based pricing, it will only save you money if your organization has extremely low usage. If your organization has average or above average usage, you could end up spending thousands or hundreds of thousands of dollars more than you would for a flat, price-per-user pricing model. Not to mention, you don’t want any deterrents to participation.

At Kudos, we offer flexibility around how we price our product based on our clients’ needs – but our most popular pricing model is flat monthly, per-user pricing.

4. Gaps in Your Detailed Reporting

Some vendors limit your oversight into things like rewards redemptions, opting instead to only provide generalized company-wide summaries. Naturally, this limits your ability to identify areas where rewards redemptions might indicate a problem, or to gain insight into things that require addressing.

Here at Kudos, since our business model is not designed to maximize your spend on rewards, we have nothing to hide when it comes to your analytics and reporting.

5. Variable Points Per Message

Some vendors allow employees to choose how many points to send with a recognition message. This can cause recognition messages in an organization to be sent with inflated numbers of points, costing your organization a lot of money over the long term.

A well-known multi-national business recently shared a story with us about how they struggled with employees sending minor recognition to dozens of their team members with $50 worth of points to each person which caused them massive budget headaches.

In Kudos, recognition messages are calibrated with pre-defined points amounts at four different levels of recognition (Thank You, Good Job, Impressive, and Exceptional). This model ensures that employees send the right amount of points for the type of recognition sent.

6. Rewards Are Not Optional

While you may be looking for an R&R partner that offers rewards, it’s always a good idea to find out if your partner will require you to use rewards, or if rewards are optional. If rewards are a mandatory part of their program, then the items listed above should be on your radar.

Kudos is one of the few R&R vendors that does not require clients to make use of rewards. Rewards are popular and they can support and effective recognition program, but they aren't for every business.

7. Too Attractive Low Pricing with Hidden Costs

Unfortunately, the R&R industry has many players that will offer attractive, extremely low monthly costs in an attempt to secure you as a customer. Don’t be fooled; these vendors are going to make their money somehow, and offering you a low per-user price is often a signal that a vendor will make more money off of your organization through things like rewards redemptions, required add-ons, charging fees for support or software upgrades, etc. Beyond that, be wary of steep renewals. Implementing R&R software takes time and requires change management – you don’t want to face switching vendors due to higher fees at renewal and have to restart the process.

Kudos clients enjoy straightforward and transparent pricing. For a low monthly per user flat rate, our clients always have access to the latest platform updates along with user and admin support.

8. Large Pre-purchase Points Quantities

Some vendors may require you to purchase excessively large quantities of points up-front – in some cases, millions of dollars worth of points. These points are then used as rewards are redeemed in the years ahead. This approach is often a signal that your vendor makes their money by selling you rewards and committing you to a minimum reward spend.

This approach locks your organization in for the long term, making it very hard for you to switch to another vendor. If you do decide to switch to a new R&R vendor, your old vendor will simply keep the remaining points balance.

Kudos provides its clients with a high degree of flexibility around funding rewards programs. Whether you want to purchase a smaller amount of points upfront, or buy years worth of points up front, that decision is yours to make.

9. BONUS Other Costs

Watch out for vendors that charge for things like support calls, software version upgrades, or even maintaining your R&R software on a monthly basis. Most vendors enable clients to use the most up-to-date version of their apps without any additional charges and offer support as part of the subscription, but not all do – so be sure to ask the questions to know what you’re getting into.

Partnering with Kudos means no hidden costs.

As we wrap up this journey through the world of recognition and rewards, one thing is clear: being informed is essential. The subtle details we've uncovered show just how important it is to make careful choices when picking a rewards and recognition partner. The balance between rewards and true appreciation can shape your workplace in meaningful ways. With this newfound knowledge, you're ready to create genuine, impactful employee recognition that truly makes a difference. Remember, behind every recognition message lies a chance to inspire, motivate, and uplift, and it's up to you to make the most of that opportunity.

In today’s dynamic business landscape, companies are continuously seeking ways to attract, engage, and retain top talent. While meaningful recognition remains an essential factor, organizations are recognizing the significant role that employee rewards play when paired with recognition.  

"When you recognize and reward people, you ignite their inner spark, and they become unstoppable." - Tony Robbins

Employee recognition needs are continuously evolving. For recognition to be impactful for today’s workforce, it must be personalized, and the same logic applies to employee rewards.

Together, recognition and rewards can have a transformative impact on culture. Employee rewards can create an environment that fosters motivation, loyalty, productivity, and ultimately, business success.  

What are employee reward programs?

Employee reward programs are initiatives that recognize and reward employees for their hard work and dedication. These can range from financial incentives such as bonuses and stock options to non-financial rewards such as time off work, complimentary lunches, and summer work hours.  

Organizations need to offer curated and customizable reward options to meet the demands of what all their employees truly value. The days of only offering a small catalog of products and company swag as employee incentives are not enough – organizations need to shift their focus to robust reward options that are meaningful to everyone.  

Why do employee rewards matter?

Employee rewards can be a motivational tool; they can inspire individuals to grow, learn, and improve. Rewards can be tied to goals and milestones, encouraging employees to stretch their capabilities and reach new heights.

Motivation that fuels success

Employee rewards act as powerful motivators, igniting a sense of purpose and commitment within individuals. Whether it's a performance-based bonus, a public accolade, or a personalized gift, the act of rewarding employees for their achievements reinforces a culture of excellence and motivates others to strive for greatness.

Drives employee engagement

Employee engagement is the key to unlocking untapped potential and driving exceptional results. Rewards and recognition initiatives provide a clear link between an employee's efforts and the organization's success. As engagement increases, so does productivity, creativity, and overall job satisfaction.  

Retains top talent

Employee rewards and recognition programs play a pivotal role in creating a workplace culture that attracts and retains exceptional employees. Recognizing and appreciating their hard work and achievements not only boosts morale but also enhances loyalty – employees are more likely to stay at an organization that fosters a culture of recognition.  

"Recognition is not a luxury; it's a necessity. It's what keeps us motivated, inspired, and striving for greatness." - Brendon Burchard

A SHRM article that discusses how to measure organizational health mentions the ROI of employee rewards and if implemented well, how investing in rewards can drastically reduce turnover.

Prioritizes wellbeing

Companies that prioritize employee wellbeing and engagement are more likely to succeed and thrive. Implementing employee reward programs is a simple yet effective way to build a positive workplace culture that benefits both employees and the company as a whole.  

How can companies implement effective employee rewards?

The key to an effective employee rewards program is providing flexible reward options that satisfy everyone’s preferences. Personalized rewards that align with employees' needs and values are more meaningful and contribute to overall happiness and loyalty.  

1. Recognition comes first. It’s important to remember that recognition should always be the foundation of a robust rewards system.  

2. Focus on your employees. Companies should assess their employees' needs and preferences to design a rewards program that aligns with their values and aspirations.  

3. Offer personalization. Select a program that offers curated rewards that satisfies everyone. A rewards catalog should offer just as many experiential-based rewards as it does merchandise.  

4. Be reasonable with the ratio. An employee shouldn’t have to be at a company for many years to earn enough points to redeem a reward. Rewards should be accessible to everyone and earned at a reasonable ratio, so employees can enjoy their well-earned rewards frequently throughout the year.  

5. Evaluate and adjust. Finally, companies should regularly evaluate and adjust their rewards programs to ensure they remain relevant and effective.

Ignoring employee reward programs is a missed opportunity. Employee reward and recognition programs are powerful tools that can transform a company's culture. By investing in these initiatives, organizations demonstrate their commitment to their employees' wellbeing and success, paving the way for a highly productive and fulfilled workforce.  

Examples of meaningful rewards for everyone

Meaningful rewards look different for everyone. Everyone’s needs are unique and there should be reward options that will be beneficial and meaningful to all employees.  Kudos Rewards offers a world-class suite of options with merchandise, events, travel, charities, gift cards and custom rewards.  

Experiential rewards

Maybe it’s tickets to a favorite sports event, an outdoor adventure, or some much needed family time spent at the zoo; rewards that offer experiences and travel can serve a wide range of different interests and create lasting memories for everyone. Here are some examples of experience-based rewards offered in Kudos:  

• Banff Gondola and Glacier Two Night Adventure

• Three Night All-Star Disney Vacation
• American Music Award Show Orchestra Level Experience
• Four Night Montreal and Quebec Foodie Fest
• Grand Canyon South Rim Family Adventure

Employee wellbeing

Whether it’s a retreat, a stay-cation, or even a home gym – everyone needs time to relax, decompress and treasure moments of tranquility. Here are examples of wellbeing related rewards in Kudos:  

• Scottsdale Princess Golf and Spa Two Night Experience
• Orthopedic Pillow Set
• Bowflex Blaze Home Gym

• La Siesta Domingo Sea Salt Kingsize Hammock Chair
• At Home Wine-tasting Experience

Treat yourself or someone else

Perhaps you’ve been eyeing something special for yourself, or you need a gift idea for someone else, the Kudos Rewards catalog is a great place to start:  

• Apple Watch  

• Belgium Waffle Maker  
• Airpods  
• Dream Zero Espresso Machine
• Blink Indoor Camera System  

While recognition has long been the bedrock of appreciation, organizations are awakening to the realization that employee rewards hold tremendous sway when combined with recognition.  

Recognition paired with rewards is instrumental in attracting and retaining top talent, enhancing employee engagement and motivation, fostering a positive company culture, and promoting employee wellbeing.  

By acknowledging employees' efforts and successes, organizations create a culture that embraces innovation and professional development. The result is a workforce that is constantly evolving, staying ahead of the curve, and driving the company towards sustainable growth.

Disclaimer: The advice shared in this publication is intended for informational purposes only. It does not replace the expertise of accredited professionals. Please review the governing tax laws in your jurisdiction and consult your finance team.‍

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Implementing an effective employee recognition program can have a lasting impact on your business.  

While recognition should always come first, adding an employee rewards component to your program can be a low-cost benefit that reminds your team they are valued and appreciated.

That said, when employees redeem points for rewards, the tax implications are not always clear-cut. When it comes to Kudos Rewards specifically, a question that always comes up is, "Should we consider the rewards in Kudos a taxable benefit?"

The short answer is - it depends!

What constitutes a taxable benefit differs by country, state, province, company type, and many other unique factors.

Technically most gifts given to employees (including Kudos Rewards) are considered taxable benefits. That means that they are considered additional income, and the value of the reward should be included in your employee's year-end tax forms. But ultimately, this is at the discretion of your finance team.  

The good news is, while understanding taxable benefits might be new to you, it's basic language for your finance team.  

“They deal with these concepts regularly and will be able to support you every step of the way. Whether it's calculating the tax impact or ensuring compliance with IRS guidelines, your finance team has the expertise to handle it smoothly.” - Asif Samnani, Director of Financial Planning and Analysis at Kudos.  

What are taxable benefits?

Taxable benefits are any perks or rewards given to employees that the government considers part of their compensation. These benefits can include things like:

• Cash bonuses

• Gift cards

• Other rewards that have a monetary value

Essentially, if the reward is something that can be converted to cash, it's likely taxable.

Are taxable benefits part of employee compensation?

Yes! Think of taxable benefits as an extension of your employees' salaries. Just like health benefits or retirement contributions, taxable benefits are a part of the total compensation package.

Budgeting for taxable benefits

From a budgeting perspective, taxable benefits should be factored into your overall compensation strategy. This means planning for the tax implications just as you would for other employee benefits. For example, if you give a $100 gift card to an employee, it's not just the cost of the gift card you need to budget for, but also the associated taxes.

How to calculate taxable benefits

Calculating taxable benefits might sound daunting, but it's not too complicated. To start, let’s get some terminology out of the way:  

1. Cash Equivalents: If the reward is cash or can be easily converted to cash (like gift cards), it's taxable. These need to be reported and taxed just like regular income.

2. Tangible Personal Property Awards: These are rewards that are not easily converted to cash, such as a physical trophy or a plaque. These are typically not considered taxable if they are of nominal value and given infrequently.

Employee rewards that are cash equivalent are taxable, so they can be calculated similarly to a cash bonus. Here’s a detailed example:

Scenario: You give an employee a $500 cash bonus.

Gross Up Method: To ensure your employee receives the full $500 after taxes, you need to calculate the gross amount.

1. Let's say the tax rate is 30%.

2. The formula to calculate the gross amount is: Net Amount / (1 - Tax Rate)

3. So, $500 / (1 - 0.30) = $500 / 0.70 = $714.29.

4. Therefore, you need to budget $714.29 to cover the $500 bonus and the taxes.

Regular Calculation: Alternatively, if you simply add $500 to the employee's income, it will be taxed at their regular income tax rate.

1. If their tax rate is 30%, the employee will receive $500 - ($500 * 0.30) = $500 - $150 = $350 after taxes.

2. This method means the employee gets $350 after tax, and you only need to budget for the $500.

Your finance team can help you decide which method to use and ensure accurate calculations for your employee rewards budget.

Fitting taxable benefits into your employee rewards strategy

To better understand how taxable benefits fit into your recognition and rewards strategy, here’s a simple breakdown:

Scenario: You want to give each of your 500 employees a $100 gift card as a reward.

1. Determine the Reward Value:

• Each employee receives a $100 gift card.
• Total reward value for 500 employees: 500 employees * $100 = $50,000.

2. Calculate the Tax Impact:

• Suppose the average tax rate for your employees is 30%.
• Tax per employee: $100 * 0.30 = $30.
• Total tax for 500 employees: 500 employees * $30 = $15,000

3. Calculate the Total Budget:

• Total reward value: $50,000.
• Total tax amount: $15,000.
• Total budget needed: $50,000 (reward value) + $15,000 (tax) = $65,000.

How this is added to employee compensation

When you provide a taxable benefit like employee rewards, it is added to the employee’s total compensation for the year. Here’s how:

• Income Reporting: The value of the gift card ($100) is added to the employee’s gross income on their W-2 form (or T4 form in Canada).

• Tax Withholding: The appropriate taxes are withheld based on the employee’s tax bracket. In this example, if the tax rate is 30%, $30 is withheld for taxes, and the employee effectively receives $70 after taxes.

• Total Compensation: The total compensation for the employee includes their regular salary plus any taxable benefits. For instance, if an employee has a salary of $50,000, the $100 gift card increases their reportable income to $50,100.

Overview of tax implications for employee rewards in the US

TL;DR:

• US: According to the IRS, all cash and cash-equivalent rewards are taxable. Non-cash awards might not be taxable if they are of nominal value and given infrequently.

• Canada: The CRA has similar rules. Most gifts and awards that are cash or near-cash are considered taxable. Non-cash gifts and awards may be non-taxable under certain conditions.

Generally speaking, rewards, bonuses, and gifts are all taxable, with some limited exceptions. If you give an employee cash or a cash equivalent such as a gift card, it is taxable regardless of the amount or the purpose. Employers must record taxable income on the employee's W-2 at the end of the year.

Businesses can deduct up to $400 for all awards of tangible personal property given to any one employee annually, such as company swag and holiday gifts. Gift cards don't count as awards for this deduction because they aren’t considered personal property.

Rewards that are not personal property are considered compensation (including gift cards) and should be subject to federal and state income taxes, as well as FICA taxes (Social Security and Medicare) for both employee and employer.

How Kudos clients do it

Generally, Kudos clients approach the situation in two ways:  

1. Some do not deduct anything based on points redeemed, relying on the standard exemptions highlighted above, resulting in a tax-free scenario.  

2. The others (the vast majority) treat all redeemed points as taxable and keep the calculation and tracking simple by making the payroll deduction once per year. Some also choose to make monthly or quarterly deductions if the rewards are a significant proportion of their total compensation.  

Kudos is designed in a way that points have no dollar value until they are redeemed. For instance, if an employee leaves with a remaining balance of points, they hold no value and have no tax implications. If employees redeem points for a reward, in most cases, the value should be accounted for as a taxable benefit, i.e., as income for your employees.

Charitable donations

When employees use their Kudos points toward a charitable donation, your company makes the donation on behalf of that employee. So, in this case, the employee never actually receives cash at any point in the transaction, meaning no tax implications for the employee, and your company may be eligible for a tax deduction for the donation. The employee is simply asking the company to direct reward points to a charity they care about.

These are just some examples of how Kudos clients manage the tax implications of their program. Your finance team will have its own approach and preferences, but Kudos is here to support you along the way and guide you to success.  

Key takeaways

The most important thing is to make sure your employees are aware of the tax implications from the beginning. We suggest you make it part of your onboarding process; it's easy to explain that perks, such as gift cards, are treated as income and subject to taxes.

Finally, Kudos is a recognition-first platform – that's at the core of what we do. If you're concerned about the tax implications of a rewards program, with Kudos, you can turn off the rewards functionality entirely without sacrificing the platform's benefits.

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Originally published July 2021. Last updated August 2024.

It’s an age-old question we’ve all pondered before, but one we rarely have an answer for.

“How important is salary?”

If you’re an employee or job seeker, this question is important to you for reasons beyond employment. If you’re an HR professional, leader or recruiter, this question is important from a company success and budget perspective. Regardless, the question is crucial.

Salary matters to people for many reasons, even though it may not always be the primary motivation for accepting a job offer or staying in a role.

Job security, benefits, employee recognition and rewards, workplace culture, company reputation, career development, and more all play a significant role in determining why people choose to remain with their organizations. Yet, salary is always a factor.

There’s no black and white answer for whether salary is an important consideration or not, but how far does its influence reach when you take a job or stay in your existing one?

And if salary can’t motivate employees to do their best work the way people assume it traditionally has, what’s the solution?

We know salary matters, but how much?

Ask anyone in your workplace how much they make, and you’ll likely be met with horrified stares.

You simply do not ask colleagues how much they make.

This rule of thumb is commonly known; few people in an office or company will openly discuss nor admit to their earnings, because it’s uncomfortable. What if you make more than the person sitting next to you, or earn less commission than your colleagues on a sales team?

What if you’re ashamed of how much you make; not because it’s too little, but because it’s too much? Or vice versa?

Interestingly enough, salary is one of the first elements people consider when looking at job postings or negotiating job offers. As much as we’d like to believe that workplace culture, benefits, time-off, and other upsides can make up for a less than desirable salary, we all want to put food on the table, pay bills, or be able to get to work every day.

Millennials are a great example of this. 44% of millennial employees feel salary is important when it comes to attracting talent, second only to career development.

From an employee perspective, the salary range for a role could easily determine whether you’re ready to take the leap and accept a job offer or keep looking.

But for companies, salary often comes down to statistics, averages, and what the company feels the role is worth.

So, there’s a disconnect between what employees want and need, and what companies must do to hire the right talent without overpaying.

Compensation comes in many forms

Salary is only one part of most companies’ compensation model.

We can’t forget commissions, bonuses, benefits, or rewards. For many roles, salary isn’t simply the total annual income you bring home. It can also include things like monthly wellness allowances, a great benefits package, quarterly or yearly bonuses and more.

And while not every company will offer the same salaries, benefits or bonuses, compensation isn’t always as clear as we think.

You could make $45,000 a year as a teacher, and your partner could be a hedge fund manager bringing in $120,000 annually. Despite the salary difference, you could be incredibly satisfied teaching young children. And, your partner could be disengaged and detached from their work.

Salary doesn’t always equal happiness, but other forms of compensation may.

According to Gallup, the ‘magic number’ when it comes to salary is $75,000. Surprisingly, those who earn more don’t necessarily report being happier — personally or professionally.

How a company compensates its employees doesn’t always boil down to the number on a paycheque.

An organization may provide lunch for their entire team every Friday, or give a monthly $500 wellness allowance that employees can use on gym memberships or hiking gear. Those initiatives can quickly add up to the tune of thousands of dollars a year, but could entice employees to stay with their organization even if their salary range is lower.

Those perks or alternative compensation models matter. Consider the fact that 72% of millennials have made some sort of compromise when entering the workforce, with one-third taking a lower salary to land a job. What may seem like a low and undesirable salary situation can be helped by other bonuses that aren’t necessarily monetary, like company culture.

How do you determine if salary counts for more than just the bottom line?

When you think about salary, what first comes to mind? For many of us, it’s the amount of money we make annually, but salary range differs based on roles and responsibilities.

Put simply, salary range is the range of pay companies establish to pay an employee who performs certain functions or tasks.

When determining salary range, typically there is a minimum pay rate and a maximum pay rate, accompanied by variances in scale depending on things like promotions, industry averages or increases, and so on.

If you’re looking on Glassdoor to figure out the salary for, say, a content marketer in Vancouver, British Columbia, the average salary reported by that platform is $52,000 annually. Yet, a company may choose to advertise a content marketer role with a salary range of $50,000-$55,000/year.

That range is dependent on things like market pay rates, industry averages, education, skill level, and more.

A role’s salary range can change in relation to the employer’s needs. Not so surprisingly, salary ranges can also be impacted by location.

When determining salary for a new role, employers must take into account traditional considerations:

• Market research
• Industry statistics
• Location and demographics
• Company need, necessity
• Skills, education, experience

Increasingly, employers must consider what will motivate the right talent to not only choose their company, but apply and accept a potential job offer.

How do you go beyond stats and research to find the right people?

Salary and compensation can only entice people to a certain extent.  

If you’re hoping to motivate the right people to join your company using compensation as part of your proposition, you’ll need to make it worth someone’s while.

Determine what your salary philosophy is

Most companies operate using either a base salary or a variable salary.

Base salary refers to a fixed amount of money that employers pay to employees based on their job functions. On the other hand, variable salary or pay means compensation varies based on different factors (like job performance, sales, and so on).

Base salary is more common in large, or well established organizations. Regardless, your company must determine how it prefers to provide compensation.

For example, if you want the option to raise salary levels for high-performing team members in times of promotion or negotiation, base salary may be preferable. It comes down to what a company feels will motivate their target applicant to apply.

Consider the competition

Beyond market research or role averages, you may want to compare yourself to the competition.

If you’re a tech start up that creates food delivery apps for clients, for example, you’ll probably look at start ups in your area with similar services, structures, and size.

So, when it’s time for you to hire a Change Management Coordinator, you’ll know how competitive you must be with salary and compensation to ensure your company stands out.

Don’t forget to reiterate the big picture

When candidates first look at a job offer, the salary may seem like the key differentiator between accepting a role or declining it for another. But it’s important to consider the bigger picture.

A match in retirement funds or great benefits and office perks may be enough to compensate for a salary that applicants aren’t totally on board with, especially if there is no room to negotiate.

At the end of the day, a salary is unlikely to be the sole reason someone accepts a job offer or applies to your company. Keep in mind how applicants perceive your organization and what you can offer beyond monetary compensation.

Evaluate your benefits and perks

When was the last time you asked your employees about their benefits and organizational perks?

It sounds like an odd concept, but gathering feedback from the people who actually use your company’s benefits can help streamline the non-salary compensation you offer future employees.

Part of that non-salary compensation can include employee recognition and reward initiatives. When employees are unhappy or actively disengaged at work, up to 54% consider leaving their existing companies for a different job.

Part of the ‘perks’ of working at your company could include a highly engaged workplace culture, where employees can collaborate and do their best work. Such perks can also compensate for lower or less sought-after salary ranges.

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Originally published October 2019. Last updated June 2023.

Employees evaluate companies the same way they evaluate products. How are companies matching up in the eyes of potential employees?

More companies like Glassdoor are allowing for the honest, open, and uninhibited review of organizations globally. Many employees, both previous and current, take advantage of the unique opportunity to anonymously pick apart or praise companies.

Organizations may be grateful, yet apprehensive of such platforms because the potential to receive either happy or disgruntled reviews can be scary.

Candidates are quick to peruse platforms like Glassdoor to gain a better understanding of a company's culture and what it's like to work there.

"An employee value proposition (EVP) is an all-encompassing offering of what employees can expect to gain or benefit from when working for your company."

Undoubtedly, companies search for candidates who share similar qualities to their current high-achievers. That’s perfectly understandable; what organization doesn’t want productive, collaborative, and passionate teams?

But not every company knows how to attract and retain those types of employees — the ones who show up because they want to, not just because they need to. What do some of the world’s most successful companies, like L’Oreal or Apple do to entice the best candidates and retain their top talent?

It starts with an EVP.

What is an ‘EVP,' Exactly?

You may have heard of the term ‘value proposition,’ which refers to the key differentiator of a company; a promise that each customer will receive something of value.

However, a value proposition isn't the same as an EVP. Any organization should design its value proposition with its customers in mind, but the EVP needs to be designed and customized with employees in mind.

Simply, an employee value proposition (EVP) is an all-encompassing peek into what employees should expect to gain from working for your company.

Traditionally, EVPs include benefits, rewards, and perks such as extended vacation days. An EVP is one of the most important factors for recruiting and retaining employees.

In the modern workplace, an EVP could include both traditional and modern benefits that positively impact work-life balance and the professional environment. Benefits can range from remote work options and time-off during the workday to attend fitness classes, to learning and development opportunities, a collaborative working environment, and more.

Why Should You Focus on Your Company’s EVP?

Before considering the 'why' behind an EVP, it's helpful to first look at how an EVP should function.

What an EVP ultimately boils down to is relatability — a company’s EVP should win the hearts and minds of employees by connecting with them on both a rational and emotional level.

From a company perspective, that means clearly and consistently relating the values and vision of your company to current and prospective employees. For employees, it means looking closely at how you align, and evaluating whether that organization fulfills your personal and professional needs.

Organizations that proactively focus on an efficient EVP see between 30-40% more commitment from their teams than those that don’t, which points to one of the most significant and common organizational woes — retention.

Here are a Few Stats that may Surprise You about the EVP:

• Organizations with well managed EVPs can effectively source candidates and employees from more than 60% of the labor market
• Organizations that deliver a robust and effective EVP can reduce employee turnover by up to 70% while increasing new hire commitment by up to 30%
• According to LinkedIn, a compelling EVP can reduce cost-to-hire by up to 43%

It's fair to say that a compelling EVP can assist organizations in hiring the right employees, while also reducing turnover. These are two significant challenges most C-suite and organizational leaders face today.

Beyond those two elements, an EVP is critical for ensuring people want to work for your company. Leaders can no longer ignore that candidates evaluate companies the same way they do products. This forces organizations to dive deeper. What they can offer people, as opposed to looking solely at what people can offer them?

According to a recent survey from Glassdoor, company mission and culture matter more than salary. So much so, that 77% of adult candidates consider a company’s culture, and 79% consider its mission and purpose, before applying. This is especially true for millennials, which Glassdoor found to prioritize culture over salary.

Culture is an intangible component of an organization's EVP. People care about workplace culture, perhaps now more than ever.  

What Does Your Company’s EVP Need to Succeed?

Only 2 in 5 employees believe their current organization has an effective and attractive EVP.

Meanwhile, only 44% of CEOs and C-suite executives feel their company has a managed EVP, and are less likely than employees or HR professionals to know whether their company employs it. In contrast, 60% of CEOs believe they are responsible for the overall branding of their organization.

An EVP needs to be unique, relevant, and realistic for it to help attract, retain, and engage employees. But like any initiative, an EVP only works if leadership truly believes it.

Don't forget that the EVP is on the employer, not the employee. When employees have the support and tools they need to succeed, they are more likely to be engaged and productive. Still, the responsibility of developing a purposeful EVP rests with the organization — not the employee. While the term 'employee engagement' refers directly to the employee, employees succeed without the resources and encouragement from leadership.

Consider these key elements to improve your EVP:

Start by Asking Your Employees What They Need

Most EVPs revolve around the perceptions, opinions, and feedback of existing employees; they rarely take into account those of past or potential ones. Leaders must consider what past employees felt was lacking, and how prospective employees may feel.

For example, Glassdoor allows leaders insight into what employees think of a company's culture, salary ranges, development and advancement opportunities, leadership, and more.  

Organizations can start by surveying current employees and asking what types of benefits they need, or would 'like to have' (fitness passes or free parking). These insights can be compared to previous employee surveys (through platforms like Glassdoor) to streamline the benefits of an EVP.  

Consider Your Company’s Culture

Not every employee works or performs tasks in the same manner, nor will every employee need the same resources in a working environment to be successful. Some can function with the bare minimum, while others may find that time for play (such as having a ping-pong table in the office) stokes creativity and collaboration.

It's important to remember that EVP’s inherently consider every aspect of what will make an employee want to join, and remain with your company. So, your EVP will need to evolve to accommodate different working styles and needs, based on the type of employees your organization is looking to hire. If you factor this into your EVP, you're well on your way to improving your strategic approach to hiring.

Be Flexible and Agile

The best organizations are agile ones; able to adapt naturally and strategically to change, as well as the pain points every company faces with growth. The same should go for your company's EVP. You'll need to segment and customize your EVP based on the target audience or type of employee you're looking to attract.

That means being flexible with your offerings, and adaptable to the changes and trends in labour markets and workforces.

Always Incorporate Recognition

At Kudos, we're adamant about our recognition strategy, and not just because we develop recognition-first software. Recognizing and acknowledging others' contributions and dedication not only improves engagement but motivates employees to do their best work. Recognition should be a cornerstone of any EVP; it is a crucial part of your overall workplace culture. By incorporating recognition into your EVP, both existing and potential employees can see the value in working with your company (because they'll be valued, in turn).

Development

89% of leaders believe their employees quit because of money. While salary plays a significant role in recruiting employees, it is no longer the sole deciding factor. Many millennials report development opportunities area key driver in their decision to join a company. By including development in your EVP, you're signifying to employees that you care about their career trajectory, advancement, and promotion.

89% of executives expect an increase in the competition for top talent. With that increase comes the need for organizations to truly stand out among countless others competing for the best employees. Is your EVP working for your company’s hiring strategy, or against it?

Listen to this article from our conversational blogcast, Kudos® Corner!