Gift cards boost worker wellness, study shows

New research published in Management Accounting Research shows that while employee wellness programs are popular among businesses, worker motivation to use them remains lower.

BYU accounting professors Bill Heninger, Steve Smith and David Wood conducted a study which found that the way in which employees like to reward themselves could be causing the disparity.

In fact, it suggests that rather than cash incentives, the most effective reward for boosting employee wellness appears to be gift cards.

During this study, researchers tracked an institution that rewarded employees for completing six-week ‘wellness challenges’. Participants were given the opportunity to select which reward they would like when they finished they challenge: a cash bonus on their paycheque, a gift card or a tangible reward of equal value. Around 60% of the participants chose cash rewards, while 30% selected gift cards and 10% chose the material good.

While cash was chosen more frequently, people who selected gift cards were approximately 25% more likely to complete a wellness challenge than the other participants, holding other relevant factors constant. Gift cards may be more motivational because they represent the optimal balance between hedonic value (fun, enjoyment) and fungibility, the researchers believe.

“You would presume that when people pick the reward type that is the most appealing to them, it would have the most motivational power,” Smith said.

“But that wasn’t the case. Employees choosing to be rewarded with gift cards actually reaped the greatest health benefits. So the way you are choosing to incentivise yourself may not hold the strongest motivational power.

“Cash is fungible — it can be used for anything. A George Foreman Grill is not fungible, a gift card is not fungible, so from an economic perspective, it makes the most sense to choose cash.”

On the other hand, a small cash bonus does not hold as much hedonic value as a tangible item. This puts the gift card in a ‘sweet spot’ between the other two rewards.

“People keep mental accounts. If you work and make $10, that’s your work money. If you find 10 bucks on the ground, then that’s free money. You might go out to lunch with the free money when you normally wouldn’t with your work money,” said Wood.

Despite this, the researchers are not suggesting that organisations should exclude other incentives and only offer gift cards.

“At the very least, we can say that gift cards seem to help,” said Smith.

“Our hope is that this is one of many studies that can help us find out how to make these wellness programs as successful as possible. If you can get your employees to be more healthy there are big, big cost savings. Giving employees a reward to help them stay healthy is absolutely worth it,” said Wood.

Image credit: ©stock.adobe.com/au/Andrey Popov