Gift Cards Preferred over Cash Bonuses by Employers for Holiday Recognition and Incentive Programs.

CHICAGO -- A spike in gift card and certificate giving is expected this holiday season as more employers say they prefer giving gift cards and certificates over cash to recognize and motivate employees, according to the Incentive Marketing Association's Incentive Gift Certificate Council (IGCC).

"Recipients find gift cards more memorable and more exciting to receive than cash," said Lee Poskanzer of the Incentive Gift Certificate Council. "Gift cards are also more compelling because employees feel freer to talk about non-cash rewards than monetary compensation."

Currently two out of three corporate incentive programs include at least one gift card or gift certificate offer. According to the Incentive Federation, gift card and gift certificate use by corporations grew from 32 percent in 2000 to more than 54 percent in 2003 to become the fastest growing segment of the non-cash incentive industry.

For businesses, gift certificates and cards offer many advantages over monetary incentives because they can be branded, personalized and customized for employees. These types of incentives have been shown to increase sales, improve employee performance and build loyalty according to a 2003 study by the Incentive Federation. Employers are increasingly recognizing these benefits according to the 2004 survey findings by Stored Value Systems, one of the nation's leading suppliers of gift cards, which found one-third of employees say their employer has given them gift cards as incentives or rewards.

An International Society of Performance Improvement study of incentive programs in 2002 revealed that an overwhelming majority of workers -- 92 percent -- said they achieved their goals because of incentives. Corporations say gift certificates and cards will be their number one choice for sales incentives in the future, according to the 2003 Incentive Federation Study of Merchandise and Travel Incentive Users.

"At our company holiday party, we gave our employees a variety of gift cards from department stores to hotels and resorts. At all levels of management we had a choice of appropriate cards from restaurants to retailers for sporting goods, housewares, electronics and toys. Employees talked to each other about what they wanted to purchase with their cards. It created a lot of excitement," said David Allen, who heads employee incentives at Mell Trimming, an apparel accessories manufacturer.

In the fourth annual Consumer Insights Survey commissioned by ValueLink, an industry leader in gift and spending card solutions and First Data (NYSE:FDC) company, 45 percent of respondents cited having their own shopping experience as a primary benefit of gift cards while 26 percent said they enjoyed the convenience and ease of use as the main advantage.

"Imagine being able to motivate your employees, clients, consumers or business partners with a selection of more than 100,000 items. Gift certificate and cards are the perfect means to do so," said Poskanzer.

IGCC is a strategic industry group within Incentive Marketing Association, created to provide an awareness of gift cards and gift certificates as a viable option for use in premium and incentive programs. Member companies are the elite among retail, catalog and performance improvement agencies, offering certificates that can be redeemed for merchandise, travel, food, accommodations and services.