How right are organisations to give away super expensive gifts to a select few employees

Recently, a software company, Kissflow, awarded BMW cars to five of its employees in appreciation of their loyalty and contribution. Suresh Sambandam, CEO, Kissflow, told the media that the chosen employees had been with the Company since its inception and helped the firm achieve success during the pandemic. He added that the employees belonged to humble backgrounds and had faced huge challenges at the beginning of their careers.

This isn’t all. After Kissflow’s acknowledgement of its employees’ worth, an IT company, Ideas2IT, gifted 100 Maruti Suzuki cars to its employees as a reward for their hard work. The cars ranged from S-Cross to Baleno and cost a total of ?15 crore to the Company.

One of the founders, Murali Vivekanandan, explained that the cars were given to the employees who had served the Company for at least 10 years, in gratitude of their support and contribution to its success and growth.

While companies giving gifts to their employees isn’t a new phenomenon, it certainly raises eyebrows when they go out of the way to distribute extremely expensive gifts to employees and publicise the act widely.

“Employees possessing special skills which aren’t easily available in the market, can be promoted or offered better salaries. However, giving them gifts as rewards only puts them on a professional pedestal, marking them as ‘special’ for their contribution to the company, which is not advisable”

Ravi Mishra, SVP-HR, Advanced Materials Business, Aditya Birla Group

Favouritism: On one hand, such gifts act are a way for the companies to show their admiration and respect for the employees’ contribution to their success. However, this show of preference for certain employees over others can also create differences among the team members. Those who do not receive these gifts are bound to feel left out.

While choosing to reward just a select few employees, aren’t these organisations playing favourites? Are such organisations only concerned with their public image? Are they simply being smart by using such gifts to retain and attract talent?

Ravi Mishra, SVP-HR, Advanced Materials Business, Aditya Birla Group, says, “It’s not a sensible decision.”

False expectations: “People work in an organisation because of their skill set and knowledge,” Mishra adds. “Employees possessing special skills which aren’t easily available in the market, can be promoted or offered better salaries. However, giving them gifts as rewards only puts them on a professional pedestal, marking them as ‘special’ for their contribution to the company, which is not advisable.”

Companies often grant gifts, such as stock options, long-term incentive pay and bonuses, which are designed by a system. That is the correct way of doing things, according to Mishra. By making a flashy display of their appreciation for the performance of a select few, companies end up creating a wrong perception in the eyes of the employees. This can also lead to false expectations.

“It is important to consider what the company is trying to fulfill through this exercise. The intent of the organisation is to recognise people for their services. But can it have an impact? Absolutely yes”

Suchismita Burman, HR Leader

Sustainability: Such gifts can be disadvantageous to the organisations as well, because if they cease to do well the following year, they will not be in a position to grant such gifts to the employees, and only create disappointment and unnecessary dissatisfaction amongst the workforce, Mishra stresses.

Suchismita Burman, HR Leader, says, “It is important to consider what the company is trying to fulfill through this exercise. The intent of the organisation is to recognise people for their services. But can it have an impact? Absolutely yes.”

Through these gifts, companies are sending a message to their employees they are acknowledging a success milestone. If it’s only a one-time event, then it becomes a gimmick. The company sets a precedent by distributing gifts to a certain section of the workforce, and if it doesn’t keep up with it the next time, then it can surely create problems within the team.

Ramesh Shankar S, HR leader, says “The companies have to be transparent and fair when they decide to give such gifts to their employees.”

Criteria for rewarding: “The problem arises when organisations decide to grant gifts based on vague parameters, or only reserve them for a certain section of employees,” says Shankar. There has to be some criterion that people are aware of, otherwise they will doubt the intent of the organisation.

“If an organisation silently and secretly invites some of its employees and gives them gifts without the knowledge of the wider workforce, or discriminates by granting expensive gifts to some and inexpensive ones to others, then it will invite criticism from within and outside the organisation,” Shankar points out.

“If an organisation silently and secretly invites some of its employees and gives them gifts without the knowledge of the wider workforce, or discriminates by granting expensive gifts to some and inexpensive ones to others, then it will invite criticism from within and outside the organisation”

Ramesh Shankar S, HR leader

Appreciation: Praveen Purohit, deputy CHRO, Vedanta Resources, says, “I don’t see any demerit in organisations wanting to reward their employees with gifts.”

There are different ways in which companies can reward their employees. Some do it by distributing monetary benefits, or sending employees on international, best-in-class holidays, or just by promoting them to a higher position.

According to Purohit, organisations such as Vedanta and Reliance, with larger workforces, choose to reward their employees in their manner of choice. They provide incentives, or increase the percentage of the bonuses to show how much their employees mean to them.

Seeing no harm in the practice, Purohit says, “It is just an organisations’ way of expressing gratitude toward its employees.”

“Appreciation, whether it’s presented in the form of gifts such as cars, money or jewellery, is the biggest way to guide performance and drive growth in an organisation”

Praveen Purohit, deputy CHRO, Vedanta Resources

“Appreciation, whether it’s presented in the form of gifts such as cars, money or jewellery, is the biggest way to guide performance and drive growth in an organisation. If there are appropriate resources available, employees must be rewarded to make them aware of their importance and hardwork,” asserts Purohit.

There is nothing inherently wrong with organisations rewarding their employees for their hard work. However, such actions should be performed with caution and with the understanding that the organisation is raising the expectations of its workforce. If these expectations are not met, there may arise rifts in the employer-employee relationship.

What organisations can do to avoid such ramifications is to be transparent with their intent, and be fair in their judgement and distribution of rewards. This will clarify that their appreciation of their employees’ hard work is sincere and bereft of discrimination.