Case Study: Giving Employees Product vs. Cash

Giving out cash awards is a great way to land yourself in hot water with the IRS. Cash gifts to employees are income. That means they must be taxed accordingly. If you give an employee $100.00 cash, minus taxes it ends up being $75.00, then they spend it on groceries and it could well be forgotten in a week or two. A custom branded item, be it a diecast truck or a baseball cap, will last for a long time and remind them of your kind gesture for years to come.

73% of people say they use merchandise branded with a company’s logo at least once a week. 45% of people say they use these products at least once a day. These percentages increase when the item gifted is high-quality, durable, functional, and valuable to the recipient; likewise, the longer your gift lasts and the more your gift is used, the more times your employee associates your company with these values. This leads to reduced staff turnover and increased employee engagement. Additionally, branded gifts that are retained and constantly serving a purpose are silent mouthpieces for your brand.

While an unbranded item may be easier to produce, there is far more value to your company to give an item that bears the brand you’ve worked so hard to establish. Take outerwear as an example. Studies prove that the average number of ad impressions for a piece of outerwear is currently at 6,100 in the US. For a company with 500 employees, giving each employee one Patagonia fleece as a holiday gift equates to over 3 million visual impressions during the course of the jacket’s lifetime! To be successful your brand needs to be seen. Even better, seen continuously.

The bottom line? Since cash gifts to employees are always taxable, it makes sense to find an alternative way to show your appreciation for them. Branded gifts allow a one-time investment to make a recurring impact every time your employees wear that t-shirt imprinted with your logo downtown or take their weekender embroidered with your logo on their next flight. Your brand and company need to be brought up in conversations. You need to be noticed and remembered, and remarkable corporate gifts are a great way to accomplish this.