EMPLOYEE BENEFITS

How to Set an Employee Gift Policy

What's acceptable to accept? Experts advise on what your employees should know about where the line falls between kindness and attempting to influence favors.

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The top bosses of Edible Arrangements also don't mind receiving their own fruit baskets because they fit in with the company's definition of what is an acceptable gift

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At the Connecticut headquarters of Edible Arrangements, any employee who receives a business-related gift of moderate value has to report it to the company's management. Even when—as often happens—the gift is one of the company's own Edible Arrangements fruit bouquets.

The staff certainly isn't sick of them either. "Now that we work more in a corporate environment, we don't' see the fruit every day," chief operating officer Kamran Farid says. "When we see an arrangement, you do appreciate it."

The top bosses of Edible Arrangements also don't mind receiving their own fruit baskets because they fit in with the company's definition of what is an acceptable gift from outside the walls: Nominal gifts such as food aren't likely to sway buying decisions, and the edible treats can be shared across the entire office so no single employee feels targeted.

Edible Arrangements has plenty of experience in the field of gift-giving year round, but other companies can find themselves struggling to identify what is appropriate for employees to be unwrapping in the offices around the holidays. Creating and maintaining a clear gift policy is an easy way to confront the situation.

"If you don't have one, then you open yourself up to a credibility, liability problem," says Julian Friedland, a business ethics professor and writer who edited the 2009 book Doing Well And Good: The Human Face of the New Capitalism.

"Whatever product you happen to be selling, whether it's a service or actual object of any kind, can be compromised by the appearance of some conflict of interest."

Experts say to keep these tips in mind when you write your own employee gift policy:

Setting an Employee Gift Policy: Pick a Dollar Limit

At Edible Arrangements, any gift worth more than $50 has to be reported. Elsewhere, the threshold might be less, or even up to $100. Some companies outright ban gifts of a certain value, but experts say the lesson here is that your company should be thinking about what dollar amount of a gift could potentially influence important business decisions.

Why? In a recent survey of businesses across different fields conducted by tax and business consultants UHY Advisors earlier this year, 32 percent of respondents said a gift would actually influence their decision making.

A policy to guard against bribes—be they lavish junkets, cash gifts, or expensive presents—maintains the credibility of your company, Friedland says.

"The only way to make sure your judgment hasn't been impaired is to make sure it isn't based on expensive gifts," he says.

Friedland says a good policy will preclude employees from accepting anything that increases their self-worth—such as cash, stocks, or expensive presents. It will also say that employees shouldn't accept anything of a higher value than the industry standard—samples of new product such as cosmetics may be acceptable, but not a full makeover or spa treatment, for instance.

"You want people to win business based on the merits of the business," says Frank Fenello, managing director of UHY Advisors. "It was surprising how influential the gift giving was."

Dig Deeper: How Bribery and Other Types of Corruption Threaten the Global Marketplac


Setting an Employee Gift Policy: Talk With Vendors

Some companies spread their gift policy beyond their doors as well. Edible Arrangements talks with its vendors and asks them to sign agreements saying that it understands the company's gift policy. Management encourages vendors and clients to send things like gift baskets, food, or other treats, including its own arrangements, but not just because it wants to support its own business. Communal gifts that can be quickly used and shared reduce concerns about favoritism, Farid says.

"It creates a little more symmetry and you're not focusing on one employee," he says.

Fenello says you should talk with you vendors about your gift policies before they even sign on board. Some policies are blunt on the matter: any violation of the corporate gifting policy can disqualify the vendor from future considerations. So it's important to know the policies of the companies you work closely with, as well as communicate yours with your business partners.

Dig Deeper: Renegotiate That Contract

Setting an Employee Gift Policy: Communicate the Policy

One of the main problems with corporate gift policies isn't caused by stale fruitcakes; it occurs when gifting policies are poorly understood or incorrectly interpreted.

UHY's study showed that while most companies had some form of a policy, only 53 percent of employees said it was well-defined. Beyond that, 60 percent of employees said they were not sure whether their company's leaders follow their own policies.

That's why experts say it's important to clearly communicate your gifting rules to employees to make sure they're not caught off guard.  The policy needs to be monitored and enforced company wide — without giving top executives a free pass. Making arbitrary rulings on gifts opens you up to more criticism, Friedland says.

"If you don't, you're likely to undermine the loyalty of your employees," he says. "They might get angry or frustrated at what they see is an overly paternalistic policy."

Dig Deeper: How to Communicate with Employees

Setting an Employee Gift Policy: Giving to Your Employees

The gifts you're thinking about giving to your own employees during the holidays need to be handled carefully as well. Matt Sottong, surveys director for BNA, a legal and business publisher, recalls a time when he worked for a political campaign in Washington, D.C., in the early 90s. The staff came to work one day to see red gift envelopes in some mailboxes, but not others.

"What became evident was that the people who didn't get red envelopes were getting laid off," he says. "It was really poorly handled."

Internal gift-giving most often syncs up with the overall national economic picture, according to BNA's year-end holiday practices survey, a study of holiday giving BNA has conducted since the late 1970s. This year, 76 percent of employers are planning some sort of year-end party for employees, a jump from last year's 67 percent. Gift-giving also rebounded: 41 percent plan to provide gifts or bonuses, compared to 33 percent last year.

Companies need to set policies that walk a fine line: What level of gifting or celebration will show employees they are appreciated even in tough years, without appearing to throw money away on an extravagant party or bonuses?

"Employees frequently don't have any idea what's going on with the company economically, so they look for signs of how things are going," he says. "Certainly most lower-level employees aren't empowered and don't feel comfortable asking those questions. These are clues that employees get as to how their organization is doing."

Instead of handing out tangible gifts, many companies—64 percent this year—choose to contribute to a charity or participate in a community event.

"People don't think very hard about it but it really can impact the psyche of a workforce in a profound way if it's handled well or handled poorly," he says.

Dig Deeper: How to Chose a Holiday Gift for Your Staff


Setting an Employee Gift Policy: Be Sensible, Not Overprotective

Experts say to also be careful of overly restrictive gift rules. Walmart, for instance, bans employees from accepting gifts of any kind or dollar value. But other companies may count on receiving small gifts, such as product samples to test, Friedland says. 

One way to differentiate is to determine whether your company is an environment where people would be unable to do their jobs without accepting some gifts. But experts say it's also smart to limit the kinds of freebies and junket offers employees can accept.

"If you're being given a trip by a company that seeks your business, then you probably shouldn't be accepting that trip until that decision has been made," Friedland says.

Even at Edible Arrangements, where the company is surrounded by gifts all the time, executives consider their policy a success, Farid says.

"Anything that's given has to be disclosed," he says. "We're managing so there are no favors going on."

Dig Deeper: How to Write a Code of Ethics

Last updated: Dec 10, 2010

TIM DONNELLY | Columnist | Inc.com Contributor

Tim Donnelly is a freelance writer and managing editor of Brokelyn.com. His work has appeared in Billboard, The Atlantic, Thought Catalog, and The New York Post.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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