As technology companies experiment with new strategies to recruit and retain workers, many are rewarding top workers with points, prizes and gadgets instead of the traditional tech carrots: cash bonuses and stock options.
The trend is on the rise in tech hubs such as Silicon Valley and Boston, where worthless stock option packages and high turnover have created a relatively disloyal work force and hot competition among recruiters.
Different employers feature different perk programs, but here's how they generally work: An employee who would normally receive a US$500 spot bonus for, say, a flawless presentation to the board would instead receive 500 points, confirmed via email from an appreciative boss.
The worker could then redeem the points for a small gift purchased online. Or he could squirrel away the points to splurge on something larger, anticipating more points down the road.
Many companies give small point awards to mark the anniversary of an employee's start date, birthday or promotion. According to human resource managers and compensation supervisors, DVD players were among the most popular gadgets that point mongers selected last year. Some companies' points programs allow them to exchange points one for one with airline frequent flier mileage, enabling point hoarders to win tickets with as few as 20,000 points.
Nortel Networks is one of dozens of tech companies leading the alternative compensation charge. Already, 25,000 workers at the networking company have received points, and about 40 percent of them have redeemed them for prizes--ranging from tool kits to a bathroom remodelling job.
Perk on the fast track?
According to executives at companies that are powering the point programs, the idea is destined to become a common compensation practice within the next several years.
"How to recognize and reward employees has always been a real hot topic. The tech industry is still looking for what the 401(k) of employee recognition is going to be," said Bill Rusitzky, vice president of enterprise solutions for San Francisco-based Netcentives, which powers Nortel's program and many others.
"We feel we have a good handle on that through the programs we've done...Points are a compelling tool that gets companies a competitive advantage."
Other non-traditional rewards programs aren't based on points but work similarly via online gift certificates. A boss will reward a good worker with a US$100 gift certificate to a fancy restaurant or free ski tickets at a local resort instead of cash.
In this emerging cottage industry specializing in alternative rewards, BeyondWork recently launched a product called GiftPass. The program, used by Charles Schwab and Wells Fargo workers, uses patent-pending technology to create an online mall tailored to a specific company's work force. Employees can redeem certificates or even donate to charities in a virtual store.
