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Avoiding the Holiday Gift Trap

Avoiding the Holiday Gift Trap

We have all heard stories where a friend or family member received a holiday ham or turkey as a company holiday gift. I don’t know about you but when I first heard about these gifts I was surprised.  These types of company holiday gifts or gratuities could have mixed success but hopefully they are appreciated for their intended gesture.

I was curious what types of holiday gifts are the most popular, and according to Connie Chen of Business Insider, these are her top 5 corporate holiday gifts:

  1. A low-maintenance plant to brighten up a desk
  2. A tumbler that keeps nearly any drink at its ideal temperature
  3. A candle that’s particularly giftable (or re-giftable)
  4. A reusable bag fit for errands
  5. A journal that’s meant for developing ideas.

Considerations

If you are thinking about what holiday gift or gratuity to provide your employees or co-workers, here are some things you should consider:

  • How to make the recipient feel valued and appreciated and they were not an “after-thought”.  If you live in Seattle and send it to Denver on December 24, chances are it might not have the same effect as if it was sent a week earlier.
  • Your relationship with the recipient. Workplace relationships can range from acquaintances to very good friends and even relatives. Make sure your gift shows them they are valued but don’t be too personal or you might make them uncomfortable.  For example, perfume or cologne is probably not a good idea.
  • What are their interests? It is best to give something they will appreciate, use and remember. A co-worker once gave me a 24-inch-tall Christmas Minion plush toy and I LOVE IT.  Each year it is displayed with our Christmas decorations and it always gets a lot of discussion with guests. And I’ll never forget where and from whom it came from.
  • How to provide the gift not expecting anything in return. Remember, a gift is not an incentive.
  • How to recognize the recipient knowing not everyone celebrates the holidays in the same way or at all.  Staying away from specific themes can help you avoid this pitfall.

Keep in Mind

When considering gifts to current or potential customers, be aware of:

  • Company policies. Some companies have very strict policies and you will want to make sure you follow them. You don’t want to encourage someone to cross a line.
  • Cultural norms.  It is important to understand the cultural aspects of gift giving and receiving to avoid problems. 
  • Gift Value.  It is best to provide something with a nominal value so you do not inadvertently create pressure to buy your goods/services or become a client. Of course, you also do not want the gift to be mis-interpreted as a bribe.  One very large company I know in Santa Clara even calls this out in their sales incentive plan policies.

The Tax Man

Lastly, do not forget to consider the potential tax implications of giving a holiday gift.  Depending on the situation, the Internal Revenue Service (IRS) might consider the value of the gift as taxable income and therefore taxes have to be paid by the company and possibly the employee.  If you are personally providing a gift to an employee(s) and the company is not paying for it, then you probably do not have anything to worry about. However, if the company is paying for and providing a gift, you need to think about it. If you give a gift card with more than a de minimis value then the IRS might consider it income. Being conservative might be the best action.

Summary

Giving holiday gifts can be a great experience that has a positive effect on the relationship with the recipients.  If done well, it can result in deeper relationships which could turn into lasting friendships. If you choose to provide gifts, try to: have fun with it, be creative, and provide something you believe the recipient will enjoy and value.

To read other blogs, go here: https://alliancecompensation.com/blog/

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David Adent is a Managing Partner with Alliance Compensation LLC, a team of seasoned experts and trusted solution for clients across the Western US in public and private companies. He has over 30 years of experience in corporate and executive compensation roles, and lives with his wife in Post Falls, ID.

Sometimes holiday gifts are important elements of culture. Sometimes they'll get you into more trouble than they are worth.

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