Are Tangible or Experiential Rewards Better for Employee Engagement?

As an employee reward, would you prefer a day off or a gift card to your favorite store?

We ask questions similar to this a lot around here, usually to illustrate the value of monetary vs. non-monetary rewards how each capitalizes on different types of motivation, how they can be personalized, and how often to deploy them.

Today, we’re diving into something a bit different. Set aside money and focus solely on the length and intensity of its appeal. Can experiences outrank tangible goods in bumping up employee engagement?

Tangible vs. experiential rewards

Tangible goods are the cool employee appreciation gifts we buy to show gratitude or celebrate milestones. Company swag, gift cards, and even the latest addition to their potted succulent collection.

Experiential gifts cannot be held, but are definitely felt. Event tickets, job flexibility and perks, or a day spent volunteering. The emotional payoff, sentiment, and memories are said to be more impactful here.

Even with a wide variety of options in both categories, many HR and People Ops leaders struggle to choose the “right” reward for the individual and occasion. Balancing impact and budget is the most pressing concern.

However, research reveals even more food for thought. We’ll get to that in a moment. First, let’s review the gifts many employee rewards programs offer.

Tangible rewards: Examples, pros, and pitfalls

Common examples of tangible appreciation gifts include, but aren’t limited to:

• Gift cards
• Custom or company swag
• Self-care products
• Care packages and snacks
• Office supplies and accessories
• Tech accessories and gadgets
• Extra tacos
• Coffee subscriptions

Pros of tangible rewards

Cons of tangible rewards

Immediate motivation

Can feel transactional, impersonal

Easy to budget and scale

Limited emotional impact or story value

Works well for remote teams

Risk of becoming the only motivator

Simple; what you see is what you get

Feels expected over time, taken for granted

Experiential rewards: Examples, pros, and pitfalls

Creating core memories at work with experiential rewards often happens through:

• Team lunches and outings
• Days off
• Classes (cooking, fitness, etc.)
• Travel perks
• Mentorship
• Creative workshops
• Wellness retreats
• Team volunteering
• Taco-for-charity redemptions

Pros of experiential rewards

Cons of experiential rewards

Creates anticipation and excitement

Can be harder to personalize

Often aligns better with company values or wellness goals

More logistical complexity (especially with remote teams)

Ideal for shared experiences and team bonding

May not appeal to everyone equally

More memorable and emotionally meaningful

Cannot control the ultimate impression left by the experience

Are experiential or tangible rewards better? What the research says

Material rewards satisfy short-term gratification and are easier to distribute. They also feel transactional at times. You give; they receive. There’s a period of curiosity, delight, or gratitude. For the most part, everyone moves on quickly.

Research shows that experiences have a more enduring impact on feelings of happiness and satisfaction. The recipient experiences higher levels of what’s known as retrospective enjoyment. They relive and remember the reward for much longer than a material alternative.

These findings come from a 20-year study by researchers at Cornell University. Interestingly, experiential rewards also generate greater anticipation and excitement.

The benefits can start as soon as you present an experiential reward to an employee. The experience may be weeks away, but knowing it’s coming can boost happiness and engagement.

It sounds simple enough. Experiences are more satisfying, supplying endless streams of anticipatory delight and retrospective enjoyment. So we should choose them whenever we can, right? Not necessarily.

Researchers from The Ohio State University point out that this generalization assumes good outcomes. Their research reminds us that experiential prizes don’t always feel as positive as we want them to.

For instance, an employee is rewarded with concert tickets. The weather is disastrous, and the band doesn’t go on. They still derive a long-lasting, high-impact feeling from the experience, but now it’s negative. Their anticipation was wasted, too.

That’s a stark example, but the bottom line is that employers can’t fully control an experience's psychological outcome. In some cases, you might have preferred the “weaker,” shorter-term satisfaction of a meaningfully framed material gift.

Employee reward ideas and examples: What real-life companies are doing

Upcoming research analyzes reward-giving results across 5,000+ teams using HeyTaco. It finds that meaningful rewards work best–whether they’re tangible, experiential, collaborative, or completely free.

Teams that enabled rewards weren’t just 481% more likely to stick with their peer recognition programs. They also boasted higher engagement rates and longer retention, sustaining a culture of recognition over time.

What do these rewards look like? Here are some strategies from HeyTaco users:

• Energy intensity platform Ndustrial’s reward system offers a $25 gift card for every 25 tacos earned. But these tacos carry meaning, as they symbolize recognition tied to the company’s core values.
• Fitness company Crossrope does the same. But their rewards menu is packed with experiential events and celebrations, with options to redeem tacos for tangible swag and gift cards, as employees choose.
• Cloud consulting firm BSC Analytics has mastered experiential rewards in a remote environment. Charitable giving is a cornerstone of their program, along with an annual company retreat called TacoCon.

Tangible, experiential, or both? An employee reward system that works

Conventional wisdom says doling out material objects isn’t the most meaningful way to build bonds and strengthen engagement.

Academic research confirms that experiences resonate more, but they're harder to pull off.

Real-life examples show that companies find their own way. Rewards like appreciation gifts and milestone celebrations fit into programs that support their culture, people, budget, and goals.

1. Culture

Are you performance-driven or people-first? Depending on company values, tangible rewards can motivate day-to-day performance. Certain experiential rewards can promote the work-life balance or professional growth that employees want.

2. Team makeup

It’s easier to reward remote employees with gift cards. But adding experiences can help them feel more connected to others, especially if they’re part of a hybrid team with real-life rapport and connections. Tailoring rewards to the needs of in-person teams is more straightforward.

3. Budget

To be perceived as reliable and equitable, rewards must be sustainable. Before choosing what to keep, gather a diverse list of tangible and experiential rewards.

4. Goals

Experiential rewards help create stronger, bonded teams. Tangibles are great for regular recognition and a little extra motivation. Both can support engagement, morale, and retention.

Our recommendation: Start with a hybrid approach

Small material gifts are a great foundation for consistent recognition and appreciation. Think coffee shop gift cards, app subscriptions, or a reusable water bottle.

From there, test experiential rewards for milestones like work anniversaries and team achievements. Volunteer days, game nights, spa days, and more.

With employee rewards, intention is everything

Ultimately, it’s less about what you give and more about how you present it. Our data supports existing research: it’s how rewards are framed, not the format or cost.

Making it feel like a reward, not something owed, comes first. From there, mix it up. Keeping employee rewards dynamic keeps them interesting and appealing.

Ready to begin building a more rewarding rewards program? Send a survey to ask employees what they want, and get inspired by some of our most popular, meaningful reward ideas.

Tangible vs. experiential rewards FAQ

Which rewards have a better ROI, tangible or experiential?

Experiential rewards often have higher perceived value and can build culture more effectively. Tangible rewards offer easier fulfillment and instant gratification.

The best way to maximize ROI from both is to mix them. Do experiences quarterly or annually, and small tangibles on the spot.

How much should tangible rewards cost?

It’ll vary by frequency or purpose, but aim for meaning or usefulness over dollar value. On-the-spot rewards are often less than $50.

What’s the biggest mistake with experiential rewards?

Making experiential rewards generic or inflexible is the biggest issue. For instance, a company tells an employee that they’re rewarding them with a round of golf at a fancy club at 8 am this Sunday. The employee in question doesn’t golf and isn’t available on Sunday. This doesn't feel rewarding, and “it’s the thought that counts” probably won’t apply either.

Which reward type is better for remote teams?

Both have the desired effects on remote employees. So tangible rewards like gift cards and food delivery are a slam dunk. If offering experiential rewards, don’t make them all parties or events at the company’s home base. This can tank morale in remote employees who can’t reasonably attend.