Yule Time Tips, Part III: Holiday Gifts Under Increasing Scrutiny

During the holidays, many of us like to show our appreciation to clients by sending gifts or entertaining them with special dinners or other fun and festive celebrations of the season. But be careful. Corporate gift policies have become increasingly stringent about what, if anything, is permissible to receive or to give. Even a relatively modest gift sent with the best of intentions may violate a client’s gift policy and put your client in an awkward position or worse—inadvertently cause your client to violate his or her company’s code of conduct.

What’s the Problem With Spreading the Joy of the Season With a Gift?

A gift, particularly a lavish one, may be perceived as an attempt to improperly influence business decisions in favor of the giver. Corporate gift policies routinely prohibit such gifts. Employees should not be influenced in their business decisions by the nature and/or magnitude of gifts received by vendors or other business partners. Such gifts pose a conflict of interest to employees, and giving such gifts may violate their companies’ codes of conduct. For corporate gifts to pass scrutiny, they must be of a nature that is usual and customary in the industry and sent as a gesture of goodwill to build the business relationship. Such gifts also should be appropriate and not of a nature that public disclosure of the gift would embarrass the recipient or the company.

To avoid the problem altogether, some companies, albeit a minority, have a “no gift policy.” Rather than put their employees in a position to determine which gifts may be appropriate, they avoid the issue altogether by simply saying no to gifts. The advantage of such policies is that they impose a bright-line rule that avoids all errors in judgment.

Other companies strictly limit the value of such gifts. According to a 2013 survey conducted by SAI Global Compliance, 35 percent of companies require that corporate gifts be “modest”—defined as under $25. Another 22 percent of companies capped the value on permissible gifts at $50 or $100. Once again, imposing a restriction on the value of gifts provides recipient-employees with an easy bright-line test on which gifts are permissible.

The Timing of a Gift May Prove Problematic

Even with a long-standing client, if you are attempting to renew a contract or negotiate an increase in business, the timing of a gift may be perceived as an inappropriate attempt to influence the business decision in your favor. Companies should ensure to avoid such scenarios.

Corporate procurement officials, who have the responsibility for making purchasing decisions, are especially subject to restrictions on the receipt of gifts, to ensure that they act in the best interests of the company.

Gifts to Avoid

Many corporate gift policies prohibit gift cards or cash equivalents, trip and travel gifts, and other lavish forms of entertainment. Here, because the nature of the event renders the ticket exclusive, hard to get, or expensive, the ticket may be deemed an inappropriate attempt to influence business decisions.

Considerations for Companies That Do Not Place Strict Limits on the Value of Gifts

A majority of organizations—54 percent, according to the SAI Global Compliance Survey—do not impose strict limits on the value of gifts that their employees may receive. However, companies must be mindful of the value of a gift and the perceived influence of the gift on the recipient. What might be appropriate for a CEO (and not of such a value to influence his or her business decisions, given his or her income) may not be appropriate for a lower-level employee.

Although a majority of organizations do not have strict limits on the value of gifts that employees may receive, the SAI Global Compliance survey revealed that nearly three-quarters of companies require their employees to report on gifts that they have received. Such a policy promotes transparency and allows companies to review the nature and magnitude of gifts received—and, where appropriate, to reject such gifts or remove the recipient from participating in business decisions involving the giver.

Which Gifts are Typically “Safe”?

Flowers and food baskets to be shared with others in the business are widely acceptable. Additionally, promotional items of nominal value such as calendars, notepads, and pens, meant to further the business relationship are usually safe.

What to Do if You Are the Recipient of an Inappropriate Gift

You may politely decline a gift (and explain why you must decline it), and return the gift. If it would be awkward to decline the gift, you may turn it over to the audit department of your company for donation to a charity. This is especially useful if you receive a gift from a foreign client where tradition and culture place a high value on gift-giving and where it may be perceived as rude to reject a gift.

Reciprocal Entertainment Is Typically Encouraged

Many corporate gift policies encourage their employees to reciprocate in paying for entertainment expenses such as dinners or lunches with vendors or business partners, so as to prevent the notion that such expenditures may improperly influence business decisions. While you may like to pay for such entertainment expenses for your clients, allow them to reciprocate on occasion to avoid a problematic issue with their companies.

The Best Policy

To be safe about gift-giving, the best approach is to find out your clients’ policies on gifts and to be sure that you comply with such policies. This approach will prevent you from violating your clients’ gift policies and avoid placing your clients in the position of violating their gift policies—and possibly their codes of conduct. You never want to put your clients at risk.

When done right, a gift can go a long way in showing your appreciation for a client’s business and in creating good will in furtherance of the business relationship. A good rule of thumb is to make sure that it is always appropriate and intended as a simple business courtesy. Nothing more.

This is part three of our blog series on a variety of workplace issues that might emerge over the holidays. Part one of this series, “Yule Time Tips, Part I: Gifts That Keep on Giving—Holiday Gifts for Colleagues,” offered tips on appropriate workplace gift-giving over the holidays. Part two, “Yule Time Tips, Part II: Knowing the Difference Between Religious Assumptions and Religious Accommodations,” discusses how to handle religious accommodations around the holidays in addition to conflicts between employees’ religious beliefs and work rules.