Feature Article - January/February 2018

Celebrating the Milestones

Do Years-of-Service Awards Still Matter in the 'Gig Economy'?

By Brian Summerfield

For a few years now, the phrase "new normal" has been applied time and again to describe the novel and unfamiliar state of economic affairs that followed the Great Recession. The term itself doesn't have any concrete definition. What it means can change depending on the context, which could range from health care to commercial banking.

However, when it's used in relation to today's American labor market, the new normal typically describes a situation in which employers and employees aren't as loyal to each other as they used to be. According to the 2016 figures from the United States Bureau of Labor Statistics, U.S. workers spend 4.2 years on average with their employers; that's down from 4.6 years in 2014. And many companies have started hiring more freelancers and contractors, many of whom could be at part-time hours or performing much (or all) of their work virtually. In this way, those organizations can cut costs in everything from employee benefits to physical overhead.

In simple terms, all this translates to more hourly, less salary; more job-hopping, less job security; more flex-time and less face-time. In fact, another new catchphrase was coined recently to describe it: the "gig economy." And at least in the near term, we're only going to see more of this: Predictive research from financial software company Intuit suggests that sometime between now and 2020, freelance and contract roles will account for more than 40 percent of all American jobs.

Clearly, this has major implications for all aspects of the working world, including rewards and recognition programs. Perhaps chief among them are the years-of-service or milestone awards, which celebrate the amount of time employees spend with their organizations, traditionally in five-year intervals—a practice that is, it should be pointed out, reinforced by Internal Revenue Service (IRS) tax codes.

But is traditional recognition of the five-, 10- or 25-year anniversary still relevant at a time when the average stint for American workers is just above four years, and likely to fall further?

"The simple answer is 'no,'" said Jonathan McClellan, director of employee recognition at Hallmark Business Connections, based in Minneapolis. "And by that I don't mean there's no place for them. It's just that the trend is moving away from milestone or anniversary awards in general, even in traditional business. It's being critiqued. What's the payoff going to be for the company in recognizing those less-frequent milestone events vs. everyday events? If the focus is on the work being done now, then that shift's going to continue to happen. And I've already seen it happening over the past 25 years."

If you do it the way you did it in years past, [younger generations] will find it degrading and condescending.

That's not to say it's all bad news for traditional years-of-service award programs. They remain strong in certain industries, and will likely remain so for a long time to come.

"There's still a place for them," said Christina Zurek, incentives and recognition solutions manager at ITAGroup, based in West Des Moines, Iowa. "You still have certain industries and certain types of positions where you tend to have much longer tenure. The automotive industry and manufacturing are two great examples of where we continue to see organizations that have those very long-term, established employees—and good service award programs, too, by extension. They recognize loyalty with meaningful awards and presentations. Those continue to be a very important part of their culture."

Still, "the wave of change is definitely coming" in the broader workforce, she added. Even so, everyone interviewed for this article agreed that year-of-service awards can not only survive, but possibly will become a valuable advantage for organizations, provided they're reexamined and updated for today's workforce. Here are four ways you can make these programs relevant and effective in the gig economy.

1. Treat Them Like Individuals

One aspect of years-of-service awards that's definitely got to go? The old "gold watch" mentality. This essentially means that all employees get the same prize when they reach certain milestones—e.g., the gold pocket watch, traditionally given at 25 years of continuous employment. This won't fly at all with the majority of today's workers.

"If you do it the way you did it in years past, [younger generations] will find it degrading and condescending," said Steve Damerow, CEO of Atlanta-based Incentive Solutions. "Tenure for the sake of tenure, and just giving them a gold watch, is seen as an insult. These people have grown up with iPhones. They've grown up with the immediacy of coupon codes and going to Amazon and using them right away. They could care less about a watch that you think is pretty. They want to have a choice from among thousands of items and pick their own watch, and then be able to share that choice with their peers."

"There's been a shift away from the traditional symbolic award—i.e., the gold pen, the watch or the 'desktop dust-able'—that standalone object that's been personalized and engraved," McClellan said. "That one symbol of achievement is meaning less to a younger generation of workers than it did to the generations working in the 1950s, 1960s and 1970s. That's creating more choice, and I think that's the right direction. It acknowledges that everybody's different, and everybody's motivated by different experiences and personal preferences. Tapping into that and allowing individuals to celebrate that achievement in their own way is key."

Also, any recognition related to milestones ideally will "tell the story" of all employees from their hire date to the present anniversary. That should involve sharing and celebrating their accomplishments, professional growth, and involvement in major projects and initiatives over that time span.

"If we're not connecting all of that, it's a tremendous lost opportunity to engage those employees and show appreciation for all their hard work and accomplishments," McClellan said. "I think the negative trend I've seen most often is that it's become this turnkey, operational solution that takes that message out of the equation."