Web Exclusive - January/February 2018

New Measures of Success

By Brian Summerfield

Milestone or years-of-service awards, which recognize long-term, steady individual employment at certain intervals (five years, 10 years, etc.), are unquestionably a 20th century concept. That doesn't mean that they have no place in the 21st century, but experts in the rewards and recognition space believe they'll have to change in order to stay relevant.

(For more on this, see "Celebrating the Milestones").

That will include changing the success metrics of these programs, particularly as organizations look to trim fat everywhere they can.

"Most companies still have service recognition programs, but I would also say that a lot of them are questioning the effectiveness of it," said Christina Zurek, incentives and recognition solutions manager at ITAGroup. "It's no secret that these have some of the lower returns on investment within recognition and rewards programs. And these days, everything's coming under scrutiny. As a result, there's been more of an emphasis on behavior-based or ongoing manager-to-peer or peer-to-peer recognition to replace some of those long-standing service award programs."

Traditionally, if milestone awards were measured at all, that was typically around things like varying levels of tenure or employee retention rates. And these programs still tend to show results in this respect. Michelle M. Smith, former vice president of marketing at rewards and recognition company O.C. Tanner, pointed to a recent global quantitative and qualitative study by The Cicero Group that looked at the impact of years-of-service programs. It found that celebrating career achievement is strongly correlated to increased tenure.

"Organizations that offer a career achievement program keep employees an average of two years longer than organizations that don't," said Smith, citing findings from the study. "It's clear that companies with milestone programs are achieving above-average employee tenure, while those without are falling behind."

Still, measuring tenure or employee retention alone can be a bit problematic. Jonathan McClellan, director of employee recognition at Hallmark Business Connections, pointed out that these programs could primarily be recognizing people who are either inherently loyal (and therefore would have stuck around anyway), or those who aren't inclined to put themselves back on the job market for reasons ranging from fear to complacency.

Also, as Zurek pointed out, great employees could have perfectly valid reasons for not sticking around. Let's say you have a top-notch contributor, but she leaves after a year or two because her child gets a serious disease or her husband's job requires relocation. Even if she didn't stay on for at least five years, she might have added a lot more value than many employees who did.

"The cost of turnover is exorbitant," Zurek explained. "That's why we're still seeing a lot of pull toward using turnover and retention rate to measure them. That's still a valid metric to look at, but I think there are other things that can be evaluated."

What else can be measured, then, to get a better sense of the impact of these programs? For one thing, McClellan recommended tracking tenure in a slightly different way: by taking into account the number of work anniversaries that could have and should have happened in that year (read: staff who weren't terminated or laid off), and then compare that to the actual amount. If there's a big disparity, try to figure out what's behind that.

Another thing to measure is employees' personal sense of pride at having reached the milestone as well as the accomplishments they've achieved along the way. "We should be seeing a great sense of pride after they've received this award," he said. "If we're not, maybe we're rubbing people the wrong way, or it isn't having the impact we intended it to have."

Finally, try to get an accurate impression of employees' future commitment to the company. This is best done a week or so after they've achieved the award, and in a non-intrusive way. McClellan said it can be as simple as a single question: "After reflecting on the last five years, how confident are you in the vision and direction of the organization, and your role in that?"

Whatever you choose to measure, it should ultimately reflect real and meaningful goals you have for years-of-service awards, and tie back to overall organizational success, McClellan said.

"Leaders and owners of these companies should spend time evaluating what they really hope to accomplish with this investment."