Feature Article - April/May 2020

Recognizing Loyalty & Service

The Value of Service Awards Remains Strong

By Rick Dandes

Although service awards in one form or another have existed for decades, they remain one of the most effective and important programs in the incentive industry.

"Service awards are designed to recognize and reward the long service and dedication of employees to their company," said Ira Ozer, president and CEO, Engagement Partners, Chappaqua, N.Y. "The business objective of these awards is to improve retention of valued employees, keep institutional knowledge and productivity, and encourage all employees to be similarly loyal."

In general, Ozer contends, "service awards are given at five-year intervals, starting after the first five years with the company, then 10, 15, 20 and so forth. The reward given most commonly is a preselected "trophy value" item, such as a watch with the company logo or the recipient's choice of merchandise items from a "plateau" catalog.

Service awards are an example of a "formal" recognition program, Ozer said, as defined by Recognition Professionals International (RPI), "since they have defined rules, guaranteed recipients and a presentation ceremony, often with a plaque or certificate and ideally in front of peers."

Service awards are the only type of incentive program, with the exception of qualified safety programs, that are tax-exempt to the company and the recipients, Ozer noted.

A Historical Perspective

"In North America, modern recognition and rewards companies first formed in the late 1800s," said Jeff Gelinas, vice president, product and people, Engage2 Excel Group, Statesville, N.C. Gelinas offered his own company as an example. Engage2Excel first started as a jewelry manufacturer called the Robbins Company in Attleboro, Mass., in 1892 and was a leader in symbolic and emblematic awards that paved the way for today's service awards, he said.

Some company historians, Gelinas explained, talk about how service awards really gained traction during the Great Depression, when jewelers couldn't sell watches and instead decided to give the inventory to employees as a token of appreciation for their dedication. Others talked about the 1920s and '30s, when it was common for U.S. Army service members to spend their careers without receiving any medals. With the onset of World War II, the Army started producing awards in the forms of medals for service milestones. This continued into the 1950s and 1960s.

Following WWII, you also had jewelers and medal manufacturers tailoring their craft to make emblematic jewelry (1940s) and then awards, plaques and trophies in the 1950s, Gelinas said. "Later in the 1970s and 1980s, you started to see employees looking for more choices as they began requesting lifestyle and electronic gift items that chartered a new path for the recognition and rewards industry.

"Over the years, service awards have become a staple of total recognition and rewards programs and are quite ubiquitous today," Gelinas said, adding that according to a report from his company, "a majority of companies in the United States have a formal length of service program, prevalent in 90% of 'best practices' organizations and 76% of all other organizations."

To understand their significance, Gelinas added, "it's important to explain the difference between award versus reward. Unlike a reward, which is often earned for achievements, service awards are initiated by the company and given to employees as symbols of appreciation and gratitude and as recognition for all they contribute to the company as individuals."

Do Such Awards Have Value?

Yes, Ozer said, "although employees are no longer given 'jobs for life' as previous generations enjoyed, and as such, tend to change employers and even careers every two to five years, people still value service awards."

In fact, Ozer said, in employee engagement surveys, lack of recognition and appreciation are cited as the most common complaints. Conclusion: Having a culture of recognition is a significant lever of engagement.

Although service awards in one form or another have existed for decades, they remain one of the most effective and important programs in the incentive industry.

Megan Shea, director of loyalty for Links Unlimited in Cincinnati, Ohio, is even more emphatic. She believes service awards are "more valuable or relevant today, compared to the past, due to more frequent turnover with personnel these days. They can help with employment engagement and strengthening retention."

A resounding "yes," is how Gelinas responded to the question of value. "Our research indicators found that organizations with formal length of service programs enjoy engagement scores that are 25 points higher. In addition, 74% of all employees believe service awards help employees feel valued and improve engagement. Furthermore, 80% of 25- to 34-year-olds believe service awards are effective and make people feel valued, debunking a myth that younger people don't value service awards.

"Our global research has also revealed that service awards are strongly correlated with increased tenure," Gelinas said. "Companies offering a service award program maintain employees an average of two to four years longer than companies without a program. We also found that effectiveness really matters. For example, we found that employees with a service award program rated 0 to 7 on a 10-point scale stay, on average, two years longer than employees with no program. But when the service award program is rated 8 to 10 on a 10-point scale, employees stay, on average, four years longer than employees with no program."

The true personal impact of any recognition solution, Gelinas continued, is in the human, emotional experience delivered by managers and leaders to recipients in communicating value, appreciation and acknowledgment of who they are, not just what they contribute. Therefore, the key is for all people managers to understand the "why" of recognition and the "how" of delivering it with authenticity and genuine appreciation.