Feature Article - April/May 2020

Recognizing Loyalty & Service

The Value of Service Awards Remains Strong

By Rick Dandes


When & Why

"Generally, employees from younger generations don't care as much about symbolic items like old-school logo watches and clocks and prefer their choice of useful gifts or experiences, such as concert tickets or getaways," Ozer said. "A significant change in the industry is that companies that offer multiple types of incentive programs are more commonly giving employees award points they can accumulate with earnings from the other programs to redeem for more valuable gifts."

Recognition for length of service includes not only recognition for service anniversaries, but also onboarding, retirement and other career milestones, Gelinas added. "At our company, we find that clients are caring more and more about early recognition, during the pre-boarding and onboarding phases, to cement that emotional connection to the organization."

This is no surprise when unemployment is at a historic low and leaders struggle to find and keep their talent. "But job seekers are also voicing the importance of recognition, appreciation and respect early on," Gelinas noted. According to a 2019 report on the role of recognition in talent acquisition, " job seekers indicated that feeling recognized, appreciated, and respected is the No. 1 reason why they accept job offers, and a lack thereof is the No. 1 reason why they reject job offers."

Effective Awards

"Many organizations," Gelinas said, "make the mistake of only recognizing employees for the major milestones like five, 10, 15 or 20-plus years of service, which remove the tax burden for both employees and employers. Instead, organizations should celebrate all milestones, even if each milestone doesn't come with a symbolic award or logoed item throughout the career experience from pre-hire to retirement."

Ozer explained that most companies budget $25 to $50 for five-year awards and then max out at approximately $500 for 25-year awards.

"But new research from The Culture Works, a leading engagement assessment and training company, shows that younger employees care more about receiving tangible gifts than older employees do, because they are in the accumulative years," Ozer said. "Older employees are in the decluttering years and care more about genuine appreciation."

So, contrary to the traditional budgeting norms, it seems to make more sense that companies should budget relatively more per year for the earlier years and less over time.

Service award structures have not changed significantly over the years, noted Emily Gatton, head of solutions, Engage2Excel. "Most companies," she said, "still prefer to offer a selection of quality, heirloom, symbolically oriented, logoed products. This is used as a strategic element by leveraging the value of your corporate identity and directly linking the logoed award with the recognition experience.

"That's why service award programs often have such a strong sentimental attachment for employees," Gatton added. "These awards can never be earned. They are initiated by the company and are granted to employees as tokens of appreciation, symbols of gratitude, and recognition for all that they are to the company."

The awards have to be different, said Shea, of Links Unlimited. "Maybe Apple watches for the youngest workers, while older ones might want an older watch with a brand name that is not so tech-driven. The most wanted perk is still technology such as Amazon Alexa or Google Home, but also experiences. Outside of that, home appliances," she said.

In addition to symbolic items that are presented as part of a service award presentation (at a banquet, town hall or team meeting, for example), Gatton said, many employers give employees access to a catalog of items (with various levels, based on the milestone) to give employees choice in selecting an item in such categories as electronics, at home, everyday, and do-it-yourself (DIY). "Tangible items, digital assets like eCards, images and videos are modern tools for employees and managers to celebrate an individual's loyalty," she said. "Engage2Excel has created a product called Sociables to create a social experience around an employee's anniversary or other work/life milestones like retirement and birthdays."

Will Service Awards Always Be Relevant?

"Employers will always need long-term productive employees," Ozer said, "and people will always need recognition and appreciation, which are powerful motivators. According to self-determination theory, the leading and most proven theory of human motivation, people need mastery, autonomy and relatedness at work, and service awards reinforce all three of these areas."

Certainly, workforce demographics are changing and we're seeing more of a contingent workforce composed of independent contractors and gig workers, Gelinas said. "However, the traditional employee-employer relationship isn't disappearing anytime soon, and so organizations will continue to have a need to hire and retain their talent."

Service awards, Gelinas said, when done well, have an opportunity to positively affect the career experience and contribute to greater loyalty, which has an ROI for the organization. Furthermore, service award presentations present a powerful opportunity to customize the experience to the individual and truly celebrate the person at a time when people appreciate personalized experiences as consumers. Lastly, service awards provide organizations with the ability to appreciate everyone versus recognition tools that recognize and reward a subset of the population for achievements and behaviors.