Recognizing Loyalty & Service
The Value of Service Awards Remains Strong
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.
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."
"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.
Points of Concern
The problem of not acknowledging employees' career milestones in a personable and meaningful way appears to be on the increase, said Roy Saunderson, chief learning officer, Engage2Excel. "When employees do not feel valued, honored or celebrated by their managers for their career service, managers are jeopardizing that employee's engagement, level of motivation on the job and the employee's ongoing loyalty toward the company," he said.
By not acknowledging an employee on their anniversary date, Saunderson explained, you are showing a lack of respect. You are actually dishonoring them and their years of service. If you don't say anything or do anything, then employees might feel their years of contribution have not been valued.
"I can also guarantee the company will receive tons of negative word-of-mouth publicity," Saunderson said. "Each employee shares their disdain and disgust for the company they've given their time and effort to because of the lack of personal recognition. This means employees will not recommend your organization to work for to their family and friends if you failed to acknowledge their milestone properly."
Employees just want to be acknowledged.
"Staying with a company is a big deal these days," Saunderson said. "For those employees who like the public recognition, plan a get-together as a larger team or department. Whether you have cake and ice cream or not, the act of honoring and celebrating career milestones is the real icing on the cake. A manager could even take the employee out for lunch accompanied by some of their peers."
For employees reaching 15, 20 or more years of service, "all many employees want is the opportunity to connect and reminisce together with others who started work at the same time," Saunderson said. At a bare minimum, stop and take a small amount of time out of the workday to simply say, "Thank you!"
Highlight the important role managers have with milestone recognition. Invite senior leaders to set the expectation for managers to consistently recognize service anniversaries the right way.
Far too often, Saunderson said, "I've seen a lack of human connection. There was no acknowledgment by their manager of the years of contribution employees had made. Employees did not feel valued or celebrated. Interestingly enough, most employees stated that because their manager or supervisor did not even mention their milestone on their anniversary date, they did not feel recognized by the company either."
Get Managers On Board
With career milestones or service anniversary recognition, a senior leader must commission your managers with the assignment of representing the company, Saunderson advised. "They must be held accountable to that leader for representing the company well with acknowledging each and every employee's milestone."
Supervisors and managers can no longer think, "Well, they received their gift in the mail, there's nothing more for me to do." You might need to find out how managers currently view career milestones and see what you can do to address any negative attitudes.
Managers serve as the spokesperson for the company when they recognize service milestones, Saunderson said. "They must carefully plan what they are going to say. Give them speaking pointers and guides to assist them. Solicit what senior leaders would convey if they were unable to be present. Show the manager how to best represent their leaders and the company. Provide online video tutorials and digital downloads to teach and help them."
All managers need to do, he continued, is acknowledge employees for their years of service and highlight the employees' positive actions. In this role of recognizing career milestones, you're no longer speaking for yourself. You are actually representing the company and all that this means to the employee.
Show managers the open-ended responses from surveys to show how employees feel, Saunderson said. "Capture employee feedback about what managers do right or wrong regarding career milestone recognition on video. Use these tools to educate managers on the negative and positive impact of service anniversary recognition done poorly or given the right way."
Have managers make career milestone acknowledgment a priority. Expect them to schedule it into their calendars. Tell them to make the time to walk down the hallway and congratulate an employee. If that is not possible, then videoconference or record a video and send employees your greetings and congratulations on their special day. Others may consider sending a very personalized letter prior to the anniversary capturing some memories or noted contributions from over time.
The bottom line, Saunderson noted, is to thank each employee for their service and celebrate them in a way that respects their needs and wishes.