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How to set up an employee service award program

01 Jun, 2020 Employee recognition

Recognizing employees is the simplest way to improve morale” is the title of a 2016 article in the Harvard Business Review by business founder David Novak. This title as a statement says it all. Awards for an employee’s years of service are an integral part of an employee recognition program. The statement is reinforced by extensive research which points to the fact that you should ensure your organization has an effective employee service award program in place.

Service awards are an integral component of employee recognition, and the introduction of a service award program is a powerful way to recognize employees for loyal service. Employees appreciate some sort of recognition for their work achievements, including years of service.

Some managers question why people should be recognized for simply coming to work, and they give little recognition when their employees reach milestones of service. But more enlightened managers understand that being on the workforce for years is a major investment in their life. And service recognition is easy to do. Years of service award programs improve employee retention. Employees stay at organizations for 2-4 years longer when their company has an effective years of service program, according to OC Tanner surveys.

Employee retention volatile

Results from a poll conducted in November 2020 and published in an article by the US Society of HR Management (SHRM) in March 2021, revealed that 57% of US employees said they were burnt out. Both Millennials and women reported higher levels of burnout, as did employees with kids remote learning at home. Leaving is often viewed as the best option for employees to address burnout. And when the economy and labor markets get healthier, some employees may feel they have no other choice. Employee service awards help to increase job satisfaction and employee retention.

Employers obviously prefer competent workers to stay. Apart from disruption to team output, a departing employee costs the organization significant dollars to replace. The cost of turnover is estimated to be about 30%-50% of the annual salary of entry-level employees, 150% of middle-level employees, and up to 400% for specialized, high-level employees. Add in the non-quantifiable, but equally critical, loss of industry and client knowledge and experience, it is quite understandable that employers are highly motivated to keep valued employees. Nevertheless, not all employers are across this:

Universally, employee surveys show that employees want more recognition. The State branch of a billion-dollar engineering company, where I completed a short-term internal consulting contract a few years ago, was no exception. The national employee survey found that only 34% of employees were satisfied with the recognition they received for the performance in their current job.

The company quite often fell short on making employees feel special. For example, a senior executive received his 15-year service pin in the internal mail because he hadn’t attended the annual Christmas party during which such pins are traditionally presented. Do you think this was a sore point with him? Two years after receiving the award, he still hadn’t bothered to open the little presentation box containing the pin!

Benefits of an employee service award program

Research conclusively finds that celebrating an employee’s years of service achievement as an effective strategy with several main benefits:

  1. Celebrating years of service increases stability of the workforce

A global quantitative and qualitative study by The Cicero Group, looked at the impact of years of service programs and found that celebrating career achievement is strongly correlated to increased tenure. In fact, organizations that offer a career achievement program keep employees an average of two years longer than organizations that don’t. If the program is perceived to be effective, employees plan to stay at their current employer for an additional two years on top of that.

  1. Celebrating career achievement actively improves key employee engagement metrics

81% of employees feel career celebrations help them feel appreciated for their work. Specifically, communicating that your company cares about its employees and helping employees feel they fit in and belong. And all of these results were found to be true globally and cross-generationally.

  1. Reinforce your culture and deepen employee commitment

Celebrating career milestones provide unique opportunities to teach and reinforce what matters most in the organization. During the service award presentation, a clear connection is made between individual employees and company brand values, and training managers to connect employees’ actions to organizational goals can help create the meaning your employees’ are seeking in their work.

The connection gives your employees a purpose; making them part of the bigger organizational vision. This communication assures employees they have an active role in the organization’s success.

Managers’ roles are also enhanced, because they take the time to consider the service and contribution of every employee—when they ordinarily might not have done so.

  1. Opportunities for connection and inspiration

Working with many clients, I’ve seen how celebrating careers at key milestone years is a unique, one-of-a-kind opportunity to focus on an individual. It showcases an employee’s entire history of contributions, not just one single event or annual result. It provides opportunities for leaders to connect with their employees, enabling them to be exposed to new talent. And, it creates moments that inspire peers to grow their own contributions to the company. How ideal is that?

Most organizations run a program to recognize their employees for their years of service, but most organizations could communicate much better about their program to achieve more effective results.

In the old days, a 25-year watch was the traditional and only recognition of significant length of service. People move on far more frequently these days, and should be recognized for serving shorter periods of time.

Some may believe that recognizing employees for their time served only emphasizes quantity rather than quality – the chair warmers rather than the achievers. However, the fact is that any significant length of service represents a major investment by an employee from their life. This choice of investment is something to be valued, especially when there is a comparatively high employee ‘churn’ (and cost of turnover) these days compared with the past.

Service awards are traditionally an HR-initiated activity. But if HR are slow to act, the PR branch could easily set them up, as I did. If you read my articles and my ebook on how to set up an employee service award program, you will find this activity heartwarming. As these programs have a high communication component, they are an area for the public relations branch to play a significant role.

In addition to gifts of a tangible value, many other acts of recognition can be accorded to employees for length of service. Some of these are outlined in the list below, which is the actual list used by the engineering company in its employee service recognition program. This type of list should be communicated to all employees so that they readily understand and expect certain actions to recognize their service milestones. The list is shown below as a helpful guide.

Most of these acts are low cost or no cost. The sheer act of recognition itself often has the most impact – the fact that the employer has remembered and has acted to celebrate the employee’s length of service.

A typical employee service recognition program used to involve actions to mark every 5 years of service. It’s a bit pointless to recognize only the later years of service such as 20, 25 or 30 years, because so few employees reach those milestones. Most move on before reaching those milestones. But employment tends to be much more uncertain these days, especially due to pandemic issues, and younger employees move on much faster. Therefore it is wise to mark every completed year of service.

Typical actions in a program could include something like the following, incorporating awards from the first year of service:

Gift ideas for an employee service award program

Company swag or a restaurant gift card for completing 1 year of service. “Company swag” comprises promotional productsthe promotional items that you hand out that are decorated with your company branding.

Gift of tech or homeware for 2 years of service

Gift of digital tool or equivalent for 3 years of service

Gift of basket of specialty items or a unique local experience for 4 years of service

  • Gift of iPad or similar for 5 years of service
    Gift to value of $1,000 for 10 years of service
    Gift to value of $2,000 for 15 years of service
    Gift voucher to the value of $2,500-$3,000 for 20 years and 25 years of service
    Gift voucher to the value of $5,000 for 30 years of service

Other recognition for each milestone

  • Letter, certificate and presentation from regional manager
  • Letter from CEO and presentation if available
  • Listing in newsletter
  • Note in intranet
  • Article in newsletter
  • Organizational Facebook post
  • Twitter message
  • Morning tea and informal presentation
  • Dinner with colleagues or family
  • Honor Board/Hall of Fame
  • End-of-year presentation + certificate
  • Long service pins (ruby, emerald etc)
  • Etc

The problem of retrospectivity

When establishing a service award program, the problem of what to do about past milestones always occurs. There has to be a date set as an arbitrary starting point for the program. But what should be done about people who have passed previous milestones without any recognition?

To be fair to all, a starting date should be set for a service award program. Any people who have reached milestones before this date should be recognized in a low-key way for the most recent milestone. Anyone who is due to reach a milestone in the current year should not receive retrospective recognition for previous milestones because their award this year will supersede any previous milestones. Due to the increased number of people these days who move on quickly after starting a new job, the cost of recognizing people for past service is not as high as you might think.

Measurement

Most organizations conduct an annual staff survey. You can ensure employee recognition is included, with a question such as “How satisfied are you with the recognition you receive for performance in your current job?” and “How satisfied are you with the recognition you receive for years of service in your current job?” If you are able to include open-ended questions, you can ask for suggestion on various aspects. But ensure they are significant questions, that they are “need to know” rather than just “nice to know” questions. The survey results will be a valuable guide to the extent to which employees respond to the service awards and later recognition initiatives. This year’s survey result will form the benchmark figure for employee recognition.

There are many ways to communicate about positive initiatives like these. Read about some of these in my article, “Communicate to encourage employee recognition.”

Recognizing remote employees for years of service. I will be writing an article shortly on this topic, which has become very topical.

If you enjoyed this article, we recommend this book

Employee Recognition: The secret to great team performance Employee Recognition: The secret to great team performance

About Kim Harrison – author, editor and content curator

Kim Harrison, Founder and Principal of Cutting Edge PR, loves sharing actionable ideas and information about professional communication and business management. He has wide experience as a corporate affairs manager, consultant, author, lecturer, and CEO of a non-profit organization. Kim is a Fellow and former national board member of the Public Relations Institute of Australia, and he ran his State’s professional development program for 7 years, helping many practitioners to strengthen their communication skills. People from 115 countries benefit from the practical knowledge shared in his monthly newsletter and in his books available from cuttingedgepr.com.

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