Why wait 5 years?

When we hear "years of service" we think of grandfather clocks and crystal vases. Perhaps that worked in the past but not with the new generation of employee that has entered the workplace. And, companies using the recession to drop award programs may want to rethink that decision.

{mosimage}We are now in a knowledge-based economy where innovation and information give organizations a competitive edge. This knowledge-based economy has given rise to the knowledge-based worker, who can be characterized as diverse, creative, and one who no longer stays with one company their entire career.

In fact, in 2008, the average employee tenure was 4.1 years and statistics reveal that the typical Generation Y member – those born between 1978 and 2000, will have 10 jobs by the age of 38 and stay an average of 1.5 years with their employer (Source: U.S. Department of Labor’s Bureau of Labor Statistics). Generation Y employees will represent 40 per cent of the workforce in five years.

Unfortunately, despite the changes in the working world, in the workforce, and in most other human resources practice, service awards programs are something that have remained virtually unchanged, says Razor Suleman, CEO and founder of I Love Rewards (www.iloverewards.com). Most companies still wait to reward and recognize at the standard intervals – 5, 10, 15, 20 years.

But, companies who wait risk losing their top talent and miss the opportunity to engage their employees, particularly those Generation Y employees who have grown up to expect easy recognition. Too many companies offer “too little too late” in terms of rewards and recognition!

Not only can antiquated service and recognition programs cost companies employees by failing to recognize achievements fast enough, it may cost them potential employees as well, says Suleman. He suggests that many top performers will look at an antiquated recognition program and wonder what else in the company is equally as outdated or ineffective.

Tough economy not an excuse to dump recognition programs
Suleman notes that while some companies have dispensed with their service award programs with the economic downturn over the past year, he has found, that many more have not only continued their programs, but have developed some novel approaches.

{mosimage}Among the trends, Suleman points to the following in particular:

  • Companies are offering awards with increasing frequency. Instead of waiting for five years of service, many companies are starting to realize that a first year of completed service deserves recognition as well. One company, a large brewery gifts its first-anniversary employees with a beer stein, complete with a toast and a speech, to celebrate the anniversary.
  • Giving praise and recognition every week, or even every day. This doesn’t necessarily mean employees receive a gift every time – it means their accomplishments are recognized and commented on, and made public, if the employee is comfortable with public praise. One consulting firm has a program that recognizes an employee every time he or she does something that embodies one of the firm’s core values.
  • Peer-to-peer recognition. At I Love Rewards (the team is pictured above), peers can recognize when a co-worker makes a contribution or reinforces company values  by awarding 500 points. Each point is only worth a cent (so 500 points equals $5), but these points can be accumulated and added to other reward points, which are then subsequently redeemed on something the employee chooses.
  • Still recognizing the traditional milestones. However, now there are options that allow employees to decide what types of recognition, or gift items, they receive.

Suleman notes that Gen Yers have grown up in affluent times, conditioned by their parents and society to be rewarded, often merely for participating rather than performing. Now entering the workforce, however, this new generation is quickly learning the need to perform, but still look to tangible rewards, such as praise and gift items, to confirm that performance.

3 steps to transform traditional years of service awards in 2010
How can organizations tailor years of service award programs to needs of business and employees of today? Transform them with the following three best practices. Offer employees the rewards and recognition that inspire innovation and strengthen employee alignment in the organization.

1. Focus on the recognition first, then the reward – Most companies spend a large portion of their human resource budget on years of service programs because they want the reward to be valuable and well-received. What companies need to realize is that it’s not the amount of money that is spent but the recognition the employee receives. Recognition is what makes people feel valued, and an employee who feels valued is more likely to be motivated and become engaged.

2. Offer rewards that make an impact – Just like recognition should be personal, so should the reward. There are many options available today that allow employees to choose their own rewards. One option is moving to a points-based currency where employees are awarded points and can redeem their points for items of their choice.

Popular employee rewards include the latest and greatest in personal electronics such as iPods or iPhones, experiential rewards for adventurous seekers and the ability to donate the monetary value of their reward to the charity of their choice. The benefit to providing choice,  is that employees feel their employer is empowering them to choose the reward that best fits their individual lifestyle and needs.

3. Automate the system – The two most common pains associated with organizing traditional years of service awards are the heavy administration and the many reward redemption headaches. Traditional years of service programs are painfully slow to process and involve a great deal of manual work. Look for a system that will handle the painful administrative aspects for you – and make the program rewarding for HR as well.
The future of years of service awards is here. Tailoring the program to your organization and the needs of your employees will help you build a culture of recognition, not a culture of entitlement in your workplace.

For more ideas on service awards, visit www.iloverewards.com/solutions/celebrate-years-of-service/.

Sarah-Beth Anders is the PR coordinator with I Love Rewards. I Love Rewards is the leader in results-driven rewards and recognition solutions.