Are Employee Service Awards really necessary today?

What do you do when you don't have employees staying long enough for service awards?
What do you do when you don’t have employees staying long enough for service awards?

I was reading an article that gave examples of tax exempt benefits that your employees really want. One of these was recognition awards, including longevity awards for years of service. My first thought on reading this was “Really?”

Survey says

The article I was reading was in the online version of MySanAntonio. The author said “only half of the U.S. workforce report feeling valued by their employers” according to a 2014 survey by the American Psychological Association. He further referenced a study by SHRM and Globoforce that said “90 percent of HR professionals surveyed said recognition programs positively impacted engagement.” So I did some further research on the SHRM/Globoforce survey and came across the statement that “Years of service (YOS) programs are still widely practiced in today’s organizations, according to results of the 2015 SHRM/Globoforce Employee Recognition Survey, with 74 percent of companies reporting they have a service anniversary program.” The survey further said:

While the prevailing wisdom is that companies implement service awards to drive retention and loyalty, our survey responses indicate a different story. By far the top objective for YOS programs is to appreciate employees (88 percent.) This was followed by ambitions to increase employee satisfaction or happiness (73 percent), renew emotional commitment to the organization (69 percent) and to raise engagement levels (68 percent.) Interestingly, reduction of turnover was #9 on the list, with only 45 percent of companies pursuing this as a top objective.

What is the impact?

Looking at the results provides us with a mixed bag, they include:

  • 21% thought it makes employees feel valued
  • 16% thought it contributed positively to the culture
  • 16% thought the employees liked it
  • 12% thought it increased employee engagement
  • 10% thought it provided a satisfactory ROI
  • Only 8% thought it increased employee retention

Not exactly a ringing endorsement! Who would stay just for a service award?

Flying in the face of current trends

The reason I looked at this to begin with is that to my way of thinking service awards fly in the face of two current trends. According to the Bureau of Labor Statistics the average job tenure in the United States in 2014 is 4.6 years. Only about 29% of workers have job tenure of 10 years or more. According to the BLS:

Median employee tenure was generally higher among older workers than younger ones. For example, the median tenure of workers ages 55 to 64 (10.4 years) was more than three times that of workers ages 25 to 34 years (3.0 years). A larger proportion of older workers than younger workers had 10 years or more of tenure. Among workers ages 60 to 64, 58 percent were employed for at least 10 years with their current employer in January 2014, compared with only 12 percent of those ages 30 to 34.”

The second trend is the movement toward the “gig” economy. There is a desire for flexibility in some current workers that is not tying them to any one employer. As a result time in the job is not a factor. People are just not staying with employers beyond a few years, in order to get a job experience, and then they move on.
As a result having a reward program that rewards someone for the time they spend in a job is not going to be money, time or effort well spent. To paraphrase a car commercial “This is not your father’s company.”

3 thoughts on “Are Employee Service Awards really necessary today?”

  1. Seems I tend to take the opposite view from you more often than not.
    1. Service anniversaries are designed to say thank you – not extend tenure. No different than celebrating anniversaries in marriage are events that punctuate history not guarantees for the future. The problem starts when companies think doing them drives longevity. It doesn’t. It is another data point in the employees data base when crafting their view of the “humaness” of the company and whether they feel valued. Ultimately, it may influence tenure – but it is not a direct causal relationship.
    2. Only saying thank you because someone stays more than 3, or 4, or even 5 years is the wrong way to look at service anniversaries. Celebrating tenure should be part of an overall employee engagement strategy that thanks employees for contributions that aren’t simply temporal – but when they get promoted, when they get certified. Right now service anniversary programs are a one trick pony typically designed to take advantage of the way tax law is written and it really should be part of bigger engagement strategy.
    3. Why would it ever makes sense to not say thank you to the 30% that do stay (from your stats). That kind of recognition would reinforce the value the company places on loyalty and possibly impact others.
    4. Everyone wants to know that showing up is valued and respected. Taking away yet another way for companies to do that may just ensure they won’t stay.

    • Paul:
      First let me thank you for reading the post and making such a thoughtful comment. I agree with some of what you say. Companies should say thank you to their employees, even to the ones that just stay a year as long as they have made a contribution. You said “Right now service anniversary programs are a one trick pony typically designed to take advantage of the way tax law is written and it really should be part of bigger engagement strategy.” They should be bigger. Service awards to me are kind of like participation certificates. I was never really motivated by the ones I got, well actually the one I got. To me they are awards for being able to not get fired. They don’t mean you were a great employee, they just mean you were good enough not to get fired. I would rather have someone reward me with something that recognizes my contribution and not the fact that I was a place marker.
      Just so you know I am not against giving someone a service award, but I think too much stock is put in to those programs with hopes they will drive bigger things.

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