Rethink Recognition & Rewards: Why Service Awards Don’t Work Alone

Rethink Recognition & Rewards: Why Service Awards Don’t Work Alone

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Why is a solid Recognition & Rewards solution better than a Service Awards program? Let’s get down to brass tacks: 81% of US companies offer Years of Service (YOS) awards to their employees to celebrate major tenure milestones. Yet when those employees were asked if those awards motivated them to do better at their jobs, only 14% said yes.

“Houston, we have a recognition problem.”

Employee service awards are a traditional mainstay of human resources programs. But the workplace — and the needs and expectations of workers in it — has evolved dramatically over the past decades. Yet service awards haven’t. Now, companies are pouring money into an outdated form of recognition with little to no positive effect on employee engagement, or their bottom line.

We’ll break down what service awards are designed to accomplish, what they get wrong, and how to fix it.

What are Years of Service awards?

Years of Service awards, also known as milestone awards, recognize employees’ service anniversaries. They’re typically awarded annually or in 5-year increments, and reward employees for their loyalty to an organization. (Service awards also frequently cover safety, teamwork, or sales.)

Historically, YOS awards have been an automatic company benefit. As is the nature of most automated programs, they tend to be impersonal. This is a hugely missed opportunity to drive employee motivation. According to World at Work’s Trends in Employee Recognition report, the majority of service awards are presented en masse at large company meetings. And the rewards themselves aren’t any better: 80% are a simple certificate or plaque.

80% of service awards are a simple certificate or plaque.

Observing service milestones and important work anniversaries can absolutely instill a sense of belonging and pride! Unfortunately, they usually miss the mark. 

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Why don’t Years of Service awards work alone?

Recognition matters. And not just on 1-, 5-, or 10-year anniversaries — it matters every day.

In fact, recognition is so critical to employee engagement that nearly 80% of employees who leave their job say they did so because their employer failed to express appreciation.

Here are the ways service awards miss the mark when it comes to giving great employee recognition.

Service awards are based on an outdated model of work

Traditionally, the first big YOS award came at 5 years. That worked well for 20th-century employees who remained loyal to companies for decades. However, the U.S. Bureau of Labor Statistics cites that today’s average tenure for American workers is only 4.1 years.

So if YOS awards are the heart of your company’s recognition program, most of your employees will never qualify. Which, as we explained above, actually encourages employees to leave your company. That’s the sign of a loyalty program that doesn’t just miss the mark, but actually has the opposite effect.

Service awards are only given once a year (or less)

Timeliness is critical to good recognition. This isn’t just good manners — it’s rooted in behavioral psychology.

Here’s a quick breakdown from a psychological perspective. Thanks to recency bias, any activity or behavior loses significance with the passage of time. This is why it’s important to celebrate recognition-worthy behaviors while the win feels fresh and relevant. Unfortunately, years of service awards by design are given no more than once per year. This means the link between the desired behavior (loyalty) and the reward is weak.

The tl;dr: From a timeliness perspective, YOS awards are critically ineffective at reinforcing the behavior you’d like to drive. Which means your company isn’t getting any bang for its YOS award bucks.

Service awards aren’t personal — and therefore, less meaningful

Want to make an impact? Make awards personal. In fact, a study by Alight Solutions found that employees who feel their rewards meet their needs are 7 times more likely to be engaged with work compared to employees who don’t feel that way.

So if your company is still issuing physical awards or plaques to employees annually at large meetings, you’re driving a mere fraction of the employee engagement you ought to be. This is a missed opportunity — correct it with a strategic Recognition & Rewards program.

Service awards are not tied to performance — and therefore, don’t drive performance

Let’s take a step back and give your Recognition & Rewards program a hard think. What’s its purpose? If you want to reward employees for behaviors that are good for them and for your company, basic motivational science says: Recognize and reward those behaviors.

When awards are tied solely to years of service, there’s a disconnect between employees’ input, and your company’s desired output. Reward the behaviors that count, not just loyalty. (Then you can end up in the unenviable position of rewarding employees just for sticking around — even if they aren’t performing especially well.)

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5 ways robust Recognition & Rewards fill the service award gap

We understand, it looks bad. We’ve just given you a laundry list of ways years of service awards fall down on the job. But — to sling two clichés at you in quick succession — it ain’t over ’til it’s over, and nobody’s throwing the baby out with the bath water. Service awards can work: as a single piece of a larger employee Recognition & Rewards strategy.

What does this mean for your organization? It means if you currently do service awards, congratulations you’ve got one piece of your overall employee Recognition & Rewards program in place. But as we noted above, service awards just can’t do it alone. To actually foster company culture, motivate employees to impact your company’s goals, and support employee engagement? You need a year-round, real-time Recognition & Rewards program that celebrates success from all directions.

Not convinced? Here are 5 ways a robust Recognition & Rewards program fills the motivation gaps left by YOS awards:

1. Use Recognition & Rewards drive the behaviors that matter

A primary difference between standard service awards versus a comprehensive Recognition & Rewards strategy is in the ability to reward and even incentivize a wide range of behaviors. Traditional service awards usually recognize things like organizational safety and employee retention. But a modern reward system works to align individual behaviors with the company’s values, culture, and unique long-term goals.

Let’s try an example. Imagine for a moment the impact of receiving a personalized reward for demonstrating your organization’s core value. Let’s say it’s resilience.

You poured time and energy into a mission-critical project for months, only to find out in the eleventh hour that the needs had changed. You quickly changed course and thrived while doing it. That’s the behavior your company has chosen to recognize. So that’s the behavior being rewarded. Which encourages you to keep exhibiting that core value of resilience.

2. Peer-to-peer recognition builds culture and connection

Our colleagues have a unique ability to motivate us to be our best. To be specific, social recognition is 20% responsible for inspiring us to go that extra mile.

Service awards, like most traditional recognition, are what we call top-down recognition. Meaning, it comes from managers or leadership (the top) and is directed down to the employee. Top-down recognition is valuable. (In fact, studies find that a personal note from the CEO can have a powerful, lasting impact on employees.) But when it’s the only form of recognition at your company? It can feel impersonal, generic, and organizationally driven

Peer-to-peer recognition has a few big perks. First, coworkers have unique insights into each other’s lives and work that managers may not. When colleagues recognize each other, each employee has more opportunities to shine. And to receive personalized, meaningful recognition. (Plus, it takes the burden off the manager to be the team’s sole cheerleader.)

Second, peer-to-peer recognition drives connection between coworkers and teams. This establishes positive workplace emotions, boosts sense of belonging, and enhances overall team culture. As a bonus? These results impact not only employee satisfaction, but customer satisfaction as well. In fact, 41% of companies that implemented peer-to-peer recognition reported seeing increases in customer satisfaction.

3. Real-time recognition lets you reward responsively

All feedback (this includes Recognition & Rewards) is most meaningful when it’s given in the moment. It’s not just behavioral psychology — it’s what employees want. According to PwC, nearly 60% of employees say they want feedback as often as daily. (And for employees under 30, it jumps to a whopping 72%.)

If giving recognition in real time doesn’t work for you, try batching it at the end of each work week. But try not to let it go much later. And whatever you do, don’t wait an entire year. As we mentioned above, the more time that passes between a behavior and a reward, the less significant the reward feels when it arrives. Keep driving positive performance and boosting morale by recognizing and rewarding behavior quickly, and year-round.

4. Make rewards meaningful by making them personal

Your employees are unique. Your rewards offerings should be, too.

Generally speaking, today’s employees appreciate — and expect — more customization than did previous generations. “Companies at the forefront of this wave,” reports Deloitte, “are creating rewards programs that are delivered more continuously, aligned more closely with individual preferences, and based more fully on an employee’s whole contribution.”

So get to know your people (try a simple employee survey). Better understand their preferences. Then, tailor your work environment to a more diverse workforce. Because that’s who’s working for you. Put your rewards budget toward actually motivating them. Otherwise, why spend it at all?

Bonus: From a hiring and talent retention standpoint? A rewards system that goes beyond office perks and treats employees like a diverse set of individuals serves as a huge competitive advantage.

5. Create a culture of recognition 

When rewards are real-time, customized and personal, a culture of recognition is born. In addition to recognizing loyalty, leaders reward innovation, creativity, and personal achievements. Forging such a culture of recognition helps employees see the value their company places on them. And it boosts both morale and employee retention. It’s a win-win.

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