Recognizing years of service is a powerful, proven way to help employees feel valued for their contributions and achievements. But determining the most appropriate awards isn’t always obvious. Our experience combined with research conducted by the O.C. Tanner Institute demonstrates that the best approach is more nuanced than many realize. Fortunately, this whitepaper will break it down, share a few tips, and hopefully make your decisions easier.
The key in all cases is to balance the preferences of employees with the impact you want the service award to have. Specifically, the award must delight the recipient while connecting them back to their accomplishments and the organization. To do that, it should rarely take the form of a single gift. But because company gift catalogs are such a common component of service awards, let’s start there.
What are the best types of employee gifts (and what aren’t)?
Years of research and analysis are resoundingly clear—give employees things they want, not things they need. Aim for gifts that would otherwise feel like a big splurge or that the recipient would be proud to show off. This is one scenario where luxury beats practicality.
The best gifts help employees fondly remember their experience at your organization whenever they use them. Envision how employees will feel when they wear the Cartier® watch, fire up the Weber® grill, or ride the Specialized® bike they got from their company. Be conscious of brands and quality because if you want the award to have a lasting impact, the gift itself needs to last.
The most essential aspect of the catalog is a wide (but not infinite) variety of items for all employees to choose from. Try to match the diversity of employees at your organization and be sure to include a good mix of enough items to cover everyone.
Here are some categories to consider including when creating or refining a recognition catalog:
“I think things like jewelry, wearable tech, bags (handbags, backpacks, laptop bags) etc. are great options. They are often a bit of a ‘luxury’ or ‘treat’ buy that are regularly used—so people are reminded regularly of their award, get lots of use out of it, and save money on something practical—but it’s not a ‘boring’ or grudge-purchase type of practical item.”
— Employee, Technology Company, Australia
Three gifts that aren’t as effective: Cash, time off, and donations to charity.
Cash is easily forgotten and often gets used to pay everyday expenses. (If you’ve ever received a cash award at work, try to remember what you spent it on.) By contrast, a meaningful, memorable award that properly expresses appreciation creates an impact that lasts far longer.
Extra time off is equally fleeting and rarely makes a good gift by itself, although it can supplement a more symbolic service award (more on that in a minute).
And finally, the trend towards offering options to donate an award to a charity is not a productive one. It may sound like a great idea, but, having worked with thousands of companies to fulfill millions of awards, we know a miniscule percentage of employees actually do this. Giving a gift to be given away again doesn’t serve the purpose of a service award. The symbolism and memorability are lost.
*Note that gift cards and tickets to experiences are not tax-exempt and, if included, will make your service award program ineligible for potential tax advantages.
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Keeping it diverse
Knowing you need to draw the line somewhere, how do you ensure your catalog is diverse enough to appeal to all of your employees?
There’s no single formula for every organization because organizations are so diverse, but here’s one suggestion: You’ll get more mileage out of awards based around interests, like travel, than on age groups or gender. And as long as you have several categories, such as those above (and not just jewelry for women and power tools for men), you’ll be on the right track.
WHAT'S THE RIGHT NUMBER OF CHOICES?
Just as you’d prefer not to get the same Christmas present as everyone else in your family, employees want a gift that’s personal to them—something they wouldn’t easily buy themselves, or perhaps something that’s been on their “want” list for a while.
While unlimited choice (think Amazon-type catalogs) can be overwhelming and confusing for employees, a smart selection of 100-200 items provides a good variety for almost any size organization. The problem with nearly infinite options is they can result in choice fatigue and lower satisfaction in the chosen item.
If you’re an international organization, it may also help to consider global preferences and cultural differences. For example, in European countries (and denser cities everywhere), many employees live in apartments without space for large awards like grills or gardening tools. Smaller appliances, high-end cookware, jewelry, and bags for commuting are popular there.
LET'S TALK TAXES (BRIEFLY)
Offering tangible items for service awards actually gives companies tax advantages in the United States. Tangible awards are tax-free for both the employer and the employee, so organizations can stretch their dollars and maximize their service award program.
Often organizations will want to combine their service and performance awards or co-mingle recognition points. This can interfere with tax compliance and result in programs that cost companies extra money each year.
What should years of service be worth?
Most service awards occur as frequently as comet sightings. But more importantly, they can represent a career’s worth of contributions. So they deserve to be celebrated. Unfortunately, many organizations fail to give awards or create experiences that are as meaningful and memorable as they could be.
Some spend very little on employees in their first five years. Others don’t start recognizing employee anniversaries until 10 years. And many put most of their money into 25-year awards. But according to the Bureau of Labor Statistics, most turnover happens within the first five years. So if you consider the costs of recruiting, onboarding, and training, a service award program that helps retain newer employees could easily pay for itself. Additional research shows people stay at organizations with service award programs two years longer than organizations without these programs. This makes early recognition crucial.
And here’s another insight to help appropriately allocate money within a service awards budget: a gift with a larger monetary value can have much more impact on employees with less tenure, who often have a smaller salary, than those who are more established.
The best service award experience combines a personal gift, a symbolic award, and a memorable message.
Thinking outside the catalog
In addition to a gift of the employee’s choosing, consider giving a symbolic award to represent their years of service and connect it to the company and its culture.
Symbolic, or custom, awards are often more meaningful and memorable than anything available in a catalog. Similar to Olympic medals, Oscars, Grammy awards, or Superbowl rings, symbolic awards remind employees of the great work they’ve done and how much they’re appreciated. And when the design is inspired by the company, its history, or the job itself, it can elicit even stronger feelings.
Some examples of effective symbolic awards:
Dow Chemical has a company culture of openness, innovation, diversity, team spirit, and growth, and wanted their recognition program to reflect it. Using feedback from employee surveys to understand what connected people to their local cultures, they created one cohesive program customized to individual locations.
When employees reach a career milestone at Taco Bell, they can receive a symbolic award. These include actual symbols of the company from throughout its history, which help connect employee contributions to the company’s
purpose and success.
Roto Rooter wanted to recognize the hard work and years of service their 2,900 employees gave to the company. Because service technicians aren’t especially interested in jewelry, they changed their entire gift catalog and commissioned customized numerals that generate an “overwhelmingly positive” response.
“Employees appreciate the custom awards they receive and display them proudly in their workspaces. They’re like status symbols!”
—Human Resources Analyst, Medium Enterprise Energy & Utilities Company
Elevating the recognition experience
Of all workplace celebrations, service anniversaries lend themselves to peak experiences and personal presentations. These don’t have to be formal or complicated, but leaders and peers should participate and highlight specific achievements throughout the employee’s tenure. A custom keepsake, like the Yearbook from O.C. Tanner, can include messages from senior leaders and colleagues, as well as photos.
One benefit of having presentations that involve peers is the inspiration it gives others. Employees see what behaviors are recognized, what’s important to the company, and look forward to the same events for themselves. Research shows when employees observe a recognition moment for a colleague, they’re more likely to believe the organization cares about its people, and that they belong there.
Service anniversaries can and should be some of the most valuable experiences for both employees and organizations. However, no single-award or one-size-fits-all approach can accomplish the task.
To be as meaningful and effective as possible, service awards need three ingredients: Celebration (a gift the employee truly wants and chooses), Relevance (a symbolic award to connect the milestone to the organization), and Presentation (personalized messages, often including a printed keepsake, from leaders and peers to make the award authentic and memorable).
That’s the secret to service awards that engage and retain employees and strengthen company cultures. Please feel free to share it.
Compared to competitors, 94% of surveyed organizations found O.C. Tanner’s service award selection to be better. See why.