Rewarding Employees Smarter

Reprinted with Permission from Bob Nelson, author of the Best Selling Book "1001 Ways to Reward Employees".

Topic: RECOGNIZE YEARS OF SERVICE, DON'T REWARD IT

There's a new program concept sweeping the incentive industry regarding service awards. The concept is simple yet revolutionary in how employees are recognized for years of service--one of the most frequently used formal recognition programs in the U.S. Already in use by Nynex, NBC, CPC, and other companies, this concept is bound to become an industry standard as it shifts service programs from focusing on the award to focusing on the achievement.

Most employee service programs today involve giving an employee logo jewelry with a "jeweling sequence" for their significant years of service in the organization. That is, with each successive anniversary, employees typical receive 10K &14K logo jewelry of greater worth-and in many companies the cost of such jewelry items is significant--especially when precious gems are used to depict years of service. In some programs, for example, recipients receive a pin at five years, a diamond added at 10 years, a second diamond at 20 years, etc.. Typically, this is some for employees on five- or ten-year anniversaries, ideally with some form of presentation by one's manager.

Although the cost of such programs can run in the millions of dollars, unfortunately, there are some fatal flaws regarding their effectiveness. For example, more times than not an employee's anniversary date goes unnoticed on the day of the event, even though in the employee's mind the specific anniversary date is significant. Perhaps in a subsequent staff meeting mention is made of the date by one's manager or--more likely--a notice and momento of the anniversary appears after the fact via the company mail or the annual awards banquet as much as 12 months after the anniversary date.

A second flaw is the nature of the awards that are used. Traditional logo jewrely items or knives, pen and pencil sets and jewrely accessories have lost popularity with employees who would be just as happy--or even happier--with a lifestyle gift of their choosing. Items such as electronics, cameras, clothing, luggage or even barbecue equipment that will have a practical value are more popular today with employees.

A third flaw is that studies show that the perceived worth of logo jewelry used in most service award programs typically is far less that the actual cost of the merchandise to the company.

These shortcomings can be fixed in a way that both increases the program's effectiveness while reducing costs and administration. The idea is to standardize the activity of recognizing each employee's anniversary, while at the same time allowing greater flexibility of choice on the part of the employee of items of similar value. For example, each year every employee would receive a letter (the same letter to each employee) from the company's president thanking that person for his or her contribution to the organization. The letter could be sent to the employee's manager for an individualized presentation two or three days prior to the employee's anniversary date. On significant anniversary dates (5, 10, 15, and 20 years) the employees would select a gift from 25 lifestyle items of equal worth.

Each year a new selection of gifts would be made available so that with each significant anniversary, employees have a fresh selection of gifts to choose from. A a result, the focus of the program is on the employee's anniversary, not the increased value of a gift he receives. The gift becomes more of a momento of the occasion.

Companies who have tried this approach lave found marked improvement in their service program in terms of effectiveness, reported satisfaction and reduced costs. It is not uncommon for employers to reduce the number of people needed to administer such a streamlined program. In one major corporation, for example, this change enabled the organization to reduce the number of people needed to administer the program from seven employees to one half-time person. All employees celebrating 5- to 20-year anniversaries received a gift of the same value as did employees celebrating 25- 45-year anniversaries. This trend toward recognizing but not rewarding years of service thus places a greater emphasis on the years of service.

When was the last time you evaluated the effectiveness of your service program? Chances are you can make some changes to both improve its effectiveness while you reduce the time, energy and expense required to run it.

Copyright by Bob Nelson, vice president of Blanchard Training and Development, Inc., San Diego, CA and author of 1001 Ways to Reward Employees (Workman), now in its 13th printing.