• LeCarie Whitfield

Build Employee Loyalty by Giving Service Awards Earlier

I am a Gen Xer, and during the first seven years of my career as an attorney, I changed jobs 5 times and lived in four different cities until I found the perfect job for me. During that same span of time, from 1996 to 2003, some of my closest friends also had transient work histories. One friend amassed 8 job changes in under a decade. Our parents thought we were strange, even crazy for “jumping ship” after a year or two, but we were on a mission: work hard, learn fast, and trade up-- we traded up for a better company, a better salary, and better perks.


We watched with excitement as venture capitalists fueled the dot-com bubble, creating millionaires overnight. We replayed “Jerry Maguire” on VHS and shouted, “Show Me The Money!” with Tom Cruise and Cuba Gooding Jr. I had more than a handful of friends become paper rich millionaires when the companies they worked for IPO’d. The entire Silicon Valley was our generation’s version of Studio 54 (but filled with engineers and without drugs). We ran at full speed, chasing the dream of an early retirement. Contrary to our parents’ generation, we were not convinced that retirement was something to enjoy only after serving 30 years with a firm.


Fast forward to today and not much has changed. The Bureau of Labor Statistics (BLS), which collects data on employee tenure, reported in 2018 that the average tenure of workers between the ages of 25 and 37 (Millennials) is about 4.2 years. (Generation Z workers are now entering the workforce and I suspect that the iGeneration will have even shorter average tenures.) According to The Deloitte Global Millennial Survey 2019, which surveyed 10,500 people, more than 43% of Millennials actually plan to leave their jobs in as few as two years; while only 28% of those surveyed hoped to stay beyond five years. Moreover, when asked how long one should work in a role before promotion or departure, employees surveyed in ManpowerGroup’s Millennial Careers: 2020 Vision answered less than two years.

These numbers don’t mean that Millennial and Gen Zers are not loyal employees, because they can be very loyal. These younger workers just realize that a majority of their waking hours will be spent working and they want to spend that time doing what makes them happy. They want jobs where they can make a difference, have their contributions valued, and feel successful. If a job is missing any one of these three things, Millennials are inclined to leave. And while it might sound silly to an employer that an inexperienced worker expects to be promoted within two years–given that many employees haven’t mastered their role in that short of a time frame --Millennials are particularly sensitive to when they and their work matters. As employees, they move on when a position does not align with their personal worldview. So, if you’re an employer that wants to improve employee loyalty and tenure among every generation in your workforce, then become an employer that delivers an above average experience.


One of the many ways to improve employee loyalty and retention is by taking a holistic approach to tenure-based awards. This means implementing (or modifying) tenure awards programs to match the employee’s career journey, valuing the service of long-tenured employees as well as the learning curve that new employees go through. I’ll show you how to effectively create (or revamp) a tenure program, explain why having one is better for your bottom line, and give you a suggestion for how much to spend on awards.


How to Effectively Design A Tenure Program That Inspires Workers

Tenure-based awards (also called “years of service” or “YOS” awards) have been around for decades. Back in the “olden days” (let’s call that the 1970s and 1980s), employers would gift an employee a wooden plaque engraved with gold lettering announcing that an employee had completed “5 Years of Outstanding Service” or “10 Years of Committed Service” or “15 Years Of Loyalty” – you get the picture. I remember my own father receiving awards just like these from his employer Collins Foods Intl. These plaques were proudly displayed in his office for his colleagues to revel and envy. My dad was a “company man” through and through. My uncle “CR” had similar plaques from the LAPD, also recognizing his commitment to serve and protect to good (and not so good) citizens of Los Angeles County, in five-year increments. Back in the day, thanking an employee every 5 years was an acceptable thing to do.


Nowadays, however, with employee tenures growing ever shorter, many employee engagement coaches would argue (myself included) that starting YOS awards the five-year anniversary mark is outdated.


So, how do you make your YOS program effective? Easy -- offer awards earlier in an employee’s tenure. Doing so helps to develop a workplace culture where loyalty is valued and this improves employee retention. With an effective YOS program, the first tangible award can be right away or after the newbie completes an initial training period. This early stage recognition provides just the right motivation to an overwhelmed new-hire. Since it can take anywhere from 8-26 weeks or longer for an employee to achieve full productivity (and much longer for the business to recoup lost revenue, hiring, and training costs associated with new hires), the “Welcome Aboard” award encourages them to keep going. This can be a lapel pin that appears high-end but doesn’t cost a mint.


When you show employees that they are an essential part of the organization, you’ll start to earn their loyalty sooner. The next YOS award is the first anniversary. Yes, it is only been a year, however, giving a meaningful item at this important anniversary shows show your Millennial and Gen Z employees that you value the time it takes to learn the position, and you want them to succeed. The 1st Year Pin inspires a “stick with it” attitude, particularly in a position where it may take a few years for new hires to get fully up to speed and completely self-sufficient.

CorporateJeweler.com recommends making YOS awards on the following schedule:

It may seem like giving three awards prior to the fifth anniversary is excessive, but it’s not. These early awards show that you appreciate and respect the investment of time, energy, and effort that it takes to get good at something. Even loosely giving credence to Malcolm Gladwell’s popularized “10,000-hours theory”—in working years, this is roughly 5.5 years (assuming 7 hours of being highly productive for 260 workdays of the year). Therefore, when younger employees can see that they will be rewarded for taking the time to get really good at what they’re doing, the odds of them staying longer increases significantly.


Why YOS Awards Are Good for Your Bottom Line

One of the biggest criticisms of YOS award programs is that they do not reward merit. Some would say that a YOS award is the equivalent of a participation trophy or an attendance award. People who downplay the importance of tenure in this way are missing the point. Here are some of the benefits of recognizing tenure:

  • For solid performers, sometimes a YOS award is the only recognition they’ll receive for their loyalty to the job.

  • Longer tenured employees who know the job are usually more productive and exercise better judgment (based on experience) than newer employees who are learning the job.

  • Where building relationships is critical to job performance, internal collaboration, customer service, vendor relationships, and strategic partnerships, the length of time spent with others is a key factor in developing trust. With longevity, employees build stronger relationships.

  • When employees achieve YOS marks, it means that, in some way, the company is a good place to work and has earned the loyalty and longevity of its employees.

All of this is good for your bottom line because the cost of replacing a trained employee usually exceeds the cost of maintaining an effective YOS program. A study by Mellon Financial Corp. found that lost productivity from new hires costs the business 1% - 2.5% of total revenues. SHRM estimates the average cost to replace a salaried employee is 6 to 9 months’ salary. Other studies estimate employee turnover costs a company between 33% and 150% of salary, depending on the position and tenure. A specialized, high-earning employee or executive could cost as much as 400% of annual salary to replace! No matter what study you rely upon, the cost to hire and train a replacement employee could cost the business tens (or hundreds) of thousands of dollars.

You see, tenure is not a trivial metric, and ought not to be ignored. Tenure is an indicator of loyalty in our highly mobile world. Most businesses want a stable, steady, highly productive workforce, willing to bring fresh ideas to the table to help the company succeed. This perfectly describes the outspoken Millennials and Gen Zers who want to make the world a better place.


How Much To Spend on Tenure Based Awards

There’s no hard and fast rule on how much to spend on a YOS program. However, remember that perception is everything. If you give merchandise that looks cheap, your employees will chuck it in a bottom drawer or lose it at the carwash. If you give cash, your employees will use it to pay bills. If you give gift cards, you’re telling employees that you were too lazy to find something special. If you can afford to give travel, the experience has to be memorable without breaking the bank. Because awards can be tailored to any budget range, put some thought into how much you are willing and can afford to spend before launching your program.


If we go back to the schedule for giving awards, here are some budget suggestions:

Welcome pin: budget $25-75 per employee. Of course, you can probably find a less expensive option, but a $10 pin will look like it cost you $3 (trust me, it will be poorly plated, microscopically small, and the enamel paint will flake off in about a week)--and your employees will judge you for it. For just a bit more, a $25 pin can look and feel like it cost $100 and your employees will deem you worthy of their time and efforts.


1st and 3rd years: budget $50-$500 per employee. You can invest in upgraded label pins (with lab created or imitation gemstones) and fine writing utensils in this range. Again, the purpose of these early stage tenure awards is to keep your Millennials and Gen-Z workers motivated and engaged so they get past the itch to jump ship in the first 2 years. Once they’re into the 3rd year, you are nearing the BLS average of 4.2 years and on the way to having a “career employee” among your ranks.


5th year: budget $1,000 per employee on this award (so about $200 for each year of employment). A company watch on a leather band is a great item for this anniversary. When an employee reaches this milestone, you can start to envision a lifetime employee, loyal to your firm.


10th, 15th, 20th years: plan to spend $250-$400 for each year of employment. At these more important anniversaries, consider travel awards, company rings (in precious metals of course), gold watches, and bucket list experiences. You want to plan awards that employees can show off (like a championship style ring featuring your company logo) for years to come. Fine quality, specialized logo jewelry is something employees will wear every day to remind themselves why you are a great employer.


For organizations just getting started with service awards, don’t forget to “grandfather” employees into your new service awards program. To make this affordable, present all employees with the highest service award they have earned. For example, give an 11-year employee the milestone award designated for having completed 10 years with your organization. It isn’t necessary (and it would be weird) to also present a welcome aboard pin. And, if you work with a boutique firm to create your awards, you’ll have considerable input in the design process to create awards and you won’t be forced into long-term contracts or minimum quantity requirements. You can often get small batches for great prices.


Whether you are starting out or already have a YOS program in place, a tenure-based recognition program offers the potential to be a great return on investment when done right. Research shows that years-of-service awards are viewed positively by employees, including Millennials and Gen Z. Employees want to feel that they matter and when employers finally realize they’ve got to do more to earn employee loyalty, they get better at recruiting and retaining the best and the brightest. Implementing an effective (or revamping an existing) YOS program may be the difference between having mildly interested workers for a few seasons and having loyal employees for life.

© 2019 BY KRIKAWA CORPORATE JEWELER

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