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A New Approach to Service Awards

Many of us know that employee recognition and workplace culture have become critical components in retention, especially given the ongoing challenge of a tight labor market. To that end, perhaps you’ve designed a dynamic performance management and goal setting system for your employees. Or maybe you offer some great benefits for a flexible work/life balance. And we all know scheduling fun events – holiday parties, summer picnics, social outings – can go a long way to create a welcoming and positive workplace.

Among all these efforts, though, sometimes employers lose sight of a long-standing piece of employee recognition: service awards. Length-of-service awards, also called achievement awards, have a long history in the US workforce. The tradition conjures up images of plaques, watches and catalog items when employees reach those significant 10, 20, and 30-year work anniversary milestones. While those can still be part of an effective employee recognition program, HR professionals should consider some new approaches to make service awards consistent with the makeup and motivation of today’s workforce.

Here are a few tips to keep in mind:

· Millennials seek service anniversary recognition sooner than previous generations of workers. As they approach 50% of the workforce, it will be important to acknowledge their motivations and approach to work with more frequent service anniversary recognition. One recommended practice is a one-year service anniversary recognition and then three years, five years, and in five-year increments after that.

· Any service award given during the employee’s first five years is taxable as well as any service award given in less than five-year increments. Outside of these rules, if a company gives personal property as a service award, it’s not considered taxable income. Personal property must be something tangible like a watch, ring, or pen. Cash, gift cards, and paid trips are not tangible, so they would be subject to normal taxes on compensation.

· Cash is often a poor choice. It’s not personal and is often just used to pay routine expenses like groceries and bills.

· Time is often more valuable than we think. Coffee or lunch with a manager, no matter at a one-year or twenty-year anniversary, is almost always well-appreciated. Along the same lines, a work anniversary card with a nice well-thought message from a manager or co-workers has an amazing power to make people feel good about the work they do.

· The award needs to be more than a participation trophy and a recognition of someone sitting at a desk for five or ten years. Especially for these longer tenured employees, it should instead focus on legacy.

· Along those lines, consider a unique gift that represents the symbolism and connection to purpose for the employee. Perhaps their family or a volunteer organization are important to them. Or maybe they have a hobby or sport where a related gift could have a lot of meaning. If the service award is connected to any of that, it’s much more powerful.

· Customize your approach to what is comfortable for the employee. If appropriate, make the recognition social – whether through email, a company meeting, a newsletter, or other communication method. Across all generations, the social component is important.

So, if it’s time to revive (or start) your service award program, remember it should be something unique to your company with a personal approach. Ideally, you should have an individual overseeing it to make sure managers and others are doing their part. With a well-organized and well-planned program, you can make service awards another compelling reason to attract and retain the best talent in your industry.