While most companies have programs in place to reward their employees on their work anniversaries (that typically start at year five and then in five year increments after that) most are not well thought out. A 2012 report from Bersin & Associates found that over $40 billion a year is spent on programs that reward employee tenure.

The average company budgets $25 a year to spend on each year of service for awards. So, for 10-years of service you would expect to receive an award valued at around $250 in an average company. Companies are allowed to give these awards to their employees tax-free as long as the award (and any tax-free performance bonuses) do not exceed a value of $1,600 in a given year.

Recent research found that nearly 75% of companies offer their employees rewards for tenure. When asked why, the most common reason was to encourage employee retention, and the second most common answer was to show appreciation and boost morale. The way a majority of these programs are administered today, they are not likely to accomplish either of those two stated goals.

First, many companies hire outside help to administer their program, which depersonalizes the process and does not engender loyalty or a sense of being appreciated. Think for a moment what would make you feel more appreciated, a choice of a knife set, a blender or a clock or an item specially selected for you (of similar monetary value) that was useful for a passion of yours outside of work? I’m guessing that was not a difficult choice.

Secondly, a majority of companies do not take full advantage of these special opportunities. Even if the gift was a choice of non-personalized items, you could make it more meaningful by presenting it to the employee at an all hands meeting. To make it even more impactful, have a few old bosses or co-workers share stories about work they did with the employee that reinforce the company culture and promote cohesion going forward.

Far too many companies give these awards in private missing out on all the subconscious benefits to others in the organization. Seeing a valued co-worker appreciated gives others hope that they too are, or soon will be, appreciated. It also serves to let senior workers take a walk down memory lane and reminisce about the company’s history and origin, while the younger employees learn details through stories about the company that made it what it is today. These stories represent the heart and soul of a company and can serve to create loyalty and motivation for each employee’s daily mission.

The average length of tenure for a worker at their company today is down to an average of 4.6 years, making effective retention programs more important today than ever before. An anniversary is an emotional experience for most people, and when handled properly can engender benefits that are immeasurable to that person and the company.

Conversely, when work anniversaries are mishandled it often engenders resentment and reduces a worker’s happiness and productivity in substantial, often unseen, ways reverberating through the company, killing morale, and affecting retention and recruitment of future quality employees.

I recently heard a story that shocked and disgusted me, because it was handled so poorly. The company had previously given out anniversary gifts to employees and without warning changed their policy. An employee who reached his 20^th anniversary for the company, instead of receiving a gift, received a card via FedEx saying thanks for 20-years of service. He was so disgusted (and likely hurt) he taped it to the top of the whiteboard in his office and wrote “this is what you get for 20-years of service here.” You can only imagine the effect that will have on everyone else in the company.

If companies would look at years of service awards as an investment rather than a cost, and use them as opportunities to celebrate and reinforce value’s, it would pay them back multiple times over. Unfortunately, most companies treat them like a box to be checked off and end up being penny wise and dollar stupid.

Fortunately, some companies do understand the importance and value these rewards can have for individuals and their company. One of the best uses of these awards I am aware of, is a company in Los Angeles that has a wheel of fortune type of wheel prominently displayed in their office. The wheel has prizes ranging from $100 Starbucks gift card to an all-expenses paid weekend getaway to San Francisco and plenty of other cool rewards in between like car washes for a year, etc.

Every time an employee hits a year anniversary (starting at year one and each year thereafter) they get to spin the wheel for all the employees to see. Not only is this a morale booster it also reinforces how fun it is to work there. To most employees an anniversary is regarded in the same way as a birthday, so why not take time to celebrate it each year?

I even checked the website www.glassdoor.com where people can anonymously rate their current or former company and management, to see what people were saying about this company. Not surprisingly it had about as high of a rating (4.8 out of 5) as I have ever seen for a company on that site. The following two comments seem to sum up what it is like to work for the company: “Good office atmosphere; good people who collaborate and try to achieve together” and “Exec management is trying to communicate as effectively as possible to keep the broader company informed and ‘in-the-loop’. That’s what makes it a great place to work.”

When employees feel valued and a part of something, they will usually go through a brick wall for the company. When they feel taken for granted and unappreciated they will shut-down and just do the minimum. The companies that are full of the latter rarely realize what could have been. It’s like I tell my daughter, rude people usually get what they ask for, but polite people usually get more than they ever thought possible

Make it a Happy Thanksgiving!

You can follow Sam on Twitter @SuperTaoInc

Posted in The Mind Side Blog