Beyond the gold watch

Employees seeking recognition say ‘no thanks’ to outdated years of service awards

Years of service awards were invented in the early 1900s in textile and automotive factories across North America and Europe to solve a prevalent business challenge — high turnover rates due to the monotonous and tedious work employees experienced on an assembly line. This created a major problem because a well-run assembly line was a company’s number one competitive advantage.

Businesses, therefore, created reward systems that offered highly valued gifts of that era, such as gold watches and grandfather clocks, to encourage employees to stay on the job.

Over the last century, business and employee needs have undergone significant changes. In a knowledge-based economy, innovation and information give organizations a competitive edge.

As a result, companies have shifted the focus to retaining top performers and motivating employees to produce value for the business with innovative ideas, knowledge and information.

Another telling characteristic of knowledge-based workers is they no longer stay at one company for their entire career. In 2008, the average employee tenure was 4.1 years, according to 2008 data from the Bureau of Labor Statistics in the United States. The typical gen-Y worker, born between 1978 and 2000, will have 10 jobs by the age of 38 and stay an aver­age of 1.5 years with their employer.

The following are three reasons why current service awards programs don’t motivate the workforce:

Employers wait too long to recognize workers

Traditional years of service programs do not offer timely recognition, given the standard time intervals are five, 10, 15, 20 and 25 years. Waiting five years to recognize and reward employees does not motivate employees to repeat positive behaviour, nor does it make employees feel their day-to-day actions and achievements contribute to the success of the organization.

Focus on the reward, not the recognition

It’s not the reward but the recognition that makes an impact. Recognition in the workplace makes employees feel valued by their employer and significantly boosts employee engagement.

Traditional service awards such as gold watches and tie-pins don’t motivate or engage employees because there is no meaningful recognition behind the reward. Rewards don’t build loyalty or engagement — recognition does.

High administration

Due to the high amount of administration and steep price tags of many traditional rewards such as rings and watches, traditional programs tend to eat up a large part of a company’s HR budget.

Also, it’s important not to equate cost with value. A gold watch may have a significant price tag attached to it but if the employee doesn’t wear a watch, the intended meaning is lost.

4 best practices

The following four best practices show how to evolve a traditional service awards program into a recognition-based program that fits an organization’s culture and aligns to corporate goals.

Offer personalized recognition: To make the most of workplace recognition, HR needs to train managers on how to give recognition because managers know their employees best and can, therefore, provide meaningful, personalized recognition. For example, a manager should know which team member appreciates being recognized publicly and which prefers a one-on-one celebratory lunch with his manager. Give managers the autonomy to decide how to recognize their employees for achieving milestones.

Automate the system: Look for opportunities to automate the process so HR can manage, instead of administer, the program. Remember, the future of years of service programs is all about making the program work for the needs of the workplace and workforce.

One solution is integrating years of service awards with data systems such as a human resource information system and building in the ability to:

• send notifications of upcoming anniversaries to the HR department and managers

• create personalized letters of recognition for managers to give employees

• allow employees to choose their own rewards from an online catalogue.

Reflect corporate culture: Creating an association between the recognition received and the organization is an effective way to strengthen alignment and engage employees in the corporate culture and their future with the company.

A great example of this comes from a major North American brewery that gives new employees a company beer stein — a coveted memento that acts as a symbol of the company’s culture. The stein serves to recognize an employee’s first year with the company and is engraved with the employee’s name and anniversary date to make it meaningful.

Offer rewards that make an impact: Just as recognition should be personal, so should the reward. There are many options available to allow employees to choose their own rewards. One option is moving to a points-based currency where employees are awarded points that can be redeemed for items of their choice.

Popular employee rewards include the latest and greatest in personal electronics such as iPods or iPhones, experiential rewards for adventure seekers and allowing employees to donate the monetary value of their reward to charity.

Provided with choices, employees feel their employer is empowering them to choose the reward that best fits their individual lifestyle and needs. When meaningful recognition is tied to meaningful rewards, everyone wins.

This article is an excerpt from I Love Rewards’ white paper Long Live Recognition Milestones. Toronto-based I Love Rewards provides rewards and recognition solutions. For more information, visit

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