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Consultant Dispels Myths About Service Award Programs

By Bob Nelson
Author of 1001 Ways to Reward Your Employees

Synopsis: Many HR Directors are reengineering their Service Award programs and switching from mundane, passive ceremonies to energized systems that increase retention and reward more meaningful contributions.

The vast majority of recognition programs are obsolete, according to a 10-year national study, the Independent National Study of Recognition Policies and Practices, by Perspectives Resources, Inc. In fact, many of them demotivate rather than motivate employees, because they are based on concepts designed in the '60s and '70s and no longer meet either corporate objectives or employee needs.

"Companies are spending more than $500 million annually on service award programs that don't work," says Edward L. Ford, recognition consultant, "and minor changes will not address the problems. At the same time, with all the downsizing and change taking place in business today, recognition is more important to the morale of employees than ever. It is imperative that companies take a fresh look at what constitutes effective recognition -- including what the needs of the award recipient are."

Here, we dispel some common myths about award programs....

Myth one: Logo emblems of gold and diamonds make the best award.

Fact: Corporate emblems are outdated, and 95.8 percent of employees would rather have practical merchandise items as awards.

Since many employees eventually receive logo awards, such as "years of service" awards, they stop carrying recognition impact. Moreover, since employees no longer feel the same job security as in the past, they no longer have the same corporate identity. As a result, the company logo is less important to them.

In addition a two-year study, which covered 1,500 employees and 200 companies, representing a total of 12.4 million individuals compiled the Employee Needs and Wants Recognition Index (ENRI) which measures the effectiveness of recognition award programs. Results showed that only 4.2 percent of employees would choose logo jewelry over merchandise for awards.

Myth two: Recognition programs incorporate award choices that employees really want.

Fact: According to the ENRI, 70 percent of employees would choose something other than what they are offered.

"A human resource executive from one of the nation's largest banks helped put award choices in perspective by asking, 'How many many pen and pencil sets... can you use?' " says Ford.

The ENRI study identified the 200 most popular service award selections.

The top five include:

  • electronics and entertainment
  • cameras, optics and camcorders
  • watches, clocks and weather instruments
  • crystal, china, silver, and kitchen accessories
  • sports and outdoor equipment

"Consider how many of these items and categories are included in your own program," says Ford. "An effective program needs selections that incorporate several of these categories."

Myth three: A simple change in selection or awards will substantially improve your recognition program.

Fact: To address employees' changing attitudes, more and more companies are reengineering their recognition policies.

Here are some key factors in restructuring award programs:

  • Establish the goals and objectives of employee recognition and obtain management support.
  • Survey a representative sampling of employees as to what they want and need in a recognition program. Make sure every region and its differences are represented.
  • Create a program based on employee feedback and input from program administrators. To help empower employees, make it an employee-defined, not a corporate-defined program.
  • As often as possible, make recognition timely, preferably as close as possible to the reason for which you are recognizing an employee, rather than monthly, quarterly or annually.

Reengineering can actually help companies save money rather than spend more on recognition, while allowing them to provide awards that employees really want. For example, 117 companies that re-engineered their programs during 1994 and 1995 saved an average of 42.9 percent on their programs, and their average award cost per employee per year dropped from $17.66 before reengineering to $9.21 afterwards.

Myth four: Companies should reduce or eliminate years of service awards.

Fact: Companies should not cut programs at random. Instead, they need to make all recognition programs more effective by aligning them with shifting employee attitudes and updating them annually.

Identify which types of awards are most appropriate in your present corporate culture. Employees may like the types or recognition your program offers. Their dissatisfaction may lie in the awards they are offered.

We Look Forward to Working with You on Re-Engineering Your Service Award Program!