Cracking the Recognition Code
November 21, 2008
Companies pair length-of-service awards with other incentives for retention and recruitment success
By Jenny Cromie
Before starting their first day of work, employees at Baptist Health South Florida are already telling their managers how they want to be rewarded. Along with perusing information in their new-hire packets, employees fill out questionnaires and answer questions about their favorite candy bars and sodas, whether they like to be recognized in front of their peers or in private, and what kind of gift certificates and rewards they'd like to receive when—not if— they do a good job.
"And when you hit your workstation at the end of your first day at Baptist Health South Florida, your favorite candy bar and soda are sitting there waiting for you—recognition of getting through your first day of work," says Hal Adler, president of the Great Place to Work Institute, a San Francisco–based management research and consulting firm.
There's a similar approach at SnagAJob, where employees receive a $400 recognition gift certificate with a letter from the company's president on their first day of work, he says. Not surprisingly, the Glen Allen, Va., firm ranked third on the Society for Human Resource Management's 2008 list of the 50 Best Small & Medium Companies to Work for in America.
SnagAJob and Baptist Health South Florida, which ranked 94th on the annual Fortune 100 Best Companies to Work For list this year, are just two examples of how great companies treat employees and manage their recognition programs, Adler says. Instead of waiting for employees to hit traditional milestones, the companies that tend to land on the Institute's coveted lists have an entirely different approach that marries length-of-service awards with more immediate incentives.
SnagAJob and Baptist Health South Florida send a different kind of message than most other organizations because of the way the companies reward new hires, he says. The message to new employees is this: "You've come into a different kind of organization that is going to recognize good work and extra effort, not simply when it's done, but based on the assumption that at some point, it will be done."
And while all companies on the Best Places to Work lists have length-of-service awards, "[SnagAJob and Baptist Health are] focused on culture, they're focused on what makes the organization special," Adler says. "They're much less focused on the tactical nature of individual practices and policies. These companies are not focused on what the longevity of awards or recognitions are, but rather how they're experienced in the organizations.
"They don't use annual recognition as a way to keep people in the organization," he says. "They start thinking about how to fully welcome and engage a person from the first day, and they don't let them go. It starts the first day and it doesn't end."
A Shorter Span
For many organizations, the conversation about employee recognition and rewards programs has changed in recent years. Employees are no longer sticking around for the 30-year anniversary, the Rolex watch, or the diamond-studded pin. In this environment, employers are having to get a lot more creative about how they reward employees and how often they pass along the kudos.
Twenty or 30 years ago, length-of-service awards often were the only recognition programs that companies had in place, says Lenny Sanicola, practice leader at WorldatWork, an organization for HR professionals based in Scottsdale, Ariz. "But in today's environment, you can't just rely on length-of-service programs. They're still part of the mix, but you're not going to survive just on that.
The Gen Ys aren't going to stay around for the Rolex watch."
Regardless of generation, in fact, employees are no longer staying at companies as long as they used to. And in this era of layoffs, downsizings and reorganizations, many younger employees no longer expect—or necessarily want—a long-term commitment with an employer. Motivated more by career opportunities, attractive benefits, flexible work arrangements, and more frequent rewards and perks, many employees are more fickle today when it comes to the traditional definition of company loyalty and long service.
Contributing to the trend toward more recognition programs is the fact that merit budgets have decreased for many companies, says Sanicola. "So recognition programs are a way to reward people through monetary as well as non-monetary ways, without necessarily increasing somebody's base wage. The whole point of incentives is to reward people for exceptional performance without increasing the fixed cost."
But length-of-service awards still are the most common type of recognition awards at companies (86 percent), followed by performance-based awards (79 percent), according to WorldatWork's Trends in Employee Recognition survey released in April.
Despite their continuing popularity, however, many companies now recognize that length-of-service awards are only a part of a successful rewards program, Sanicola says. Now—especially in the last five to seven years—length-of-service awards typically are used in combination with other recognition programs. Many companies also offer length-of-service awards earlier than they used to, and at one- and five-year increments.
"With Gen X and with Gen Y, they really are looking for companies who are going to invest in them and educate them," says Bridget Dahlgren, certified recognition professional and marketing coordinator at Crystal D, a supplier of corporate recognition awards in St. Paul, Minn. "So what we are finding is that corporations as a whole are increasing the number of recognition programs they use. And in addition to the length-of-service awards that they have maybe always had, they are now using additional recognition programs to incent employees to stay with them."
Similar to Baptist Health South Florida employees, those at Crystal D fill out a recognition profile when they're hired, and then are asked to update it every six months, Dahlgren says. They answer questions about their favorite candy and treats, how they want to be recognized by their supervisors and what they would do if they had a surprise day off. Based on the information, managers then provide incentives and rewards to employees throughout the year.
In addition to length-of-service awards, which begin at the one-year mark, Crystal D also has a number of other programs that help provide Gen Yers and other employees the day-to-day recognition and reinforcement they desire, she says. Prizes are a common feature at company meetings, and there are plenty of barbecues, picnics and community outreach events to help keep morale high in the company. There's also a peer recognition program, where employees nominate each other for exhibiting the company's core values. And to boost the frequency of nominations, Crystal D also provides incentives like gas cards and gift certificates to those who nominate their peers for awards.
Other companies, like Cognex, a Boston-based high-tech firm, provide employees with less traditional length-of-service awards. At the three-year mark, Cognex employees receive a Seiko watch. But at five years, employees receive an all-expenses-paid long-weekend trip for two and up to $250 in spending money, says Kimberley Vaillancourt, the company's corporate, culture and events manager. At each five-year mark, the company provides employees with an additional week of vacation and an all-expenses-paid trip for two to one of a variety of locations, with increasing dollar amounts in spending money. Then at 20 years, there's the additional week of vacation, plus the company provides a trip for the employee and up to seven friends or family members to enjoy one of several excursions, including golf in Scotland, a cruise on the Aegean Sea on a private yacht, or a stay at a castle in Ireland.
The company rewards employees in a variety of other ways as well, but employees really seem to appreciate the additional time off and all-expenses-paid vacations the most, she says. And in such a competitive marketplace, the vacations help not only in the company's retention efforts, but in its recruitment efforts as well. As the Great Place to Work Institute's Adler points out, employers like Cognex, SnagAJob and Baptist Health South have come to recognize that the most important service anniversary is the end of day one.At RTTS, a New York City–based software quality testing firm, the approach is a little different. While length-of-service awards start at 10 years with an engraved Movado watch, RTTS employees are rewarded in many other ways leading up to that milestone, says Ron Axelrod, senior vice president of business development and recruiting.
At many firms, it takes five or six years before employees can even qualify for a managerial position, he says. But at RTTS, employees are eligible to train to become senior test engineers or senior quality assurance analysts after only a year at the company—a promotion that can represent a $5,000 increase in pay and three weeks of vacation. This is particularly attractive to Gen Y employees and recent college grads—the bulk of the company's new hires. Employees who outperform their peers also are eligible to receive higher pay. After a year, they qualify for up to $2,500 in tuition reimbursement. And RTTS also is generous with vacation time—at the beginning of their second year, employees receive three weeks, and at the five-year mark, they receive four.
To recognize employees for good performance and going the extra mile, RTTS rewards employees with a variety of other incentives, like American Express Incentive Services points, allowing them to choose from various gifts, like mountain bikes or golf clubs. One employee, who decided to revamp the company's Web site, was rewarded with a weekend trip in the Bahamas.
"So, again, our focus is not so much on longevity as it is on merit," Axelrod says. "Our main goal is to keep our customers happy, and to do that, we need to meet our employees' expectations."
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