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Formal Staff Recognition

Service awards eat nearly half of thank-you budgets

Events and awards that employers use to mark service milestones seem to consume a disproportionately large share of money Canadian organizations budget for rewards and recognition.

This conclusion is based on a survey conducted by the Conference Board of Canada, which was described in a brief article in the August 2011 issue of CA Magazine.

The Conference Board found that Canadian companies spend an average of $175 per employee on staff recognition and rewards. Nearly half (45 per cent) is spent to honour employees who reach service milestones, typically once every five years.

Consider what this means for that “average” organization, which we will assume has 100 employees. Its budget for rewards and recognition would be $17,500, of which 45 per cent (or $7,875) is earmarked for a once-a-year celebration of the few employees who have worked for the same employer for five, 10, 15, or more, years.

Assuming that about 20 per cent of the staff would reach any of the service milestones during a given 12-month period, this means that $7,875 would be spent to honour 20 people ($393.75 per person) during a single, once-a-year event.

What is left of the $175 per person to recognize staff during the remainder of the year? Just $96.25. Less than 50 cents per person, per day.

Service awards presented at five-year intervals miss a lot of people. Many employees don’t remain with an employer long enough to even reach the first five-year service milestone. This means that the number of people being honoured will actually be less than 20 per cent of workforce. The 45 per cent of the money budgeted for staff recognition could be being spent on less that 15 per cent of the staff.

There may be many reasons for people to leave an organization—retirement, finding a better paying job, a family move, or an opportunity to work closer to home—but it is not uncommon for people to leave because they feel unappreciated.

In The 24-Carrot Manager, Andrian Gostick and Chester Elton write, “And it’s that hunger for recognition that drives them to leave for other jobs—searching for greener pastures where they will feel needed and appreciated.”

While meaningful recognition is seldom about money, where money is placed in a budget does send a message about priorities. Too many companies appear to believe that what’s important are big, formal events, rather than the high-value, low-cost staff recognition that has an impact throughout the year.

First published in Briefly Noted by Nelson Scott, September 2011.

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