What is a milestone award?
A milestone award recognizes a significant achievement by an employee or a milestone in their development. The most common form of a milestone award is a celebration based on the employee's years of service. It is a formal way to recognize employees for being with an employer for a certain number of years.
Milestone awards form a part of an organization's employee recognition and total rewards strategy.
Objectives of milestone awards
- Increasing morale. If employees feel they are being recognized and rewarded, they are more likely to go above and beyond their duties. It also increases the team's morale, as they recognize that hard work will be noted and celebrated.
- Improving retention. Employees who feel recognized will likely stay longer at a company. Longer serving employees have deep product and organizational knowledge, allowing them to understand what works and what does not. Having a higher retention rate also reduces costs (of onboarding, recruiting, etc.)
- Talent attraction. Prospective candidates who know that your organization recognizes milestones are more likely to join.
- Organizational culture. Milestone awards create a sense of belonging among employees, sending out a signal that the company appreciates its workers.
Milestone award best practices
1. Determining what milestones to recognize
An employer must be consistent with the celebration of milestone awards. If a milestone is celebrated for one employee, it should be celebrated for all - otherwise, it creates a sense of unfairness. Below are a few employee milestones to note:
Each of these events represents a milestone in an employee's life.
|Work anniversaries||Work anniversaries or years of service (YOS) are the most common milestone awards for employees, which celebrate people who have worked for the company for a significant amount of time. Usually, they mark increments of 5 years (5, 10, 15, etc.)|
|Birthdays||Employees generally appreciate the time taken by an employer to recognize their birthday, whether it’s big or small. Some companies have special celebrations for certain birthdays (such as 50th or 21st birthdays).|
|Promotion||A promotion is a significant moment for an employee, as it shows an advancement in their career and status in the company. It is a noteworthy milestone to celebrate, as it also creates healthy internal competition. Not all promotions need to be celebrated or awarded, so choose wisely which are significant.|
|Retirement||Even though retirement signifies the end of the relationship between the employer and employee, it is still a milestone to celebrate. It shows employees they are appreciated for their long years of service and recognized even on their final day of employment with the company.|
|Company achievement||A company achievement recognizes a milestone moment for the company itself. This could be an industry award, a new acquisition, impressive growth, or a company anniversary (such as a 50-year or 100-year anniversary).|
|Employee life milestones||Other milestones worth celebrating include occasions such as an employee getting engaged or married, the birth of a baby, or learning milestones such as graduation, certification achievement, or academic awards.|
2. Showing authentic appreciation
Employee milestone awards should not be a ‘tickbox’ exercise but rather hold significant weight to enhance its effectiveness. To show authentic appreciation:
- Communicate clearly. An employee milestone should be broadcasted and known.
- Personalize the award. Using an email template to recognize a milestone will appear cold and inauthentic. Awards can also be tailored to the particular employee’s preference, for example, a gift based on their hobbies and interest or a gift card from their favorite store or restaurant.
- Provide something of value. A milestone is a significant moment, so an employee would probably like to receive something more than just a ‘thank you’.
3. Increasing the value of the award periodically
An employee should receive a greater value award for working ten years than they did for working five years. This will motivate employees to achieve these milestones and create a sense of employee pride.
4. Setting a budget
Consider the benefit of a good milestone award program and set the budget accordingly. A good guideline is that an employee recognition program should be greater than 1% of the payroll and no more than 10%. As a milestone award is one form of employee recognition, it should fall within that budget.
A fixed amount per milestone should also be determined and applied consistently. Providing employees with a catalog of options is also a good idea. For example, you might want to offer an employee a cash bonus or a travel voucher equal to the same value for a five-year work anniversary.