While most companies have programs to reward their employees on their work anniversaries (which usually start in the fifth year and then in five-year increments after that), most aren’t well thought out. A 2012 report by Bersin & Associates found that more than $40 billion a year is spent on programs that reward employee seniority.

The average company budgets $25 a year to spend on each year of service for awards. So for 10 years of service, you would expect to receive an award valued at around $250 at an average company. Companies can award these awards to their employees tax-free as long as the award (and any tax-free performance bonuses) does not exceed $1,600 in value in any given year.

Recent research found that nearly 75% of companies offer their employees rewards for tenure. When asked why, the most common reason was to encourage employee retention and the second most common response was to show appreciation and boost morale. The way most of these programs are administered today, they are unlikely to achieve either of those two stated goals.

First, many companies hire outside help to manage their program, which depersonalizes the process and doesn’t build loyalty or a sense of appreciation. Think for a moment about what would make you feel more appreciated, the choice of a set of knives, a blender or a watch or an item specially selected for you (of similar monetary value) that was useful for a passion of yours outside of work. I guess it wasn’t a difficult choice.

Second, most companies don’t take full advantage of these special opportunities. Even if the gift were a selection of non-personalized items, you could make it more meaningful by presenting it to the employee at a general gathering. To make it even more impactful, have a few former bosses or co-workers share stories about the work they did with the employee that will reinforce company culture and promote future cohesion.

Too many companies give these awards privately, missing out on all the subconscious benefits for others in the organization. Seeing a valued co-worker appreciated gives others hope that they too are, or soon will be, appreciated. It also serves to allow senior workers to take a walk down memory lane and reminisce about the company’s history and origins, while younger employees learn details through stories about the company that made it what it is today. These stories represent the heart and soul of a company and can serve to build loyalty and motivation for each employee’s daily mission.

The average tenure of a worker at your company today has dropped to an average of 4.6 years, making effective retention programs more important today than ever. An anniversary is an emotional experience for most people and, when handled properly, can lead to immeasurable benefits for that person and the company.

In contrast, when work anniversaries are mishandled, it often breeds resentment and reduces a worker’s happiness and productivity in substantial, often invisible ways that reverberate throughout the company, kill morale, and affect retention and productivity. recruiting future quality employees.

I recently heard a story that shocked and upset me because it was handled so badly. Previously, the company had given anniversary gifts to employees and, without notice, changed its policy. An employee who celebrated 20 years with the company, instead of receiving a gift, received a card through FedEx thanking him for 20 years of service. He was so upset (and probably hurt) that he slapped it on top of the blackboard in his office and wrote “this is what you get for 20 years of service here.” You can only imagine the effect it will have on everyone else in the company.

If companies viewed lifetime service awards as an investment rather than a cost, and used them as opportunities to celebrate and reinforce values, they would pay you back many times over. Unfortunately, most companies treat them as a tick box and end up being stingy and stupid.

Fortunately, some companies understand the importance and value these rewards can have for people and their company. One of the best uses of these awards that I know of is a company in Los Angeles that has a type of Ferris wheel prominently displayed in their office. The wheel has prizes ranging from a $100 Starbucks gift card to an all-expenses-paid weekend getaway to San Francisco and lots of other cool rewards in between, like a year’s worth of car washes, etc.

Every time an employee has a year anniversary (starting with year one and every year thereafter), they can spin the wheel for all employees to see. Not only is this a morale booster, but it also reinforces how much fun it is to work there. For most employees, an anniversary is considered the same as a birthday, so why not take the time to celebrate it each year?

I even checked the website http://www.glassdoor.com, where people can anonymously rate their current or former company and management, to see what people were saying about this company. Not surprisingly, it had such a high rating (4.8 out of 5) that I’ve never seen for a company on that site before. The following two comments seem to sum up what it’s like to work for the company: “Good office environment; good people collaborating and trying to accomplish things together” and “Executive management is trying to communicate as effectively as possible to keep the company on track.” knowledgeable and ‘in the know’. That’s what makes it a great place to work.”

When employees feel valued and a part of something, they will usually walk through a brick wall for the company. When they feel taken for granted and unappreciated, they will shut down and only do the bare minimum. Companies that are full of the latter rarely realize what might have been. It’s like I tell my daughter, rude people often get what they ask for, but polite people often get more than they ever thought possible.