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Balancing long service recognition gifts budget with other recognition strategies
Determining the appropriate allocation of your employee recognition budget requires balancing long service awards with other recognition strategies. While long service awards honour employee loyalty, incorporating diverse recognition methods can enhance overall engagement and retention.
Global Industry Benchmarks for Recognition Budgets
Organisations typically allocate between 1% and 2% of their annual payroll to employee recognition programs. This budget encompasses various recognition initiatives, including long service awards, performance-based rewards, peer-to-peer recognition, and onboarding acknowledgments.
1. Long Service Awards
Long service awards are a traditional method to acknowledge employee tenure. Globally, on average, companies spend $15 to $20 per year of service, equating to $150 to $200 for 10 years of service . While these awards are valued, it's essential to ensure they are part of a broader recognition strategy to maintain employee motivation throughout their tenure.
2. Australian Industry Long Service Award Budgets
In the public sector, the South Australian Public Sector, Northern Territory Government and National Disability Insurance Agency (NDIA) have reward and recognition good practice guides and structured recognition of service milestones inititiatives, however there are no specified exact budgets.
IFrom our own data, the following industries have the largest long service recognition budgets:
1. Finance
2. Minining Energy
3. Agriculture
Budgets vary from $100 for a 1 year long service award to $1500 to $2500 for 15 to 50 years long service awards. The average budget across all milestones is approximately $1000.
3. Performance-Based Recognition
Recognising employees for exceptional performance can drive productivity and morale. Globally, industry recommendations suggest allocating $100 to $150 per employee annually for performance-based recognition .
From our own data, incentive awards, spot awards and other performance-based award budgets range from $150 - $250 for lower tier awards, and $800 for outstanding performance awards.
4. Peer-to-Peer Recognition
Encouraging employees to recognise each other's contributions fosters a collaborative culture. Implementing peer recognition programs can be cost-effective, often requiring minimal financial investment while yielding significant engagement benefits .
5. Onboarding and Retirement Recognition
Acknowledging employees during onboarding and at key milestones (e.g., project completions, certifications) can enhance retention. Recognising service at retirement is key to ensuring the employee feels valued at each stage of their career journey with you. From our data, the average retirement recognition award budget is $800.
Strategic Budget Allocation Recommendations
- Diversify Recognition Methods: Balance long service awards with frequent, performance-based, and peer recognitions to maintain continuous employee engagement.(mtmrecognition.com) Employee benefits also ensure staff feel valued and rewarded.
- Align with Organisational Goals: Ensure recognition programs support company objectives, such as innovation, customer service excellence, or safety.(hinda.com)
- Monitor and Adjust: Regularly assess the effectiveness of recognition initiatives and reallocate budgets to programs demonstrating the highest impact. You can re-evaluate your long service recognition using our checklist. We also have a helpful article on how to calculate your employee recognition budget ROI.
Conclusion
By thoughtfully distributing your recognition budget across various programs, you can create a comprehensive strategy that not only honours tenure but also motivates ongoing excellence and fosters a positive workplace culture.
Contact us to find out how you can offer a meaningful and personalised choice of long service gift to your employees to recognise their long service.