How Employee Loyalty Programs Are Evolving

Organizations are updating their loyalty incentives to ensure they speak to the needs of today's workers

Employee Loyalty Evolves opener

Finding ways for organizations to ensure they are holding on to their strongest employees and getting the most out of them is nothing new. But as the global economic landscape becomes increasingly unpredictable, programs that help organizations bring some stability to their operations by retaining their strongest workers, are more important than ever.

"One need only imagine a world where nobody says 'thank you' to understand the psychological impact they have on a workforce's morale, satisfaction, and faith in leadership," says Cord Himelstein, vice president of marketing and communications for Michael C. Fina Recognition. "Organizations should build that language immediately, cultivate trust, and start appreciating employees sooner rather than later, because strong bonds weather the storms."

He adds that companies that create and maintain a "sincere dialogue of mutual respect with employees tend to hang on to their best talent no matter which way the economic winds are blowing."

While encouraging employee loyalty has been a priority for incentive programs since they were invented, the goals for employee loyalty programs have shifted in recent years. Recognizing employee loyalty once was just a matter of giving a worker a token of appreciation after five years and a watch when he or she retired. No longer.

"With a much more fluid and adaptable workforce than previous generations, recognition can't be a once-a-year or an every-five-years thing anymore," says Himelstein. "It takes much more than an annual gift to build loyalty anymore -- it takes continuous commitment, which is the niche these types of programs now find themselves well-suited to fill."

Himelstein should know. As part of Michael C. Fina Recognition, he's part of a company that has helped pioneer the employee recognition movement since the 1960s, seeing changes in employee-loyalty needs firsthand (and in many cases helping drive the changes itself). In recent years, and particularly during times of economic uncertainty, organizations have not had the luxury of assuming their best employees would stick around for years, which has placed a greater importance on establishing a culture of recognition not just within the employee's first year, but the moment they are hired.

Jonathan McClellan, director of employee recognition, Hallmark Business Connections, emphasizes that milestone rewards are now having to be delivered not only with more frequency, but also on a more "localized" level.

"Rather than [a milestone recognition] remaining a company-sponsored event that is channeled through the employee's manager, the momentum needs to continue to shift more to a localized celebration of achievement that incorporates teams and employee networks to contribute to the employee experience storyline," he says.

These kinds of programs are good for the bottom line, according to McClellan.

"Incentives-based programs provide companies with the flexibility, adaptability, and platform (forum) for recognizing and celebrating top performers, extraordinary effort, and standout performances of up-and-comers," he says. "These programs are far more cost effective than competing for talent on wages alone, plus they offer the additional benefit and discretionary choice of when and where to apply it for the greatest impact -- i.e. motivating, engaging, and retaining top talent."