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 are a part of an organization’s employee recognition and total rewards strategy.

Objectives of Milestone Awards

1. Increasing Morale: When employees feel they are being recognized and rewarded, they are more likely to go above and beyond their duties. This also boosts the team's morale, as they recognize that hard work will be noted and celebrated.
2. Improving Retention: Employees who feel recognized tend to stay longer at a company. Long-serving employees have deep product and organizational knowledge, helping them understand what works and what doesn’t. A higher retention rate also reduces costs (onboarding, recruiting, etc.).
3. Talent Attraction: Prospective candidates who know that your organization recognizes milestones are more likely to join.
4. Organizational Culture: Milestone awards create a sense of belonging among employees, sending out a signal that the company appreciates its workers.

Best Practices for Milestone Awards

Determining What Milestones to Recognize

Employers must be consistent in celebrating milestone awards. If a milestone is celebrated for one employee, it should be celebrated for all to avoid creating a sense of unfairness. Below are some employee milestones to recognize:

• Work Anniversaries: Work anniversaries or years of service (YOS) are the most common milestone awards, celebrating people who have worked for the company for a significant amount of time. Typically, 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 a big or small celebration. Some companies have special celebrations for certain birthdays (such as 50th or 21st birthdays).
• Promotions: A promotion is a significant moment for an employee, indicating advancement in their career and status in the company. It is a noteworthy milestone to celebrate, as it also fosters healthy internal competition. Not all promotions need to be celebrated or awarded, so choose wisely which are significant.
• Retirement: Although retirement marks the end of the relationship between 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 Achievements: Recognizing a milestone moment for the company itself can include industry awards, new acquisitions, impressive growth, or company anniversaries (such as a 10-year or 50-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.

Showing 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 preferences, for example, a gift based on their hobbies and interests or a gift card from their favorite store or restaurant.
• Provide Something of Value: A milestone is a significant moment, so an employee would likely appreciate receiving something more than just a ‘thank you’.

Increasing the Value of the Award Periodically

Employees 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 pride.

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.