You also see increased employee loyalty, which is why CXtec has been recognized for the last two years by the Society of Human Resource Management as one of the 50 best companies to work for in America. And product rewards are certainly part of the reason. “We want people to come to work and have fun,” Ashkin says. “We believe that if you enjoy your job you’re going to continue to come to work every day. There’s evidence that these rewards keep them there.”

That’s a good thing, since some studies show that as many as a third of workers will consider leaving their job in the next year. Those most likely to walk out the door? Studies show that employees who have worked for a company five years or less are the ones most likely to leave. “It’s not the 10-year staffers managers should be worried about. It’s people six months or two years into a job,” says Michael Dermer, a rewards expert and president of IncentOne, a New York-based employee retention and incentive solutions firm.

And now, with “the economy improving, it’s much easier for folks to change employers,” he adds. That has more and more companies worried. Estimates for what it costs to replace a worker who leaves can be as much as 1.5 times that person’s salary – for some companies costs for replacing lost workers total as much as $27 million a year, according to a study by Development Dimensions International (DDI), a human resource consultancy based in Bridgeville, Pennsylvania.

One way to avoid such turnover is through smart incentives.

“Lack of employee loyalty and turnover is a very significant problem, especially after the dot.com fallout and some of the improvements in the economy when a lot of companies didn’t have as much concern about employee retention,” Dermer says.

But turnover doesn’t have to be such a concern. Read on to learn how a few companies that have managed to use product rewards to boost staff morale.

Setting the Bar – Low?
When a salesperson at CXtec earns a monthly performance reward it’s often not for closing the company’s largest deal. It’s simply for closing a deal. Period. That’s because, while the company’s executives are trying to inspire hard work and dedication, they are more interested in creating a positive work environment with energy that will make newcomers want to stay on for the long haul. That comes from doling out multiple rewards for any and all hard work. To help create that mood, the organization created Tchotchke Day in which Ashkin walks through the sales department and hands out prizes to salespeople. Each year the giveaways have a theme: this year the theme is dinosaurs. Last year the theme was pigs. That means staff can receive dinosaur pens, T-shirts, stuffed toys and other prizes for any sale over $500. Why so low a bar? “We’re really looking to reward more people rather than less,” Ashkin says. Of the team’s 125 salespeople, in June, 70% of them received a dinosaur-themed prize.

Other times incentive products are given to employees who simply ask questions in meetings. The point is to engage and involve staff – and create a positive work environment. “Our goal is to keep 80% of our workforce,” Ashkin says, “and we are already ahead of that this year. We’ve retained 85%.”

Not bad considering that the average turnover for non management positions is just over 19% according to a recent DDI study, Retaining Talent: A Benchmarking Study. That’s often because it’s “sometimes difficult to communicate to senior leadership in a company the cost of losing employees,” says Dermer. In that case, Dermer suggests managers create their own employee retention programs – regardless of how small – within their own departments. The key to maintaining employee loyalty and morale, he says, is to recognize staff for their efforts, even if it’s something as seemingly inconsequential as a balloon. What’s more important, Dermer says, is to vary the rewards. “People want very different things,” he says.

Targeted Retention
At Transworld Business Brokers, Andy Cagnetta, the company’s president, makes achieving rewards more difficult. But that’s because his retention plan focuses on keeping the top 25% of employees. The business brokerage based in Ft. Lauderdale, Florida, certainly doles out its share of small rewards to its 40-person staff. T-shirts, watches, hats and other items generously handed out and emblazoned with the company logo do much to foster pride and loyalty among workers, Cagnetta says. But for top performers, the company has created a special product that is as much recognition as it is tangible reward. Each year a special pin is created for only the highest performers in the company, who must earn $100,000 in commissions to receive the pin. Those who earn the pin often place it on a company hat and wear the pins much like stars in the military, Cagnetta says.

Presenting the pins to an exclusive group of performers inspires other staffers to work harder and become a more integral part of the team, Cagnetta insists. That fosters greater employee loyalty, and gives even newer reps the chance to quickly gain stature within the company. And there is evidence the push to earn a pin is doing just that. When the program began a few years ago the company had 15 salespeople and five pin winners. By last year those numbers had risen with a sales team that had 35 members and 14 pin winners. This year salespeople number 50 and already eight people have won a pin, Cagnetta says. Turnover, he says, is a steady 5% or less year after year. The stress of the industry makes turnover an issue, Cagnetta says, so it’s important to be generous with rewards and recognition if Transworld wants to keep its employees. The company’s $10,000 a year rewards budget is crucial, he says, to keeping turnover low.

Plenty of companies spend much more than $10,000 a year on employee rewards and recognition, say experts, but the price of the reward is far less important than the reward itself – particularly when the reward is personally gratifying to the recipient.

When NBC realized its employees weren’t feeling as recognized as they should in 2004, the network set up a company-wide employee recognition program, fearing that if they didn’t, underappreciated staff might head for the door. But they did so with one purpose: employees would get to select the reward of their choice. How? The program rewarded the company’s 12,000-plus employees with gift cards which they could redeem for various gifts at retailers. An employee might make a suggestion to improve a company process and receive a $25 gift certificate for doing so. Employees could then visit retailers such as Barnes & Noble or Bed, Bath & Beyond and select prizes of their choosing. Though NBC won’t release specific numbers, the program has significantly cut employee turnover, especially among staff newcomers, says Dermer, whose firm helps administer the program.

Regardless of who a company is targeting in its employee reward and retention program, the key to keeping staffers is to reward them often. Those who don’t will likely see staff walking out the door.

Betsy Cummings is executive editor of Successful Promotions.