How should you reward loyalty?

That poor gold watch. Lately HR pundits are taking their future casting hammer to it and smashing it to bits. But I agree. It’s part of an antiquated incentive system that assumes that employee loyalty can be reduced to a transaction: you give us decades of commitment and we’ll give you a token reward at the end of the line. It’s dramatically out of step with the nature of today’s radically transforming workforce.

What is true: engagement and loyalty are vital to a successful workplace, and will continue to be. That’s a key finding in the Oxford Economics’ Workforce 2020 survey of more than 2,700 organizations and 2,700 employees in 27 different countries.

To coin a geographic metaphor here, we’re right on the edge of a vast continental divide. On one side: the old workplace, a plateau of old-fashioned rewards and perks. On the other: a brave new world, with meaningful incentives and amenities that address the true wants and needs of employees. High time to make the leap, and here are the top five reasons why:

• Workers are not children.

Despite that shockingly youthful face on your new account executive, employees are grown ups. Having taken the trouble to undergo your company’s extensive hiring process, working through your onboarding program and sat through a few dozen meetings, employees are fully aware of their own motivations and what will inspire their loyalty.

• You can’t buy loyalty.

It’s been shown time and again that loyalty is built on relationships, shared understanding and trust. If leadership is engaged with its workforce, is human, responsive, makes an authentic effort to share mission, vision and goals, and demonstrates fair treatment of its workforce, that will inspire loyalty. Say it with me: with loyalty come engagement and commitment. At 11:58 pm when your team is still crunching numbers in the conference room, it’s not for a gold watch on the horizon.

• Rewards are a form of disengagement.

The Oxford study found that one of the most pressing issues facing HR and talent management is how to get C-suite executives more invested in the workforce. 28 percent of those polled said that while HR advises C-suite execs, it is not given a voice in decision-making. Without top-down engagement and investment, it’s impossible to transform HR to manage today’s workforce. But that perks and prizes system can function like a placebo, lulling leadership into a sense that they are taking care of the needs of their employees, when the opposite is true.

• The new face of the workforce is anything but one-size fits all.

I do think the distinctions between millennials (egads) and the other 4 or 5 generations all collaborating in today’s workplace is exaggerated: we’re not all that different, I’d argue. But what is different: the workplace itself is no longer simply a tangible office, where upward mobility is as obvious as the C suite on the top floor. It lives in the Cloud, it’s networked, social, mobile, global; employees may be contingency workers, consultants, part-timers. 41% of the survey’s respondents said they’re increasingly relying on non full time, permanent workers. Workers even in the same department may have different languages, cultures and customs. The gold watch mentality, as uniform and generic as a gray flannel suit, simply won’t work.

• Even time is different.

Today, information and data streams move faster than I can say “information and data streams.” Communication is instant. We retain information and conduct our workflow differently, in shorter blocks of time. The etiquette of response times has changedaccordingly: waiting a few days to answer an email or an hour to respond to a text may seem downright rude. And yes, the influx of millennials, for whom social and mobile is the norm, has further compressed our sense of time. To not text or email or back-pat for a job well done — within an appropriate span of time — is tantamount to not recognizing it at all. Finally, seemingly minor acts of recognition can have a huge impact on an employee’s faith and trust in the organization — they say, We’re paying attention. And that drives engagement and furthers commitment.

I’m always trying to put the H back into HR. In terms of revising the way we acknowledge our workforce, to me this is already a no-brainer. The numbers paint a startling picture: the future is already here. So before we lose this remarkably diverse and global workforce, let’s get rid of all those gold watches, and establish a truly human system of recognition and rewards — that engages, motives, and fosters the talent we work so hard to put in place.

This article is published in collaboration with SAP Community Network. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Meghan M. Biro writes for SAP.

Image: Ford Motor production worker Andrea Brooks assembles batteries for Ford electric and hybrid vehicles. REUTERS/Rebecca Cook