The differences between rewards and recognition

rewards and recognition

 

5 MINUTE READ

 

Should I reward or recognise? What’s the difference anyway?

 

Rewards and recognition are words that are often used interchangeably. But they don’t mean the same thing. As a result, it creates some confusion. In order to understand them both and use them more effectively, we must examine their differences and the unique benefits they offer.

 

Both have their place. Neither is “better” than the other. They’re just suited to different contexts and circumstances. And that’s what we’ll explore in this post.

 

But before diving in, it’s important to clarify exactly what we mean by rewards and recognition. In a blog post for Soapbox, Warren Tanner provided a brief definition of each along with their respective pros and cons:

 

Rewards

 

This refers to all financial rewards like pay rises, bonuses, gift cards as well as any other tangible rewards (holiday, company car etc) given to a person in recognition of their performance.

 

Pros:

  • Highly motivating if the reward is desirable
  • Attractive perks can increase the appeal of an employer to prospective employees
  • Could compensate for jobs with lower rates of pay or job satisfaction

 

Cons:

  • Short-term motivation only, leading to ongoing costs to produce regular rewards
  • Could lead to increased culture of competition, rather than collaboration and teamwork
  • Could lead staff to focus only on achieving outcomes associated with rewards, and neglecting other areas of performance

 

Recognition

 

This can include verbal or written recognition of an employee’s achievements, skills, or overall performance. This can be in a team meeting or one-on-one, or in a casual midday chat.

 

Pros:

  • No financial investment required
  • Increases employees’ sense of competence and worth
  • Builds meaningfulness and purpose for an employee, contributing to their job satisfaction 
  • Can be a great way to reinforce organisational values and cultures like improving teamwork

 

Cons:

  • Staff may “slack off” after receiving recognition, thinking they’ve already proven themselves
  • Staff can feel undervalued if they are never recognised

 

When and how to use rewards

 

Rewards should be used to drive greater performance in critical projects. The short term motivation and drive they produce can help ensure the project is a success. For example a sales team may be rewarded with a group holiday for hitting certain targets.

 

The important thing to consider is how the rewards are distributed. If you get it wrong, you may inadvertently end up hinder performance rather than helping it. Here are some pointers to keep in mind:

 

  1. Objectively (and transparently) identify who deserves reward and for what – When rewards are distributed based on objective data, employees are more likely to view the  process as fair and are also more likely to have a concrete understanding of what is expected of them.
  2. Figure out how much value the work contributed and set the reward accordingly –  It’s critical that employees genuinely value the rewards on offer and perceive them as worth extra effort. Who wants to grind for weeks on end only to receive a single free lunch voucher? Open dialogue is the best way to ensure the rewards you select are a good match for the amount of effort required to achieve them.
  3. Decide if you want to reward only the big wins or the milestone steps along the way. – Consistency is important, so stick you your initial decision. Although it’s worth keeping in mind that if rewards are only given for large achievements it’s easy for employees to lose momentum. It’s hard to get motivated by something that seems far off in the distance.

 

When and how to use recognition

 

Recognition doesn’t cost anything.  So you’re free to give it to any employee, at any time. But the important thing is to make sure recognition is given for the right reasons. If recognition isn’t justified, it loses its value and impact.

 

Below are a few examples of instances where it makes sense to give employees recognition rather than reward.

 

  • For performing actions that align with the company’s goals and strategy.
  • For small wins – minor boosts from ordinary activities can have a cumulative effect.
  • Being a team player – effective teamwork is key to achieving extraordinary results.
  • To encourage and engage employees who are not yet performing at the highest standard.

 

Recognition shouldn’t be given sparingly. It should be used again and again to build people up, strengthen their self-confidence, and reinforce the right behaviours. When people feel their work is valued, their performance tends to increase as a result. Recognition works best when it meets the following criteria:

 

  • Simple
  • Sincere
  • Consistent