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The Difference Between Recognition, Incentives and Rewards

In our industry we often see the terms “recognition,” “incentives” and “rewards” used interchangeably by prospects, clients, and the providers of these very services alike. Here is a quick primer on each to clear up any confusion.

Recognition. Recognition is a discretionary act—employee A sees employee B doing something great and decides to recognize her. This recognition might come in the form of a social posting, an e-card, a physical note or greeting card, a verbal “thank you,” etc. Within the context of a Recognition program, the recognition will ideally align with a company core value such as Teamwork or Putting the Customer First, but there is no concrete metric associated with it. Recognition that is linked to a reward is called monetary recognition; recognition with no reward is considered non-monetary.

Recognition for milestones such as service awards or even birthdays is the exception to the rule above, as the employee simply receives them for achieving the goals of not quitting or dying! While we love the idea of celebrating birthdays and anniversaries and do so monthly in our own company, we don’t believe that this should be the extent of your recognition program—nor the bulk of your spend. Here’s why.

Incentives.There is nothing discretionary about an Incentive. They are usually used within the context of sales programs, but there are other types of incentives.

  • Sales incentive example:Sell 20 widgets before the end of Q2 and get a $500 bonus.
  • Non-sales incentive example: Get a biometric screening this year and get a $50 reward (wellness) or reduce call center wait times by 20% in Q3 and everyone on the team gets a $250 gift card.

Incentives always have a time period, a measurable action or goal, and a reward associated with them. The achievement of an incentive may also be accompanied by recognition. For example, “Great job on reaching your goal this quarter Steve! You earned the Sales Superstar badge on your profile.”

Rewards. Rewards are the items, gift cards, cash, or perks such as time off or discounts earned through receiving recognition or achieving your goals within an incentive program. Simply handing out rewards is NOT recognition, as it doesn’t have any value to the employee beyond the dollar amount. Many companies make this mistake, and waste a lot of money in the process.

Many times the recognition is worth far more than the reward component to the recipient. Yes, even salespeople enjoy being recognized! They are extremely competitive and love to see their names up on a leaderboard or earn a badge and words of congratulations from colleagues. So just remember in structuring your recognition, incentive, and rewards programs that you should take all three into consideration and test out different combinations. You might find you are currently throwing away money by offering too many expensive incentives and rewards, and not enough recognition (which is free!).

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