The Difference Between Reward and Recognition 

In order for your employees to feel fully satisfied in their jobs, they will need much more than just a pay check. While offering competitive pay is critical to recruiting the top talent in your industry, it is important to have a program that covers both rewards and recognition if you wish to attract and actually retain high performance employees.  However, many professionals fall into the trap of assuming these two terms are interchangeable. In order to glean the best results from your organization’s employee reward and recognition program, it is important to first de-couple these two terms, and identify their key distinctions.  

What is the Difference Between Reward and Recognition? 

As you develop your reward and recognition program, aim to first thoughtfully consider and understand the key differences between these two areas of employee incentives. Once you have a clear picture of how they differ, both in nature and in practice, you will be able to accurately assess where and when the deployment of each is most appropriate. 

Listed below are the 10 key distinctions you should draw between reward and recognition: 

Creating an Employee Reward and Recognition Program 

Once you have gained a thorough understanding of how rewards and recognition differ in their nature, you can begin crafting an employee reward and recognition program that ensures your response to employee achievements and results is always appropriately directed. The first step is to understand just how the distinctions we have laid out will interact when put into action: 

• Tangible vs. Intangible – an individual can be recognized without being given a reward, but a reward should never be doled out without being coupled with recognition. 
• Transactional vs. Relational – rewards are useful for attracting top talent to your organization, and recognition is mandatory for retaining that talent.  
• Consumed vs. Experienced – carefully balancing how often you reward vs. recognize an employee ensures that the way in which the employee receives compensation for their achievements is appropriate and measured. 
• Transferrable vs. Non-Transferrable – aiming to focus on recognition, and teaming it with reward where appropriate, will help your employees feel valued for their individual contributions. 
• Conditional vs. Unconditional – blending rigidity in rewards, with the flexibility in recognition, and applying them either on their own or in combination over time at your discretion is critical. 
• Expected vs. Unexpected – an individual should never be let down by being deprived of a well-earned reward, but you should also be spontaneous enough in your attitude to be able to celebrate and appreciate your employees each day. 
• Economical vs. Emotional – performance and fixed outcomes of success are important to keeping employees motivated, but it is feelings (that is, satisfaction in being recognized) that rule the retention aspect of the employee experience. 
• Fixed vs. Free-Flowing – fixed rewards allow for employees to have a clear picture of the expected behaviours they should be working towards, but a free-flowing culture of recognition will help keep them on their toes and productive on the everyday level. 
• Impersonal vs. Personal – the impersonal nature of rewards can be remedied by always combining the dealing out of rewards with personal recognition for the employee. 

Now that you have a clear sense of the key differences between the concepts of reward and recognition, and how they may interact when put into action in your program, it is important to understand some general tips for creating and implementing an employee reward and recognition program. Listed below are some of the key best practices you should follow when utilizing your program: 

1. Identify What to Recognize

Outline and map out all of the behaviors and actions you will be looking for from your employees, and ensure everyone in the company has equal opportunities to receive recognition. 

2. Make It Timely

To ensure the effectiveness of the reward or recognition you deal out, you need to act immediately when success is identified. Providing recognition or a simple reward as soon as you notice behavior you want to see repeated helps employees pinpoint what exactly you are looking for, and how they can go about receiving recognition themselves. 

3. Do It Often

Employees crave recognition, so seeking out small and unique ways to regularly recognize their efforts and achievements keeps them satisfied. 

 4. Make it Genuine

Don’t stick to e-mail templates or automated responses when your employees are performing well. A sincere thank you, or a personalized recognition coupled with a reward, will go further. 

 5. Personalize It

As we have already mentioned, personalizing how you go about giving rewards or recognition to your employees is critical. If you are recognizing their achievements, praise them in a way you know the employee will be comfortable with. If the employee is shy and uncomfortable with loud, public recognition, be genuinely thankful and demonstrate your appreciation in a one-on-one discussion. If you are giving out a reward, select something that you know will be meaningful or impactful to that specific employee.  

6. Aim for Collaboration

Including everyone in your employee recognition and reward program incentivizes them to keep up the good work even when you are not looking. Employees love being recognized, but they also enjoy recognizing the work of their peers. Encourage your team to praise one another often, and consider implementing a peer-nomination system into your rewards program. 

7. Make It A Habit

By setting yourself a standard of regular recognition, it is much more likely to get ingrained into the company culture as a whole, and will transform into something every employee wants to be a part of. 

8. Be Transparent

Doling out recognition and rewards is a great tool for demonstrating the type of behaviors you want all employees to exhibit.  

9. Be Fair

Don’t just reward the same rotating roster of your top performers. Keep an eye out for the underdogs of your team, whose work is of high quality but may not be quite as obvious. In addition, never create company rewards that are only achievable by a certain group of employees or certain departments. 

10. Include Remote Workers

Your employees working remotely are just as important as your in-office team members, but they can often feel disconnected from the office. Providing recognition and rewards to them as often as you do your in-person employees, and encouraging employees to engage in recognition with their remote peers, helps to keep them engaged with the wider team. 

11. Be Creative

Your rewards and recognition program does not have to be boring and dry. Have fun with your ideas, finding ways to recognize and reward different groups, departments, and employees in unique ways that apply to their specific accomplishments, wants, and needs. 

12. Separate Recognition and Criticism

Constructive criticism is essential, but when it comes to your reward and recognition program, avoid the “compliment sandwich”. Do not leverage recognition just to soften the blow of harsher criticisms. Feedback is integral, but you should have those discussions separately from your recognition process. 

In Summary 

The term ‘Rewards and Recognition’ are often used interchangeably by professionals, but recognizing their key differences is one of the most important steps to ensuring your employee program keeps your employees feeling satisfied and engaged with their work.  You do not need to be excessive with rewards to keep your employees feeling appreciated. When giving out meaningful recognition, and coupling it with tangible, earned rewards where appropriate, your employees will feel their individual contributions will never go unnoticed by you. 

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12 Employee Incentive Programs 

Today’s job-seeker has a far greater emphasis than the rate of pay; the focus is primarily on work-life balance. 

Employees want more than promises of advancement and competitive compensation rates, and companies will need to listen and acknowledge those needs if they want to not only attract top talent, but retain them as well. A good way to do this is by offering employee incentive programs.  

What are incentive programs?

There are two types of incentive programs. 

Employee incentive programs are essentially rewards programs that push current workers to try to achieve challenging – yet attainable – goals. They should include everyone on the team and, as opposed to being one big reward at the end of the year, should be several small rewards throughout the year. There are many different options for incentive programs, which we’ll discuss below. 

As well as incentives to keep employees happy, there are also ones to attract new employees to the company. As stated above, employees are demanding more and more from organizations to work for them, so an attractive incentive program goes a long way. 

Are incentive programs worthwhile?

It is common knowledge that happy employees are much more profitable to a business. Incentive programs are an extra opportunity to make employees happy. They also contribute to raised productivity and boosted morale, as employees are more likely to work harder toward a goal if they know they will get rewarded for it. 

As for incentive programs to attract new prospects, if you want to attract top talent, you have to show them that you’re the best choice. Showing them what incentive programs they would get to take part in is a good way to do that. 

What are some good incentive programs to offer?

Before you lay out an incentive program you will definitely need to put in the research. Ensure you have it properly structured and budgeted, and understand that every organization will have a slightly different incentive program that works best for them. Check out this list of some possible incentives: 

1. Better health and wellness benefits

One of the biggest incentive programs employees want is health coverage. Obviously, a healthy employee is a happy employee, and will be more inclined to be productive. Offering a health and wellness incentive program – whether it be dental, vision, or even just a general health fund – is a good way to not only attract employees, but keep the ones you have. 

2. Flexible schedules

More and more, potential employees are seeking flexibility in their work schedules. This could be a window during which they are allowed to start their day, flexible hours on a weekly basis, certain times/days they are allowed to work from home, etc. This is a big incentive program for job-hunters and current employees alike, as a greater focus is put onto a healthy work/life balance. 

3. More vacation time

Everyone wants a vacation, so it’s no surprise that any incentive programs offering more vacation time are popular. These don’t need to include unlimited time off whenever the employee feels like it, but the more generous, the more enticing. 

4. Unlimited sick days

Unlike vacation days, sick days are something that many employees would like to see become unlimited. This would need to be monitored so as to not be abused, of course, but generally not making your employees come in when they’re sick will be better for everyone. The employees will be able to rest and get better, and their coworkers won’t need to worry about catching whatever sickness they’ve got. The employee will also feel much better while recovering knowing their job is safe. 

5. Class cost repayment

Your employees are far more likely to take courses or workshops that will teach them new skills, and help improve other ones, if they know they’ll be reimbursed for it. Offering an incentive program that does this – even in part – will more than pay for itself by making your employees more knowledgeable.  

6. Free gym membership

While this could potentially fall under the health and wellness incentive program, providing employees with free gym memberships – or potentially even having one on-site that they can use – will promote a healthy lifestyle, and also help reduce the problems caused by sitting all day. Additionally, you could consider alternate fitness and yoga classes. 

7. Parental support

Maternity/paternity leave aside, new parents still need support once they’re back. An incentive program offering free daycare services can be a huge help, and the difference between someone coming back to work or not. This is also a very good time to allow those flexible work hours we discussed before. 

8. Team retreats/outings

Many employees put a good company culture near the top of their priority list. One easy way to help make the culture a positive one is to offer incentive programs that reward the entire team by taking them on a retreat, or on outings. Not only will they be motivated to work harder to meet this goal, but the reward itself will lead to more team bonding. 

9. Free food and drinks

While it may seem simple, providing free coffee, soft drinks, snacks, etc. is a great incentive program. It gives employees options without having to leave the office, and can also save them money, which will make them happier. 

10. Incentives for completing tasks

While most of the incentive programs up until this point have been ways of drawing new employees to the organization, you can also incentivize your current workers to push through to a challenging goal. Some rewards could include: 

• Attendance awards – the longer you go without missing a day, the higher the reward 
• Green commute – get rewarded for biking, walking, etc. to work instead of driving 
• Gifts – a popular item like a gift card always goes over well 

11. Travel incentives

While easily one of the most expensive incentive programs, travel perks do pay off. It’s important to ensure you plan the getaway properly, since they’re usually on the company’s dollar. You’ll also need to be very clear as to who the incentives are intended for, and how they can qualify for them. More on travel incentive here.

12. Pay-for-Performance

A pay-for-performance rewards employees based on their performance and contribution to organizational and departmental goals. Establishing fair and consistent practices in how you reward and compensate performance is critical. More on pay-for-performance here.

Final thoughts 

Employee incentive programs are definitely a worthwhile addition to any workplace. As long as they are properly structured and researched beforehand, incentive programs can motivate employees to be more productive, boost morale, and make the company culture more positive. 

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Implementing an Effective Pay-for–Performance Model 

Pay-for-performance compensation describes performance-based pay programs where an employee is incentivized and rewarded for achieving goals or objectives.  

In a hurry? Take our Implementing an Effective Performance Management White Paper to go!

What is Pay-for-Performance? 

The pay-for-performance model moves away from systematic entitlements when it comes to compensation, and instead signals a more mature and fair approach to employee salaries. It works to drive employee engagement and is also effective in boosting top talent retention. Despite being a complex model that can manifest in several different forms, hinging on budget, goals, company size, and so on, pay-for-performance can be grouped into two principle categories: 

Merit Pay Increases 

These refer to the increases in an employee’s base pay due to high performance that are typically delivered on an annual basis. They are often already budgeted for, included as part of the annual salary increase budgeting process. This is the most used pay-for-performance model, recognizing employee performance and rewarding top performers with an increased base salary for the following year. 

Variable Pay Programs 

These encompass an array of both discretionary and non-discretionary bonuses, varying according to the payout period, employee eligibility, and employee measurement metrics. Unlike merit pay increases, variable pay programs are often administered multiple times a year (i.e. once a quarter), and a mix of different programs are often employed.  

Some variable pays programs include: 

Discretionary Bonuses

These are awarded on an ad-hoc basis to the employees demonstrating outstanding performance, and often without consideration of pre-defined goals. This can include: 

• Spot bonuses: reward employees “on the spot” for achievements that deserve special recognition. 
• Project bonuses: reward employees for completion or superior completion of a project. 
• Retention bonuses: usually awarded to long-tenured employees, or employees in “hot jobs”, to decrease their flight risk. 

Nondiscretionary Bonuses

These are awarded when employees, teams, or the entire company meets specific, pre-defined goals. They are based on the duration of the assessment period and are considered either short-term incentives or long-term incentives. This can include: 

• Company-wide bonuses: focused around specific improvement goals for the company, rewarding employees based on how much improvement is made on these goals over a certain period of time. 
• Team-incentive bonuses: focused around specific improvement goals for one specific team, rewarded based on the performance of that team. 
• Individual incentive bonuses: based on predetermined, measurable business objectives (MBOs), that are evaluated periodically based on an individual employee’s performance.  

Is Pay-for-Performance Really Working? 

Pay-for-performance compensation can come in many different forms depending on an organization’s budget, compensation philosophy, and organizational goals. However, despite their usefulness in building a competitive compensation plan, very few organizations have feasible and effective pay-for-performance models in place.  

The Pros and Cons of a Pay-for-Performance Model 

Despite embracing its concept, many employers claim that their pay-for-performance programs are failing in driving and rewarding individual or group performance. 

In a Talent Management and Rewards Pulse Survey conducted by Willis Tower Watson, a surprisingly large number of North American employers claimed their programs were not accomplishing what they had promised they would do. Specific findings included: 

• Only 20% North American companies find pay-for-performance effective in driving higher levels of individual performance at their organization. 
• Only 32% claimed that their performance-based pay program is effective in differentiating pay based on individual performance. 
• 53% agreed that annual incentives are ineffective in differentiating pay based on how well employees perform.  

The survey also pointed out the discrepancies in employee’s understandings of how merit is specifically measured, with their understandings of the merit-influencing values not aligning with their employers. For example, two-thirds (64%) of employees claim the managers at their organization consider the demonstration of knowledge and skills in an employee’s current role when making pay-increase decisions. However, less than half (46%) claim their programs are designed to take these performance indicators into consideration.  

Pay-for-performance models can be great tools in driving performance and recognizing and reward top-performing employees, but only when they are designed and implemented correctly. Traditional thinking on merit-based pay is no longer applicable – companies instead need to define what performance means specifically for their organization, and what managers can do to ensure they are driving the right performance. Re-evaluation the objectives of rewards programs can help to realign pay-for-performance models with their benefits, rather than misaligning them and causing detriments.  

Implementing an Effective Pay-for-Performance Model 

While the concept of constructing and implementing a merit-based compensation model may seem daunting to many organizations, there are several tricks you can use to do it effectively and ensure it is sustainable in the ever-changing job market.  

Most employee performance can be classified into one of the two categories: 

1. Qualitative Performance – activities related directly to customer experience and outcomes, such as sales, customer satisfaction, employee engagement, employee productivity, etc. 

2. Quantitative Performance – activities related to the operations side of the organizations, such as programming, accounting, administration, etc.  

Once an employee’s performance is quantified, it becomes much easier to link their performance to rewards, guiding you towards a fair and flexible pay-for-performance model suitable to your organization. 

Best Practices in Linking Performance to Rewards 

Identify the triggers for top performers.

Not every employee will view higher base pay or bonuses as the ultimate form of reward. Management should recognize what specifically drives engagement and productivity in their top performers, allocating the annual budget to flow into these triggers specifically. 

Identify clear-cut objectives for employees.

Pay-for-performance heavily relies on both the employee’s and the employer’s understanding of what good performance actually looks like. When the ‘what’ of performance is clearly articulated, employees will have a better understanding of what they’re working towards, making the measurement of performance against your model much more cohesive. 

The Benefit of Linking Pay to Performance 

The objective of any pay-for-performance model should be maintaining a structure that rewards the employees who best contribute to organizational and departmental goals. Establishing fair and consistent practices in how you reward and compensate performance is critical.  

SpriggHR’s Compensation Tools are an effective solution that helps you to accurately link pay to performance, tracking essential compensation activities and reporting.  

Create a fair and consistent approach to your compensation strategy by establishing adjustments that directly link an individual’s pay raise or bonus allotment to the results of their own performance.  

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Is Offering Travel Incentive Worthwhile?

A travel incentive program is just what it sounds like – travel perks offered to incentivize employees in order to increase their productivity and engagement. 

Depending on the company, a travel incentive program / event can range from a weekend getaway to focus on team-building activities, all the way up to an all-inclusive family vacation paid for completely by the organization.  

A travel incentive program is used not only to motivate current employees to work harder at achieving specific goals, but also to gain their loyalty and ongoing commitment. Which is approved by acknowledging employees that their hard work is appreciated. 

One way companies use travel incentives is to directly link it to company goals and results. For example, if a sales team isn’t gaining enough clients, the management may offer extravagant travel opportunities in order to motivate the team to work harder.  

The trip itself should be balanced between work and leisure time – after all, it’s meant to feel like a reward. A healthy balance of team-building activities, networking opportunities, and free time will make the trip diverse, interesting and reinforce its purpose of reward. 

Is it worth it to offer a travel Incentive?

Planning a corporate trip can be expensive and time-consuming. Is there true value in these types of reward programs? Here are some reasons that say yes: 

• When employees are sufficiently incentivized, they put in additional and measurable effort to achieve said targets and goals, often exceeding targets 
• This type of incentive program has been proven to both attract and retain top-level talent 
• These opportunities encourage cooperation between teams, departments, etc. as everyone works toward the same goal  
• Achieving and in some cases even qualifying for a travel incentive program is in itself a reward of performance recognition 
• The excursion tends to build camaraderie which leads to team member bonding and ultimately drives continued engagement post-travel 

Defining your travel incentive program

First, set up your criteria – you should have clear achievable targets that employees must hit in order to qualify for the incentive. These goals should be tied into the strategic business goals of your company and should be a measurable result.  You’ll also need to determine who is eligible for program participation – is it a specific team, or company-wide? Once these parameters are in place, introduce it to the employees and begin creating an internal marketing campaign to keep excitement levels up. 

Next, ensure you have regular and transparent communication about the progress your employees are making towards the goal. Ideally, they should be able to track it themselves too. This will promote friendly competition and increase productivity. It also engages employees to track their own progress keeping detailed notes on what work they do so as to prove that they are meeting program requirements. 

Defining Parameters

It must be made very clear from the start as to who can qualify for the travel incentive and the required performance metrics 

• Define the goal and who it’s for: be as clear as possible. For example: the sales team will have a goal of increasing the number of clients by 50%. 
• Tell them what they need to do, with a clear benchmark: what actions must they take to qualify? For example: to qualify for the travel incentive, a sales team member must average 10 new clients per month for the entire year. 
• Make goals achievable: the goals should be challenging but possible to achieve. 

Support the program

Manage the anticipation and excitement by slowly revealing clues about the destination. Some ways to do this include having a weekly clue posted or monthly leaderboard – again, promoting friendly competition – and recognizing employees who are getting close to meeting their targets. Giving periodic updates pertaining to the travel plans will also renew the motivation the employees feel to hit the targets. 

Finally, design and launch a bon voyage party with celebratory announcements highlighting achieved targets and recipients. 

Is a travel incentive program right for my company?

Obviously, different companies will have different restrictions when it comes to offering incentives, and a travel incentive is one of the biggest ones. However, that doesn’t mean you need to be a Fortune 500 company to offer them – it will simply take adequate preparation and sticking to a manageable budget.  

If you don’t think your company is suited toward offering a travel incentive (perhaps it’s a new start-up without the money to do so, or for a myriad of other reasons) don’t worry – there are plenty of other monetary and non-monetary options you can offer in order to attract and retain employees. Check out 12 Employee Incentive Programs for more ideas! 

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