What's the difference between recognition vs rewards?

By Indeed Editorial Team

Published 14 April 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Employees who feel appreciated, acknowledged and rewarded for their work are more likely to be happy with their job longer. One of the most effective ways to improve retention and increase engagement is by introducing elements of reward or recognition schemes. Each serves a different purpose, but together these systems can provide employees with the motivation they need to achieve milestones and exceed expectations. In this article, we look at the difference between reward and recognition and why each is important:

What does recognition vs rewards mean?

The terms recognition vs. reward may suggest the terms are interchangeable, but each system serves a specific purpose of its own. While reward operates on a standardised scale where employees gain something for their work, recognition is more of an ongoing process to improve motivation and acknowledge excellence in the workplace. Here is what each term means in the workplace:

What is an employee reward?

An employee reward is a physical item, gift or award that an employee receives to celebrate a specific accomplishment. Rewards are typically given based on specific milestones and KPIs to ensure fairness across the business. For example, an employee exceeding their sales figures in a specific month receives a gift card for their work.

Related: 11 foolproof ways to make sure your team feel valued at work

What is employee recognition?

Employee recognition is public praise or acknowledgement given to an employee based on their job performance. Instead of a set scale, recognition tends to be on an 'as and when' basis at the discretion of managers or supervisors. For example, a manager may draw attention to the great work a particular employee is doing on a specific project at the start of a meeting with high-level employees.

Related: How to show recognition for employees (examples and tips)

Why are recognition and rewards important?

Recognition and rewards provide valuable benefits to workplaces by showing employees they are valuable. If managers take note of the positive things that employees have done, from exceeding targets to staying late to finish an important project, employees feel more valued and motivated to continue to work hard. Some of the benefits of recognition and rewards systems include:

Improving engagement

Employees that feel their contributions have value are more likely to engage with their day-to-day work. Both employees receiving rewards and other employees witnessing these rewards may become more engaged in their work as they feel like what they do matters. For example, if an employee has a call-out in an email for the quality of their work, they may feel motivated to engage with their other work to the same degree.

Boosting motivation

Motivation is vital in helping employees reach deadlines and complete work to the highest standard. When employees feel valued, this improves their motivation to complete work and achieve the next milestone. For example, if an employee receives a gift card to reach their sales target, they may be more motivated to reach that goal the following month.

Enhancing retention

Retention is critical for businesses looking to retain employees and prevent turnover. Employees who feel acknowledged and valued may stay in a business for a longer period of time. Rewards help keep high-value employees in a business for longer by offering incentives that other companies may not deliver on.

Related: Unappreciate**d at work: why this happens and how to solve it**

Raising productivity

Improving employees' productivity benefits the business as they can consistently complete work on time and on schedule. Employees that feel rewarded and recognised are more likely to be productive in their workday. Having rewards in place to complete work ahead of a deadline, for example, can be one way to boost productivity.

Encouraging development

Rewards and recognition programmes aren't just for everyday work. Offering incentives and benefits to employees that further their career development may be an effective way for businesses to up-skill existing employees and give them new opportunities. For example, offering recognition for taking on new responsibilities or a reward for completing a qualification can help to encourage development.

Related: Employee incentives: what they are and how To use them

Increasing loyalty

When employees feel valued by the people they work for, they are more likely to feel a sense of loyalty to their workplace. Employees can demonstrate this loyalty in various ways, from motivation to do extra work to productivity on specific projects. Loyal employees may also be keen to work extra hours and take on additional tasks, knowing their work could receive reward and recognition.

Better self-worth

One of the less tangible benefits of rewards and recognition is self-worth. Employees who know their worth are more likely to be confident in their work and understand that what they do is valuable to the business. For example, an employee who is consistently rewarded for going above and beyond in their work may have the confidence to ask for a promotion or extra responsibility.

What's the difference between rewards and recognition?

While there are some similarities between the benefits of rewards and recognition, there are also plenty of differences between the two. These differences allow employers to create two different systems to benefit employees. Here are some of the key differences between reward and recognition:

Scale

Typically, rewards offer benefits on a scaled basis, increasing the reward depending on the work put in. For example, rewards may occur on a milestone basis for the number of cases resolved or customers served. By contrast, recognition is a flat system, with each circumstance treated individually based on the situation.

Cost

Employee recognition is usually either low cost or has no cost attached to the system. For example, an e-mail or a mention would not incur a cost for management. Rewards do involve a certain degree of cost to provide employees with something tangible, whether that's a day's holiday or a gift card for a local restaurant.

Purpose

The purpose behind both rewards and recognition schemes are to acknowledge employees for contributing beyond their role. Rewards are generally used to set specific milestones, while recognition is more flexible. For example, an employee may get a reward for hitting a defined sales target or receive recognition for their excellent attitude with customers.

Expectation

Rewards programmes are usually clearly defined to employees, whether a competitive system or based on each individual. Recognition tends to be less structured, making it easier for managers or supervisors to surprise an employee by recognising their work beyond facts and figures. Employees generally work towards rewards, while recognition happens without prior knowledge.

Reason

Recognition is best suited to non-recordable contributions that an employee makes. For example, working particularly well with a team, working extra hours or significantly improving over time. The reason behind rewards is more transactional, making it an achievement that all employees can gain instead of something specific about that individual employee.

Tangibility

Recognition can take many different forms, from face-to-face praise, a positive annual review or a mention in a meeting. Rewards tend to be more tangible, providing a direct real-world benefit for work achieved. An example of a reward would be a gift card, a catered lunch or a hotel stay.

Consistency

Rewards for specific milestones are short-term incentives, with future rewards to motivate continued good work. Recognition can provide long-term benefits to employees by continually acknowledging the work put in on a team. For example, a weekly shout-out for the top worker of the week at the beginning of a meeting.

Examples of reward vs recognition

The reasons why reward and recognition are so important may line up, but the implementation of each system is usually different. While rewards systems typically function as a business-wide practice, recognition happens at the discretion of specific supervisors or managers. Some examples of types of rewards and recognition include:

Rewards

Rewards offer a tangible way to acknowledge employees hitting specific milestones or goals. Typically, they take the form of tangible, real-world benefits that the person can use. Examples of rewards include:

  • Gift cards: restaurant cards, generic cash cards and online shopping vouchers

  • Food and treats: gift baskets, bottles of wine and catered lunches

  • Extra time off: extra days' holiday or leaving early on Friday

  • A holiday or hotel stay: all-inclusive trips or spa visits

Recognition

Recognition provides a casual method for employees to acknowledge excellence from employees. Instead of milestones, base recognition on anything of merit that the employee does. Examples of recognition methods include:

  • Meeting congratulations: Mentioning someone's good work at the start or end of a meeting

  • Emails or notes: Letting everyone know about an employee's work through a group email or online message

  • Social media: Posting about great work on social media or internal social channels

  • Employee of the month: Providing recognition through a poster or digital gallery for excellence in work


Related:

  • What is an employee recognition platform? (With examples)

  • How To Write a Recognition Letter with Guides and Templates


Explore more articles