Recognition vs Reward: Which drives the best results?


Guest Post from Chris Dyer

How does your company express gratitude to the people who show up every day to do their jobs? And don’t say it’s a paycheck. Researchers from Abraham Maslow to Daniel Pink have shown that salary alone won’t help employers retain their top talent. People need money to survive, but they also have an innate desire to belong to a group and to do things that serve a larger purpose than simply staying alive.

These needs don’t disappear when they go to work. So, incentives tied to employee performance should have more than monetary value. Bonuses and prizes are fine but acknowledging good work in ways that fulfill other important human needs are actually more effective than money. It’s this intangible compensation that keeps workers happy in their corporate homes.

When I consult with business leaders about how to use company culture to lend vitality and stability to their operations, one of the pillars I champion as indispensable is Acknowledgment. When done right, it forms bonds and elevates even small tasks to great accomplishments.

Letting people know you appreciate their everyday contributions or above-and-beyond efforts is the right thing to do in any setting. But in the workplace—where sometimes pressures and profits dominate the action—acknowledgment underscores employees’ humanity, and indicates that the boss has a pulse, as well.

Two ways to acknowledge

Management can acknowledge the value of good work to the company’s health in two forms. It can recognize people’s successes as a display of gratitude or offer tangible rewards for them. Either track motivates individuals, and this special impetus, aside from routine pay, increases an organization’s overall performance, not just the performance of those being acknowledged.

So, what’s the difference?

· Recognition-based motivation uses praise of individuals or teams before an audience to convey good status and model what success looks like within the company. Employees can be publicly recognized in a newsletter or meeting, in an informal hallway chat or a formal award presentation.

Psychologically, recognition makes givers, observers, and receivers all feel part of the group. It lets them know that their efforts matter in the larger scheme of company operations. This motivates people to repeat their successes or what others have achieved.

· Reward-based incentives offer cash, gifts, or prizes in thanks for good work. These bonuses to regular pay give employees something to shoot for, and sometimes to compete with each other for. Rewards might be gift cards, merchandise, or salary supplements.

Some companies use rewards to encourage staff to meet revenue goals or finish projects on time. They may also pair them with public ceremonies, adding some of the panache that recognition carries. Tangible rewards, though, may do more to divide than bond the group.

Which has the edge?

Both forms of acknowledgment have their pluses, but only if deftly executed. Employees want their efforts to be noticed. They want to be thanked, and to know their work makes an impact. A cash token does little to address those needs.

Low-wage workers, on the other hand, do long for the opportunity to escape the confines of their budgets. Providing an ongoing reward program, such as one employed by hospitality giant Caesars, gives access to life’s extras. In exchange for great customer service, Caesars issues “points” that staff can redeem for sought-after merchandise.

Like pay raises, however, monetary or tangible rewards tend to make people want more money or prizes—not, necessarily, to expend the effort that earns them. And rewards have fewer positive effects on observers than recipients.

For most businesses, recognition will prove the better route to results in company performance. Recognition is easy to implement at little to no cost, takes little time, and has lasting effects. Still, you must acknowledge thoughtfully.

How to do recognition right

False sincerity or cheap rewards won’t meet the fundamental needs that motivate employees. And, remember: people are watching. You want to motivate those bystanders as well as the honorees. Don’t waste your opportunity to acknowledge effectively. Formulate a recognition policy that is:

· Fair
· Desirable
· Peer driven

Everyone should have a fair chance for success and recognition. Define those terms as they apply to your business. Make sure they apply equally, and that all team members are aware of them.

Make sure you acknowledge in ways that are desirable to recipients. Wearing a crown for a day or having to attend an award ceremony in off-hours might not be. Hearing kudos over a catered lunch, however, will probably be remembered for a long time.

Finally, let the rank and file in your company be the ones to pass along that pats on the back more often than not. While everyone wants to know the boss is happy with their work, it may mean the most coming from co-workers.

Chris Dyer is the author of The Power of Company Culture: How any business can build a culture that improves productivity, performance and profits, out now published by Kogan Page, priced £19.99


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