Recognition vs. Rewards: Why You Need Both

Imagine if you only knew you were doing a good job at work when a gift card appeared. 

This is how most companies end up conflating employee rewards and recognition. Recognition gets diluted when it’s rarer, and always paired with a reward. Rewards seem less meaningful when they aren’t the result of consistent, timely recognition.

Let’s take a closer look at the difference between employee rewards and recognition, and learn how to use them. 

What’s the difference between employee rewards and recognition?

Employee recognition is the acknowledgment of one’s positive actions, while rewards are an incentive to continue acting accordingly. 

Another way to look at it is to regard recognition as seeing and rewards as giving. Just because you gave someone something doesn’t mean they truly feel seen.

Can you have one without the other?

Rewards without recognition aren’t going to drive employee engagement and loyalty. There’s a lower likelihood that the employee will feel a connection to their team and employer, even if they have confidence in their role. However, they can be effective at extrinsically motivating performance in abbreviated bursts.

On the other hand, some companies that prioritize recognition don’t have a dedicated employee reward system. Proper recognition (timely, specific, consistent, and from multiple sources) strengthens the employee’s connection to the workplace. They feel valued and have a sense of belonging. 

In this environment, an extra day off or a gift card can be classified as a nice-to-have, not a dealbreaker. So, the answer is that you can have recognition without rewards, but rewards without recognition is a much sketchier strategy. 

Employee recognition: Advantages and impact

Research reveals again and again that employees who receive recognition are more likely to stay at their jobs. How did we get to this result? 

Recognition builds connection, belonging, and culture.

Effective employee recognition is embedded in the culture. It’s part of regular interactions; it happens naturally and authentically. Consistent affirmation assures employees they belong. 

It’s an intrinsic motivator—powerful in daily work.

Intrinsic motivation is when we find joy in the act of doing, not just receiving or achieving. Employees can find giving recognition as pleasurable as earning it, which has a favorable impact on efficiency and productivity.

Works well peer-to-peer, scalable without a budget.

Recognition is often overlooked or undervalued by leaders. Fortunately, peer recognition allows employees to take matters into their own hands. 

They’re not as reliant on leadership for positive reinforcement, finding recognition from their coworkers to be more frequent and authentic. They can grow and perpetuate their culture of recognition without a big financial investment. 

Employee rewards: Advantages and impact

Rewards can function as the cherry on top of an overall gratifying workplace experience. 

Good for celebrating milestones and performance.

Rewards add tangible value to major accomplishments, from years of service to exceptional performance. These are just a few examples of instances where appreciation may not be enough on its own. 

They can reinforce positive behavior over time.

The judicious distribution of rewards can have favorable impacts on behavior and performance. They may even reinforce connections that are more challenging to form, as is often the case with remote teams. 

Employee rewards can (and should) be personalized.

A diverse array of tangible and experiential employee reward ideas means it can be tailored to carry as much meaning as some forms of recognition. This increases the chance of making an employee feel personally seen with a reward. 

The strategic use of employee rewards and recognition

As part of the culture, recognition should stand on its own. Adding a reward now and then can make it a celebration. Here are a few tips for striking a balance between them.

Tip #1: Build a recognition habit first

With the understanding that rewards are secondary, put the focus on recognition. Use a tool like HeyTaco to introduce more peer recognition, start doing regular shoutouts, and generally get great at highlighting behavior that reflects company values.

Tip #2: Introduce rewards for specific occasions 

With plenty of recognition under our belts, introduce rewards for milestones like work anniversaries or team achievements. You can also have peers nominate coworkers who are worthy of some extra special recognition.

Tip #3: Use the 80/20 rule

When in doubt, aim for 80% recognition, 20% rewards. Let’s say an employee gets recognized about once a week–that’s an amount research shows employees approve of. Over two and a half months, rewards may pop up twice. It may even be something as simple (and inexpensive) as getting to work from home an extra day.

Avoid these common recognition and reward mistakes

We’ve already cleared up the biggest mistake you can make–assuming rewards are recognition. Here are a few other things to watch out for with employee rewards programs. 

• Giving a gift alone. A note or word recognizing contributions, or why they are being rewarded, imbues tangible goods with more meaning. Suddenly, a small gift that didn’t cost very much symbolizes something greater.
• Overusing rewards. Exceeding the 80/20 can lead to entitlement. When employees expect rewards or take them for granted, they don’t have a positive emotional impact anymore.
• Neglecting non-performers. People with different roles and skills still need recognition. Being helpful, persistent, or cheerful are all examples of non-performance value in the workplace.

Employee recognition and rewards can be a powerful duo

Best practices for employee recognition programs tell us first and foremost, recognition should be frequent and personal, with emotional value. Rewards should carry meaning, too, but be less frequent.

Reflect on your current balance. Are you employing recognition, but wondering if rewards could add to its impact? Is your current recognition strategy really just sporadic rewards? 

HeyTaco makes daily peer recognition fun and easy, but it also provides a natural path to customizable rewards. Learn how it works, start a free trial, and begin getting the best of both.