What’s the difference between a reward and recognition?

Recognition and rewards are both ways to thank your employees for their contributions. While a reward is usually tangible—a cash bonus, for example, or an extra vacation day—recognition is an intangible acknowledgment.

Rewards are usually linked to a specific metric, and they almost always come with recognition. If your salespeople exceed their targets, for example, you might give them a gift card as a reward and a verbal “thank you” as recognition. Some companies refer to this type of hybrid gift as a “recognition award.”

Recognition, on the other hand, can happen with or without a reward. What’s more, it doesn’t require a specific goal or metric—you can recognize employees for hard work, a good attitude or for pushing through a difficult day.

Benefits of recognition and reward at work

Recognition and rewards are ways to show employees that you value and appreciate them. It shows that you’re aware of the work they’re putting in and understand how it benefits the company.

When employees feel respected and valued, they’re more likely to feel happy in their jobs and connected to the company. In fact, a Gallup study found that when employees feel properly recognized, they’re 73% less likely to feel burned out and 56% less likely to be keeping an eye out for new jobs.

That’s a big deal for employers—by simply providing enough recognition, you may be able to increase employee retention and create a better work environment.

If you’re concerned about the budget, don’t worry; while it’s nice to have an employer recognize you with rewards, recognition is just as important. In many cases, employees need a simple “thank you” or a compliment about their work.

Best practices for employee recognition and reward programs

To get the most value from recognition and rewards, you’ll need to make a concerted, company-wide effort. Everyone in leadership positions, from the CEO to team leaders, should be involved.

Choose your priorities

Both rewards and recognition are ways to reinforce positive behaviors. If you want to see certain things from employees, such as innovation or on-time delivery, go out of your way to recognize related behaviors. If you want to reduce the number of accidents on a production line, for example, you might create rewards for every 100 days without a safety violation.

Practice regular recognition

A few scattered compliments aren’t enough; showing gratitude and appreciation for employees must become a part of the company culture. Encourage managers to observe their teams and praise workers in the moment. They can also keep a stash of small gifts, such as gift cards or company-sponsored lunches, on hand for last-minute rewards.

Make it authentic

When you’re recognizing employees, authenticity is key. After all, employees can tell when a manager is thanking them out of obligation. This is why spontaneous recognition is so useful; it’s unplanned and organic, so it feels more authentic.

Make it personal

A blanket “thank you” is nice, but positive reinforcement works best when it’s tailored to the individual and the situation. You might point out an employee’s specific contribution, or relate a compliment from the client.

Part of personalization involves knowing how each employee likes to receive praise. Some people love to be called out in meetings, while others prefer a personal note or a private conversation.

When it comes to rewards, ask your employees what they’d appreciate most. Cash bonuses are always a good option, but if that’s not in the budget, you can offer extra paid vacation days, season tickets, upgraded devices or other non-monetary items. Rewards don’t have to be large; you can take the team out for lunch at a favorite local restaurant when they meet a deadline or send them home early on Friday after a hard week.

Recognize all employees

Keep morale high by finding ways to recognize all your employees, not just the high-performers. An equitable strategy makes everyone feel appreciated, which tends to increase productivity across the board.

Rewards require a different strategy. Consider breaking your rewards program into tiers. The lower tiers should be accessible for everyone; higher tiers should be reserved for exceptional effort or performance. That way, you can include more people while giving top employees something to work toward.

When to recognize and reward employees

If you want to establish a tradition of reward and recognition in your company, make it a habit to celebrate specific events. In doing so, you’ll create a sense of anticipation among employees.

• Work anniversaries and promotions: This lets employees know you value their loyalty and hard work. Rewarding years of service also communicates that the company prioritizes longevity.
• Milestones or important deadlines: When a team or department meets or exceeds a big goal, celebrate their hard work.
• Life events: Show your employees that you value them as people, as well as professionals, by recognizing birthdays, weddings and other key events.
• Individual and team accomplishments: When a worker or a team accomplishes something impressive, take time to recognize and reward it. The accomplishment might be an innovative solution, a delighted customer or a big new contract, for example.
• Desired behavior: Take note when employees exhibit behaviors that support company goals. Examples might include collaboration, creativity or inclusivity.

Don’t stop there—make it a habit to recognize employees for small things throughout the week. You can praise workers for offering a new idea, taking initiative on a project or dealing kindly with a difficult client.

Ideas for employee recognition

Employee recognition should be an ongoing process. As long as the praise is authentic, it’s hard to do too much. In addition to verbal compliments, you can find creative ways to recognize great work.

• Leave a handwritten sticky note on the employee’s desk
• Call out achievements in team meetings
• Profile employees in the company newsletter or social media posts
• Mention an employee’s accomplishments to company leadership
• Hand out funny certificates or trophies
• Host an employee awards night
• Create a team wall of fame
• Recommend the employee on LinkedIn
• Encourage peer-to-peer recognition

Over time, you’ll realize which types of recognition work for each employee; you can also gauge which options get the biggest response from the team. This information helps you develop a highly personalized and effective recognition process.

Ideas for employee rewards

Rewards can be large or small, depending on your budget. Inexpensive items can still be effective—after all, what coffee lover wouldn’t love a $25 gift certificate to a local coffee shop? Some ideas for employee rewards include:

• Cash bonuses
• Gift cards
• Catered team lunch
• Personalized mugs or nameplates
• “No reason needed” paid day off
• Gift baskets
• Free gym memberships
• Prime parking spots
• Professional development opportunities
• Tickets to local concerts and sporting events
• Stock in the company

For the most effective reward system, take cues from your employees. Listen when they talk about the things they love, and use those preferences to create small rewards. When it comes to formal rewards programs, survey your team; that way, you can come up with prizes that are truly motivating.