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Dr. Matt Grawitch: May 2010 Archives

3143072381_a063490ca5_m.jpgI was recently interviewed on Real Recognition Radio, along with Dr. David Ballard. We were asked to discuss the various elements of the Psychologically Healthy Workplace. As a part of the interview, we discussed a couple of key issues related to rewards and recognition.

I want to talk about one of those today: the difference between rewards and recognition. There are a lot of gray areas within this discussion, perhaps largely because of the lack of empirical research on the topic.

So, what’s the difference between rewards and recognition? I’d bet that most people have never stopped to think about this issue. I’ve thought a lot about these issues, so I’ll be the first to admit that it can be difficult to wrestle with some of the gray areas. But I’d also argue that the distinction between the two is real and important. So here is my take on the subject in a nutshell. Rewards focus primarily on providing people with economic exchanges for accomplishing some sort of performance goal or set of performance goals. You exceed your sales goals, you get a bonus. You perform well during the year, you receive a raise. You earn points for participating in a wellness program, you can cash those points in for trips, iPods, and other stuff. Essentially, rewards serve strictly as extrinsic motivators. You do X, you receive Y. It is very impersonal, and you don’t have to even know the exceptional person in order to provide a reward, because it is based strictly on some measurable outcome.

Recognition, on the other hand, appears to be much more focused on contributions and effort, rather than strictly on performance goals (starting to get a little blurry here, isn’t it?). Recognition is designed to be personally meaningful. That is, rather than simply attempting to provide an impersonal economic exchange, recognition emphasizes touching people on a more sentimental level. With recognition, we seek to show people that we genuinely value what they contribute as people, not just as workers. We can recognize people for providing exceptional service to a customer, even if that service does not result in meeting some performance goal. We can recognize people for helping to create a positive work environment, even if that is not within their official job description. But recognition means nothing if it is given out wantonly or if it seems insincere. You don’t connect with people that way.

If used properly, rewards and recognition can complement one another. Since rewards are usually tied to formal and objective aspects of job performance, they can be used to maintain performance at core job functions. For example, a commodities trader can be rewarded for net gains on investments made each quarter, a lawyer can be given a bonus based on the number of cases won each year, and a roofer can be compensated for the number of repairs completed each month. In each of these cases, the employees are performing the duties of their jobs that would traditionally be found on their job description. When they perform exceptionally, they are given monetary rewards to match that level of performance, which can help to encourage people to be more efficient and effective at attaining concrete, job-related outcomes.
 
Recognition, on the other hand, can be used to acknowledge employees’ ancillary contributions to the organization. Whether this comes in the form of innovation, commitment, or going above and beyond what is required, these intangible forms of performance can be just as important to the company’s overall performance. Furthermore, recognizing one person publicly can help to communicate to other employees that these behaviors (although not written down or quantifiable) are important to everyone’s success.

For both rewards and recognition, whoever is receiving them must value what they are receiving. Years of service awards mean little to employees, because they are being recognized simply for not leaving the organization, usually given by someone who does not even know what contributions that person has made. Cost of living raises mean little because the net salary increase is often negligible. So, whether you want to give out rewards or recognition, they need to be perceived as valuable and desirable.

I guess what this all boils down to is that there are a couple of important distinctions between rewards and recognition. Rewards can be given out by anybody and the size of the reward determines its ultimate value for somebody. Recognition must be given by someone whose opinion we trust and respect. In addition, it is easier to recognize someone’s contributions when we genuinely value the behaviors and contributions we observe. If we don’t, then our recognition may be perceived as insincere. 

A second distinction is that rewards, by nature, are only given out at finite intervals. We cannot provide a meaningful reward every time someone performs well. So, we have to prioritize in terms of types of performance outcomes to be rewarded, levels of performance that lead to rewards, size of the rewards, and reward intervals. With recognition, though, we are not limited to finite intervals. We can recognize people much more often. In fact, you can recognize people on a daily basis if you want. Just make sure it is meaningful!  

So, there are upsides and downsides to the reliance on rewards as a primary motivational tool, and there are upsides and downsides to the reliance on recognition as a primary motivational tool. Obviously, a comprehensive approach would rely on both rewards and recognition, but until we understand the difference between the two, it seems that too many organizations will continue to default to “total rewards” programs that fail to integrate the potential power of effective recognition!