Top 10 Differences Between Employee Rewards and Recognition

The terms "rewards" and "recognition" are often used interchangeably, yet they're quite different. Here's how to understand the differences between the two.


As an industry, we’ve created a semantic conundrum for ourselves. We interchange the terms rewards and recognition as if they were the same thing. Following, we explain differences between them and highlight the benefits that each brings to the table.

Rewards vs. Recognition

Although the two terms are often used interchangeably, rewards and recognition are entirely different. Rewards refer to programs that measure performance and aim to motivate employees on either an individual or group level. They are normally considered separate from salary but might be monetary in nature or otherwise have a financial aspect tied to them. One major goal of rewards programs is to increase employee performance.

Although employee recognition programs are often combined with reward programs, they retain a different purpose altogether. Broadly, recognition programs are intended to provide a psychological boost by focusing praise on the employee and their work or accomplishments, rather than on a physical prize for those accomplishments.

Although many elements of designing and maintaining reward and recognition systems are the same, it is useful to keep this difference in mind, especially when companies want to motivate staff while keeping costs low. To further differentiate rewards and recognition, we've put together the following "top 10" differences list. 

1. Tangible vs. Intangible

Rewards are always tangible, and tied to goals. For example, rewards typically come in form of cash, travel, merchandise or gift cards. Recognition is often invisible in nature and yet priceless in value. You can give verbal praise and recognition without giving a reward. You should never give a reward without giving recognition.

2. Transactional vs. Relational

Rewards are always if you do “X” then you’ll get “Y” in return. Recognition is much more of a relational exchange between people. Rewards are great for attracting people to an organization, and recognition is perfect for retaining people.

3. Consumed vs. Experienced 

When you receive money or a gift, it is usually spent, used up or somehow consumed until it ends. In contrast, recognition is a total immersion experience and a personal encounter of the best kind which can last forever. Carefully using both will help address the unique differences within all of us.

4. Transferable vs. Non-Transferable

Certain rewards (e.g.,cash, gifts, gift cards) can be passed from one person to another and are temporary in nature. Recognition cannot be removed from the person it's given to or exchanged and is permanent in nature. Focus on achieving that kind of permanence through recognition while using tangible rewards to make immediate impacts.

5. Conditional vs. Unconditional 

Rewards are very dependent consequences based on certain terms or conditions. Recognition, however, tends to be more independent and not part of a fixed result derived from specific actions. It is about blending rigidity with flexibility or at least knowing when to use one over the other.

6. Expected vs. Surprise

It seems that, with rewards, we go into a situation knowing that if we perform well, we deserve the reward. With recognition, on the other hand, recipients have no idea it is coming their way. Never let anyone down by not giving them a merited reward and learn to be spontaneous with appreciating and celebrating people every day.

7. Economical vs. Emotional 

Rewards are a prudent use of resources in the whole economy of production, distribution and income. Recognition, in contrast, is a psychological and emotional event, a felt phenomenon. Remember that performance may reign but feelings rule!

8. Outcome vs. Behavior-Driven

Rewards are used to reinforce achieved results, such as when someone hits a specific revenue goal or designated lead acquisition. Recognition can happen anytime someone notices the positive behaviors of another.

9. Fixed vs. Flowing

Rewards are fixed and determined based on desired performance and the expected returns. Recognition is free-flowing from one person to another and can be expanded when that recognition or praise is shared with others. 

10. Impersonal vs. Personal

Rewards (with the exception of travel rewards) have little human dimension due to their tangible, contractual nature.  Recognition differs because it is based on human connection, celebrating people for who they are and appreciating what they do.

Incentive columnist Roy Saunderson is the author of Practicing Recognition. He is also a recognition strategist and the chief learning officer at Engage2Excel.