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The Definition of Employee Rewards and Recognition

The Definition of Employee Rewards and Recognition

The Definition of Employee Rewards and Recognition

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Employee rewards and recognition are human-centered and strategy-driven programs that acknowledge and reward individuals for their intrinsic or extrinsic performance. It’s a unique and important way that HR leaders add value to their employee's achievements and the best organizations ensure that systems of rewards and recognitions take place in a timely and professional manner and schedule.

A healthy and functional system of employee recognition and rewards has become a necessity for every successful business no matter its success, size, level of goals. It should be an integral player in your company culture system and should serve as a recognition platform that praises employees for their great work and inspires underperforming employees to continue to improve their skills and enhance their goals.

You see, money isn’t the only thing that matters to employees, nor is it the only ingredient necessary for an organization to succeed. The truth is that a company that is holistically successful delivered a lot more than a paycheck to their teams. Employees require a functioning rewards and recognition platform to feel fully satisfied in their position and confident in their company’s vision.

What Is The Difference Between Reward And Recognition?

Employee retention and engagement statistics are aided by the use of rewards and recognition. A retention strategy is a plan developed and implemented by businesses to aid in employee retention. Employee engagement is influenced by company culture and refers to a worker's feelings about their employer, as well as their role, position within the firm, coworkers, and other factors. Healthy levels of employee engagement are necessary to maintain satisfactory levels of employee retention.

As an HR executive, developing the groundwork for a system of rewards and recognition is primarily your responsibility. Before you begin developing an appropriate system of these two actions that managers can utilize to inspire their teams, you should carefully evaluate the differences between these two incentives so that you can clearly understand which one is appropriate and best suited in particular circumstances. So, first things first, let’s examine the differences between rewards and recognition.

Rewards and Recognition at work - corporate ladder

What Is Employee Recognition?

Employee recognition is a form of personal praise or appreciation for good work and can be given by anyone at the company at any time. It is not level-specific and simply refers to the act of acknowledging a person’s performance or contribution that has helped their organization achieve their collective goals and values.

Employee recognition costs nothing holds incredible value. In fact, the majority of employees respond better to consistent and fair employee recognition than they to a reward even though it has nothing to do with money. It simply refers to witnessing, approving, and appreciating an employee’s work and contribution.

There is no overestimating the value of employee recognition. Appreciation and praise and a fundamental part of a successful company’s relational framework. It encourages individuals to feel a part of something bigger than themselves and maintains much-needed respect between lower-level employees and top-tier ones.

Put simply, if a lower-level employee feels that management does not appreciate or recognize their hard work, energy, and effort, they will feel less motivated to continue dedicated efforts and instead may consider relocating to a different organization where their efforts are recognized.

Nowadays, regular employee recognition practices are more necessary than ever as most companies are functioning exclusively from a home office or at least operating via a remote and in-person hybrid model. This means that the communicative ties between managers and employees are naturally weaker. Without regular and strong recognition, it’s likely that internal company rapports will become even weaker and these relationships would not be conductive towards a healthy and successful work environment or culture.

Rewards and recognition checklist

What Are Employee Rewards?

Meanwhile, rewards are tangible and tend to be tied to specific goals, accomplishments, and employee achievements.

Generally speaking, organizations set up a system where employees accomplish x to earn y. For example, if your financial department has achieved their goals for the last quarter they might be rewarded by a special social celebration or a weekend trip away.

Rewards are a fantastic tool that can be used to motivate employees to bring their A-game and in relation to large companies with a hefty budget for rewards, they can even be an incentive that can attract people to work for your company.

Companies with a larger budget can afford to develop and manage a more lucrative reward system, but with this can come complications.

While rewards can be exciting and incentivizing, exclusively preaching a culture of rewards and perks can be dangerous and counterproductive to a team’s organizational attitude. By solely motivating your team with rewards you risk them becoming the only incentive and letting important intangible factors such as team spirit, respect, and duty fall by the wayside.

This is why we advise that you reserve rewards for exceptional work and achievement as opposed to a frequently recurring acknowledgment of a job well done. Rewards should be considered a benefit, not a necessity, and your reward program should always be centered around respect, morale, and pride for your organization.

Why Are Rewards And Recognition Important?

Put simply, a system of rewards and recognition is vital to the lifespan, success, and internal fulfillment of your organization. Rewards and recognizing your employee's hard work lead to greater employee engagement, which increases retention and helps to build a more positive and better-focused workplace.

Establishing a well-matched, transparent, and exciting reward and recognition program demonstrates to your employees, and the outside world, that you are aware of their contribution. It shows them that what you are doing matters. Rewarding great performances, efforts, and initiative keep your employees inspired and encourages them to set and reach goals, whether they be daily, weekly, quarterly, or annually.

Without operating a system of rewards and recognition within your work environment, you won’t be leveraging the most out of your talent. Your co-workers and team members spend over 40 hours a week contributing to your company’s vision, they deserve to feel appreciated and praised. In order to create a thriving workplace, peer recognition and employee appreciation ideas are fundamental.

A rewards and recognition system is a fail-safe strategy that contributes to the welfare of your company and the happiness of your workforce.

Rewards and Recognition - Employee profile

What Are The Different Types Of Rewards And Recognition?

Rewards and recognition are not one-size-fits-all. In fact, there are many different types of rewards and recognition and numerous ways in which you can express either of them. However, the goal for any expression remains the same. You want the rewards and recognition activities to help your employees to feel satisfied, motivated toward your company’s collective vision, and engaged with their work.

Types of Employee Rewards

Rewards in employment can be classified into three main categories.

  1. Intrinsic Versus Extrinsic Rewards

Intrinsic rewards are rewards that aren’t tangible but yield higher levels of job satisfaction. For example, an elevation of job title or notification of personal achievement on the company’s social media. Meanwhile, extrinsic rewards are tangible rewards that are awarded to individuals when they have done good work such as bonuses, free swags, and gift cards or personalized gifts.

  1. Non-Financial Versus Financial Rewards

Financial rewards include monetary rewards such as bonuses, salary raises, etc. On the other hand, non-financial rewards don’t provide the employee with any financial gain. Instead, they are centered on demonstrating appreciation to the employee through alternative recognition ideas such as employee of the month, birthdays, and work anniversaries recognition.

  1. Membership Versus Performance-Based Rewards

Performance-based awards are given out to specific employees based on their performance within the company. Performance-based awards are realized through pay plans, incentive systems, and group bonuses while membership-based rewards are given in the form of benefits and services given to the company’s employers.

Types of Employee Recognition

There are many different ways in which employees can receive recognition for their hard work, however, all recognition should be purposeful and done in a respectful and frequent manner. Each way can be placed into one of the following categories.

  1. Top-Down Recognition

In this system structure, employers/managers witness, approve and appreciate the contribution given by their employers.

  1. Peer-to-Peer Recognition

Here, all members of an organization are empowered and encouraged to recognize the contribution of their colleagues.

  1. Customer-to-Employee Recognition

Although this is not specifically relevant to HR executives, this kind of recognition is important in terms of motivating an organization to perform to the best of its abilities. In this system, customers give thanks to the employees for the valuable service they have received.

Benefits Of Rewards And Recognition

Starting a rewards and recognition program within your company can be a vital and beneficial decision. Sure, developing a functioning system may create some extra work for you and your HR department in the short term, but in the long term, it will aid your company in achieving excellent company retention, achieving their goals, and more.

Here are some of the many benefits associated with a system of employee rewards and recognition.

  1. Increases Motivation

Offering recognition and rewards for employee performance will increase motivation in an organization, help them stay on track, and help your whole team to maintain a positive attitude.

  1. Shows Appreciation

It is impossible to maintain employee satisfaction without showing team members how much you appreciate what they do. By recognizing wins and milestones, you’re sending them a direct message that they matter to you and that you’re seeing the hard work you’re putting into your company’s collective vision.

  1. Encourages Friendly Competition

Recognition programs support the feelings of friendly rivalry among workers, with an emphasis on friendly here! Sure you don’t want your employees being pitted against each other, but a bit of friendly competition helps encourage employee engagement and individual employees to take pride in and interest in their work.

  1. Improves Productivity

Employees and teams are more engaged in work when their successes are recognized. Investing in a culture of recognition will serve your company on the whole because it will demonstrate various company successes to different teams and inspire them togo the extra mail themselves.

  1. Boosts Employee Retention

It sounds obvious, but employees who feel engaged and satisfied are more likely to choose to remain employed by your organization. The more you recognize an employee’s hard work and contribution, the more satisfied, engaged, and seen your employee will feel.

  1. Creates A Positive Workplace

Teams comprised of satisfied, motivated, appreciated employees are not only more productive, but they’re also more positive and positivity is contagious. This leads to a better overall workplace of enthusiastic and fulfilled employees, employee experience, and company culture.

New employee joining company

Creating An Employee Reward And Recognition Program

It’s no coincidence that many of the world’s most successful organizations use employee recognition and reward programs. When a well-designed program like this is used correctly it won’t just enhance the performance of your employees, it will enrich your company culture too.

Your reward system program should be specifically tailored to your company goals, values, and employees. Despite this, however, there are some best practices that should be applied to most programs.

So, if your HR fraction is about to develop a killer program, make sure to follow the basic guidelines below.

  • Align your program and company values
  • Enroll your HR department in relevant reward programs webinars
  • Choose a recommendation reward platform software such as Nectar, Bonusly, or Kazoo
  • Tie the program to your company values
  • Make it personal
  • Design a program that celebrates all wins, no matter their size
  • Ensure the program focuses on growth and development just as much as collective expansion
  • Make it inclusive
  • Make it consistent
  • Make it spontaneous and fun!
  • Keep it simplicity
  • Provide performance-based awards
  • Ensure there is a work-life balance


That concludes our article on employee rewards and recognition programs! Make sure to reference our advice when designing your own tailored company program.

Remember, an optimal employee reward and recognition program starts and end with your employees but it should also further the expansion of your organization. With this in mind, we advise blending both focuses to produce a program that is specifically beneficial for your company. Good luck!


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