Incentives or Recognition – They Never Seem to Learn the Difference

Will corporate award planners every truly understand the difference between an incentive program and a recognition program?  Try as some of the experts in the industry might to educate them; these two terms are constantly being interchanged.

The EmployeeEngagement Alliance defines the two types of programs as this…

“Incentive programs are used to drive behaviors conducive to practically any business objective. Recognition programs are used to recognize individuals whose accomplishments were particularly noteworthy.” 

We’ve addressed the issue on several occasions but many folks still persist on confusing them.   Here’s an excellent post from our friend PaulHebert at I2I Incentive Intelligence that will give you one way of looking at a difference between the two.  Another great way to differentiate them is by reading this post from the Compensation Café on the Right vs WrongIncentives.  As this article comes to us from a well-respected blog on cash compensation, it gives us a good look at the same things we need to consider when discussing incentives or recognition to improve performance.   

The key paragraph in this compensation piece is the discussion of a financial rationale and these questions… 

“What will the company receive in return for the increased costs of an incentive program?" and “If you are planning to increase your targeted compensation costs of an affected group, how will you answer the ROI question?

All well planned non-cash incentive programs follow the same methodology.  They plan for an ROI.  This is the single largest difference between incentives and recognition! 

The award industry has struggled for years to apply any sort of meaningful ROI to a recognition system.  They haven’t figured out a good way to do it and never will based on the metrics and fundamental structure they use for these types of programs. 

And as mentioned in the Compensation Café article…

Caution: You had better provide a business rationale, and not subjective phraseology like “survey says” or “everyone else is doing it" or even “it’s the right thing to do.’ Management tends to frown on such trivial rationalizations.

So for all corporate award planners, please get your definitions straight.  Regardless of what all the prize peddlers in the industry tell you, you won’t change behavior and drive significant results with a recognition program.  Recognition programs can provide you with a whole different set of benefits.  You can drive results with an incentive program that is well designed and implemented, but it won’t necessarily recognize specific behaviors of employees whose accomplishes are particularly noteworthy.