Tag: reward

understanding the difference between recognition and reward

UNDERSTANDING THE DIFFERENCE BETWEEN RECOGNIZING AND REWARDING YOUR PEOPLE

Written by Kai Donesa on . Posted in Resources.

When was the last time you acknowledged your people for a job well done?

It’s easy to get caught up in the daily grind and forget to recognize the efforts of those around us. As leaders and managers, it’s crucial to understand the difference between recognizing and rewarding the hard work of our staff.

While recognition and reward are essential in motivating and encouraging employees, they are vastly different. Each word carries varying connotations and outcomes. Recognition is about acknowledging staff for improving at their jobs, while reward is about commending individual staff for their exceptional performance and achievements.

Knowing the difference between both strategies can transform your workplace dynamics. In this blog post, we will explore the nuances between recognizing and rewarding staff and how you can strike a balance to create a culture of appreciation and excellence in your organization.

Why you must distinguish between reward and recognition

Recognizing and rewarding staff are two distinct concepts often misunderstood and used interchangeably. Distinguishing between the two is critical because it informs how your organization appreciates and incentivizes its people. At the same time, recognition and reward complement each other in creating a balanced and positive workplace culture.

A common mistake in organizations is using recognition and reward synonymously. However, this mindset can lead to a skewed view of what motivates staff. Recognition and reward have different impacts, and implementing a balanced approach can significantly improve your human resources strategies.

Understanding recognition

At work, recognition can be a powerful motivator. Recognizing the growth in your people’s skills and knowledge boosts their morale and promotes a positive work culture. It’s an often-overlooked gesture that can significantly affect job satisfaction. When staff members feel valued and appreciated, they are more likely to put in their best effort.

The role of employee recognition in fostering a motivated, satisfied, and high-performing workforce cannot be overstated. As we better understand what recognition focuses on, remember that each point holds unique value in shaping an employee’s job progression.

Valuing knowledge. The knowledge and expertise of your people are the driving forces behind your organization’s innovation, problem-solving, and decision-making. Recognizing and appreciating the depth and breadth of your staff’s knowledge can foster a culture of learning and growth. It encourages employees to continue expanding their knowledge base, contributing to their personal and professional development.

Appreciating skills growth. Skills are the practical application of knowledge. They are tools that enable staff to work effectively. Recognizing the skills of your people, from technical prowess to interpersonal abilities, is important. By acknowledging the growth in your staff’s skill sets, you confirm their value to the organization.

Recognizing capacity. Capacity refers to a person’s ability to meet the demands of the job. Recognizing an employee’s capacity is acknowledging their potential and ability to take on challenges. You trust their abilities and are confident in their growth potential. This recognition can empower staff to push them beyond their limits and strive for achievement.

Focusing on professional development. Professional development is important in an employee’s career progression. Recognizing your staff’s commitment to continuous learning and improvement shows you value their drive to better themselves.

Managing fair and objective pay increases. When your staff feel that their hard work and dedication are recognized with appropriate compensation, it boosts their morale. Additionally, fair pay increases demonstrate that your organization values and appreciates their contributions, encouraging staff to continue improving their skills and knowledge.

Recognizing and appreciating employees’ efforts creates a positive work environment where everyone feels valued. The Birches Group approach to recognizing employees is rooted in skills growth. Managers and staff members collaborate and have equal ownership of measuring and growing their skills. Providing your people with a framework that objectively measures and recognizes their skills growth, you enable the following opportunities:

  • Your managers and staff provide input on the pace of their growth
  • Your people are recognized and compensated as they become better at their jobs.

Understanding reward

Reward is integral to an organization’s approach to managing people. Most organizations tend to link reward to high-achieving, outstanding employees. However, at Birches Group, we also reward a majority of the staff who meet the expectations of their jobs.

So, what differentiates reward from recognition?

Recognizing results. Reward is often tied to specific outcomes or achievements, such as exceeding targets or completing a project successfully. It is a way to acknowledge and celebrate the results that staff members have delivered. Recognizing staff accomplishments reinforces the importance of their contributions and motivates them to perform at their best.

Acknowledging impact. Whether it’s through ideas, client service, or an ability to solve complex problems, the impact of one’s work is felt throughout the organization. Rewarding this impact is a powerful way to show staff that their job matters and makes a difference. By focusing on output, your organization can encourage employees to think creatively. More importantly, focusing on getting things done gives your staff the flexibility to try different paths to achieving their output.

Highlighting critical incidents. Critical incidents are situations that require immediate attention and exceptional handling. When your staff successfully navigates these challenging situations, it’s important to recognize their quick thinking and problem-solving skills. This will boost their confidence and motivate them to manage future incidents with the same level of competence.

Celebrating achievements. Achievements deserve credit and kudos. By celebrating your staff’s achievements, you acknowledge their efforts and foster a sense of pride in their work. When you take time to celebrate individual or team accomplishments, it also encourages a spirit of camaraderie and communal success.

Offering bonuses. Bonuses are a tangible way of rewarding exceptional performance. They show your employees that you notice and appreciate their hard work. Offering bonuses as a form of recognition can incentivize employees to continue performing at a high level.

recognizing the difference of recognition and reward

Why your organization should both recognize and reward staff

A successful organization is like a well-oiled machine, with each part playing a role in supporting smooth operations. Employees are the most vital, powering the machine with their skills, dedication, and creativity. Thus, organizations must not only recognize but also reward staff.

As discussed earlier, recognition is a powerful tool that can significantly increase staff morale. When employees feel their hard work and dedication are recognized, they feel valued in the organization. This, in turn, can boost their productivity and enthusiasm for their work. Moreover, recognition fosters a positive work culture where employees feel appreciated and are likelier to go the extra mile for their job.

While recognition fuels pride in one’s work, reward reinforces this sentiment. Whether monetary or otherwise, rewards are a tangible acknowledgment of an employee’s contributions. They function as a driving force, motivating staff to exceed their performance levels and strive for higher achievements.

How to balance recognition and rewards in your workplace

Recognition and rewards help foster a positive work environment. They reinforce the behaviors and values that contribute to an organization’s success. However, striking the right balance between the two is a delicate process. If not appropriately managed, it can lead to discontent and demotivation among staff.

An overemphasis on rewards may make recognition seem hollow, while focusing too much on recognition may leave staff members feeling undervalued due to the lack of tangible benefits. Your organization can achieve an optimal balance by maintaining a consistent pattern of recognition and tying rewards to clearly defined performance benchmarks.

Recognize effort and reward results. Recognition should be frequent and consistent, aimed at acknowledging effort. This approach motivates all team members and not just top performers. Employees who see their efforts recognized will likely continue contributing to their best abilities. On the other hand, rewards should be linked to significant achievements and results. This approach reinforces the link between performance and rewards, encouraging employees to strive for excellence.

Implement a fair and transparent system. Fairness is vital in balancing recognition and rewards. Ensure that all employees understand how the recognition and reward system works and that it is applied consistently and uniformly across teams. Make sure the rules and criteria for recognition and reward are well-defined and communicated to each staff member. This involves outlining the performance standards or behaviors that will be rewarded or recognized, and the types of rewards or recognition that employees can earn.

How Birches Group’s approach and tools can help

At Birches Group, we understand the importance of recognition and rewards in engaging your staff. Our Community™ approach has made it possible to distinguish recognition from reward, where pay movement is linked to skills growth, and performance is linked to rewarding achievement.

Our online platform offers comprehensive tools and resources to help your organization recognize and reward employees effectively. In addition, our compensation and benefits surveys provide data and insights into what similar organizations in your labor market are doing to recognize and reward staff.

We also offer training and consulting services to help you develop and implement effective recognition and rewards programs. Our team of experts is ready to guide your organization using Community™. Contact Birches Group today and let us guide you in distinguishing recognition and reward.

Carla is a part-time copywriter in our marketing team in Manila. Before shifting to freelance writing in 2020, she worked as a marketing and communications specialist at the offices of EY and Grant Thornton. She has written about HR and career development for Kalibrr. 

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PAY FOR PERFORMANCE – HR’S BIGGEST EPIC FAIL

Written by Bianca Valencia on . Posted in Resources.

Recognizing and rewarding employees for their contributions is required to motivate and retain staff. But “Pay for Performance” as we know it just doesn’t work!

For the longest time, companies have used performance ratings to decide merit pay increases and sometimes, annual incentives. Typically, merit increases are determined according to a combination of performance ratings and position in range (compa-ratio) – those with a combination of higher performance ratings and lower compa-ratios are eligible for higher increases, while those with lower ratings and higher compa-ratios get less.  The idea is that such an approach provides a differentiated reward to those with better performance, while ensuring that, on average, the company is paying at the market rate (compa-ratio of 100).

The level of differentiation between strong performers and good ones isn’t much with annual salary budgets of 3% or less in many countries.  Employees don’t get excited about getting an increase of 3.2% instead of 2.9%.  It’s not really motivating, and does little for retention, which are the two primary goals.  Not to mention employees and managers probably hate your performance management system and do not trust the results are fair.

What’s Wrong with Pay for Performance?

Putting aside that last thought, and assuming your performance management approach is working well and is perceived by management and staff to be fair and effective, the problem with pay for performance is one of alignment.  Pay for performance rewards a one-time achievement (as measured by the annual performance rating) with a salary increase forever. That’s a huge misalignment!

Merit increases are essentially “baked in” and will remain a part of salary until the employee leaves the organization.  On the other hand, performance is variable, and usually changes from year to year.  If an employee is a high performer one year, and gets a “high” merit increase, and then in the next year, their performance is lower, how much do they give back?  Yeah, right.  The penalty for lower performance is a smaller increase going forward.

Using annual performance assessment to determine salary increases is crazy.

Alignment is Key

To align your pay for performance strategy, the first thing you need to change is the role performance management plays in determining rewards.  Birches Group believes performance management, which measures periodic, time-bound achievements, should be used to grant one-time recognition such as bonuses.  When performance is higher, bonuses go up.  If performance drops, bonuses go down, sometimes to zero.  You should do something else for salary movement.  But what?

Using Skills to Recognize Growth

In Birches Group, we believe that pay movement should reflect one’s experience. As an employee gains more experience in their job over time, they develop a deeper understanding of their role and accumulate the necessary skills that enable them to be more efficient and produce results of increasing quality. Linking an employee’s growth in skills and knowledge to the determination of their salary movement makes sense, and it’s totally aligned.  The accumulation of skills and knowledge stays with your employees and can be applied continuously in the future.  Skills are like an annuity that keeps paying over and over – like salary!   The challenge with such an approach has always been how to measure skills and knowledge.  Until now.

Birches Group Community™ Skills provides a framework for measuring experience.  Skills uses five skill levels – Basic, Proficient, Skilled, Advanced, Expert – anchored to our job levels.  For each job level, explicit measures or milestones are defined, enabling managers to evaluate employees’ accumulated skills and knowledge.  Companies can link their compensation administration to the progression of Skills in any number of ways, and provide increases based on employee growth in their jobs rather than performance.

The New Pay for Performance

Employee’s should be recognized for both the growth they demonstrate in their job and their achievement during a performance period.  By structuring your pay for performance philosophy using two concepts instead of just one, you can solve the alignment issue and create a pay for performance program that works.

If an organization’s goal is to motivate and engage their staff, the approach must be clear and fair. By linking salary movement to growth in skills and knowledge, you will be paying for increased capacity, while also recognizing achievement. Contact us to learn more about our Community™ approach to recognition and reward.

Bianca manages our Marketing Team in Manila. She crafts messaging around Community™ concepts and develops promotional campaigns answering why Community™ should be each organization’s preferred solution, focusing on its simplicity and integrated approach. She has held various roles within Birches Group since 2009, starting as a Compensation Analyst and worked her way to Compensation Team Lead, and Training Program Services Manager. In addition to her current role in marketing and communications, she represents Birches Group in international HR conferences with private sector audiences.