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Are Rewards and Recognition the same thing?

They are two different things, but are often delivered in tandem.  A reward is something of material value beyond what is in the compensation package:  a lottery ticket, a pair of movie tickets, a trip to Timbuktu.  Recognition is anything said or done to express the message:  “I/we know and are grateful that you are making an important contribution.”  Saying “Thank you,” is delivering recognition.  Presenting a desktop trophy is delivering recognition.  A reward often comes with recognition attached.

Do Rewards motivate?

Sometimes rewards motivate, but generally they fail.  Money isn’t a reward if it is part of the pay package. The pay package—salary and bonuses and commissions–is designed by HR to attract candidates who will perform their duties at or above the Bank’s performance standards. A person who doesn’t perform at or above standard doesn’t need more money to motivate them to improve.  They need something else:  perhaps training, coaching, practice, recognition of progress made, a knock on the head with a big stick, and so on. 

Let’s talk about motivation in general.  What motivates someone isn’t the good thing that happened yesterday, unless they expect a similar good thing to happen to them again if they continue to perform well.  Let me share an episode from my own career.

I once received a $10,000 reward for doing something great for my Bank.  Did the money increase my motivation?  Not a bit, because I knew that such a large reward was seldom bestowed on someone at my level.  I’d likely never see a comparable one, no matter what I did.  I was grateful to my boss, of course, but I didn’t ramp up my performance; I continued to work about as hard as I did before. Did the Bank get a big bang out of its $10,000 investment in me?  Nope.

It’s the capricious nature of rewards that robs them of their motivational impact.  From the employee’s perspective, “spot rewards” generally seem to be given randomly; they don’t see much of a correlation between what they do and what they get.  This is especially true when a well-intentioned manager spreads rewards around the office, for fear of fear of creating resentment, or triggering accusations of favoritism. 

Strangely, the most well-constructed rewards programs are those that provide incremental rewards each time the employee does a certain thing.  I say strange because often such programs are also failures.  That sounds like a contradiction.  It’s not; what is wrong with them is that the payoff is too small to compensate for the expected effort required or pain received.  The employee unconsciously performs an equation:  Gross Reward plus Fun – Effort – Pain = Net Reward.  Often the Net is negative and the “incentives” fail to incent.

It’s easy to see this in the realm of teller cross-selling.  You might tell your tellers, “Hey, guys, we’ll pay you $5 every time you give our investment rep a bona fide referral!”  Our teller, Angie O’Plasty, works the equation out this way:  “Based on my past experience, I might get $50/month out of this.  There won’t be much fun in it.  It will require a significant amount of effort.  There will be a significant amount of pain, though; some customers get very testy when you seem to be pushing them to buy something they don’t need.  I hate having people get mad at me. Also, there’s pain if I spend too much time with a customer and we end up with a line of cranky customers. Thanks, but I’ll pass on the rewards.”  Not every employee is an Angie, of course, but most tellers do absolutely hate it when customers are cranky with them.  This is something successful managers just don’t get…the down side of selling for many employees.

Now, could we light a fire under Angie by increasing her potential additional extra earnings to $1,000/month?  Probably, but your execs aren’t going to fund that, are they?

The bottom line on rewards is that they are generally too small and you are too capricious in the way you dole them out.  Instead of putting your time and energy giving rewards, invest it in ramping up your recognition efforts.   (About which, more in my next post.)