Incentives and rewards

istening to Radio 2 and Chris Evans breakfast show - other stations and presenters are available - Chris started to talk about the difference between incentives and rewards, and discussing just which is the best motivation tool for employees?

But surely incentives and rewards are the same? Well, no, not really. An incentive is a thing that motivates or encourages someone to do something and a reward is a thing that is given in recognition of effort or achievement. So essentially, incentives are to get something done, and rewards are for when the “something” has been done.

For example, often sales roles are incentivised, by having goals and targets to be achieved. Conversely people who are in vocational based roles usually are in those roles for the reward of helping others.

Why should employers differentiate between incentives and rewards? Employers need to understand that their organisation is likely to have some roles that respond to incentives, and some roles that respond to rewards. Offering an incentive to an employee who is in a vocational role, would be seen as inappropriate and potentially interfering in the core part of the job. Conversely, imagine if a sales consultant was told to “sell what you can” and they did not know if they had sold enough to achieve their bonus payment.

By definition, incentives tend to be financially based but rewards tend to stretch wider than just financial gain. Rewards can include the ac- colade of “employee of the month”, a dedicated parking space, or an article in the company newsletter to name but a few.

Both incentives and rewards are as good as each other, but they are only as effective as the group of employees to which they are applied. A fine balancing act is also needed by the organisation, so one group of employees is not seen to be receiving more through their incentive/ reward system than another.

My recommendation is to keep incentive/reward systems simple, sustainable, transparent and fair. In just four steps: 1) Establish why the company wants to implement an incentive/reward system. 2) Complete a cost/ benefit analysis. 3) Talk to your employees and share the suggestions, taking care not to raise their expectations beyond the company’s financial means. 4) Implement in a timely manner.

However, if the leap to formalising an incentive or reward plan is too much at this time, how about just saying in public, someone has done something that is great?