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On the Edge: The Difference Between Recognition and Incentives
May 07, 2008
You say "Recognition" … I say "Incentive"
By Paul Hebert
Too often I hear the words "recognition" and "incentive" used interchangeably in discussions about influencing behavior. They are not the same thing and it’s not just a semantics issue. Inappropriate application of these distinct program types drives poor program performance and ultimately unsatisfied participants and clients.
If you reward the top 10% of your participants with a trip, did you run an incentive? If you assign individual short-term goals and award points for each milestone, are you running a recognition program? Some would answer yes to both of these questions. They would be wrong.
What's the difference?
First, an incentive program is designed to cause an action—to give participants a reason to change behavior. Recognition on the other hand, is something that happens after the behavior occurs. Both may include an award but the focus, timing and structure are very different:
1) Choosing audiences wisely
Incentive programs are about individuals. Incentives should focus on the individual and their behaviors—specific ones—ones you can track and reward. The objective is to cause your audience to change specific behaviors. Incentives are about performance against individual historical activity.
Recognition Programs are relative to group performance. Recognition programs focus on individual achievement within the context of everyone else’s activity. Whether a person earns an award in a recognition program is contingent on how the total population in the program does. In other words, individual rewards are relative to group performance. Recognition is about how a person stands against the same standard by which everyone is measured.
2) The Changeable vs. The Steadfast and True
Incentive programs are flexible. Incentive programs are designed to be flexible—to start and stop as needed without affecting your audiences' income or life style. This provides a company with the ability to change and adapt as the market place changes. Non-compensation-based incentives have the ability to focus attention on one objective this quarter and another next without disrupting the income expectations of your target audience. This is 180 degrees from what you want your recognition program to do. Incentives should change.
Recognition programs are longer-term. Since recognition programs are designed reward individuals using the group performance as the baseline, recognition programs should focus on larger, longer-term criteria such as the core values of the organization.
Recognition should be able to stand the test of time. If innovation is a core belief and value, it should be valuable 10 years hence. Understand that while core values and beliefs might evolve over time, they shouldn't be discontinuous. Values, beliefs and the company "brand" are things that create and sustain a culture. Culture doesn't change quickly. Culture doesn't bow to the "latest and greatest." When culture changes quickly it is simply a series of cults.
I mention the core values of an organization, but I don't limit it to only the total organization. You can bring the values down to individual departments and divisions such as a sales department or a call center group. The point is that recognition should be used as a visible standard of performance for all audience members.
3) Different Goals, Different Means
Incentive programs are about "the now." When thinking about incentives, look for things that need attention now. Look for changes in the market that you believe are "blips" or short-term needs. Need a sales spike? Run an incentive. Need to launch a new product? Run an incentive.
Recognition programs are scarce. Success measures for recognition programs are different than incentive programs. Don't expect your recognition program to provide lift or pay for itself. Recognition is about communicating what is best. Recognition by virtue of the fact it is scarce means that when you announce the program the majority of your folks will know they don't qualify. That's okay. Recognition is about keeping the best and setting standards—not temporarily lifting all boats.
4. Measure Twice, Reward Once
You can recognize individual performance and I highly recommend it) but the act of recognition is not the same as a well-planned recognition program. One of major differences between incentive and recognition programs is how you determine success and how you measure the impact of the program.
Incentive programs are easy to measure—i.e., did the person change behavior and did they earn the award?
It is much more difficult, however, to measure the impact of a recognition program. Since these programs are tied to long-term goals and broader metrics, it is impossible to link them to specific business outcomes. However, I would suggest that changes in the audience opinion of the company, overall change in the focus on core values and the impression of the company culture can be measured—just not program by program.
In addition, many times recognition programs are a retention play—targeting your best performers. A company can look at their turnover at the higher performance levels and see if their top performers are staying with the company. This is typically a good measure of program success and appropriate design.
Bowling for Results
Like anything else in the world, there are no absolutes. I can probably come up with one or two ways to run an incentive over a longer term and tie it to group behavior. I can also find a way to use a recognition program to drive short term results. But these would be anomalies.
I like to think of bowling when I look at incentive and recognition programs. The gutters are the boundaries – the limits. How I roll each ball depends on the pins in front of me. Sometimes I bowl to the left, sometimes the right, but always within the boundaries of the gutters. Recognition provides those boundaries, and incentives are how the ball is rolled each time. Recognition sets the limits; incentives drive action within those limits.
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