Recognise This! – Incentives and recognition play important but distinct roles in Total Rewards. Don’t confuse the two.

As a contributor to the Compensation Café community blog (which was just named No. 4 on Fistful of Talent’s Top 25 Talent Management blogs, by the way), I get to work with and learn from some of the brightest minds in compensation and rewards. A primary reason I sought to contribute to the Café is Founder & Editor Ann Bares.

One thing I greatly appreciate about Ann is her astute assessment of the underlying truth behind murky – if well intended – compensation and rewards practices. Case in point – her recent post on her own Compensation Force blog, “Is the Purpose of Incentives to Motivate People,” in which she says:

“I don’t believe that the purpose of incentive is to motivate people.

“I would suggest that the purpose of incentive pay is – in fact – to influence the efforts and choices of workers who had better already have a baseline level of motivation, by calling out top priorities, by guiding them to areas and activities where they can create the most value, by signaling the importance of collaboration through highlighting shared goals and the opportunity for shared reward, and by defining a form of partnership through which employees have the chance to share in the economic success they help produce.”

I couldn’t agree more. Incentives play a critical role in setting clear goals and giving employees a vision of a shared reward once they achieve the goal.

But that is very different from recognition. Problems arise when people assume that incentives and recognition are the same thing. They are not. I explained this difference in a Compensation Café post last year, using this graphic:

Recognition is powerful for setting that baseline of motivation Ann mentions. Recognition done right clearly communicates to employees not just what you need them to achieve, but how you want them to do it. There is no set goal to achieve, but instead direction to contribute to the organisation’s strategic objectives whilst working in such way that you are demonstrating the core values in your work. In other words, it doesn’t matter just what you do, but how you do it.

Do you only incent employees to do what you need, or do you also recognise them for how they do it?