Reward vs Incentive
Rewards and incentives are human resource management techniques used by employers to manage their workforce effectively. Rewards and incentives are used within the workplace for motivation, to improve morale, increase productivity, and encourage workers to contribute their best quality of work. Rewards and incentives are beneficial to both employers and employees as it facilitates the creation of a positive work environment. However, there are a number of differences between the manner in which each mechanism is employed for this purpose. The article offers a clear overview of each and explains the similarities and differences between rewards and incentives.
What is a Reward?
A reward is a benefit that is provided in recognition of achievement, service, commendable behavior, etc. A reward is given to an employee only after he / she has provided evidence of his /her positive behavior and achievements. The aim of a reward is to show the employees that their work and effort are valued, and is given as an appreciation for the work already completed, as well as a motivation to keep improving their quality of work. Rewards can be in the form of money or can even be non-monetary in nature. Monetary rewards may be in the form of salary increments, bonuses, etc. Examples of non-monetary rewards include promotions, paid time off, flexible work hours, etc.
What is an Incentive?
Incentives are benefits that are promised to employees to motivate them to achieve their best and to improve their behavior, productivity, and output continuously. Incentives are granted to workers that perform below par, and to encourage them to achieve the desired level of performance or set goal. An example of an incentive would be, “rewarding a $200 gift certificate to an employee achieving 30% increase in sales for the month.” Examples of other incentives include sales commissions, employee stock options, better offices and work spaces, higher allowances, etc. The aim of an incentive is to motivate and encourage employees to achieve desired performance, efficiency, and levels of output.
What is the difference between Incentive and Reward?
Despite their similarities in motivating and encouraging workers to achieve better levels of performance, there are a number of differences between the two. The main difference lies in the timelines in which each is offered. A reward is offered after the job is completed and after the employee proves his worth. An incentive is offered beforehand and is aimed at improving performance of employees who are not meeting expected standards or established goals.
While rewards are benefits given to employees that are currently performing well, incentives are given to employees whose performance is not up to par. An incentive is an encouragement to perform better and once the employee meets the expected goals the incentive becomes a reward in which the employee gets the promised benefit. There are a number of major benefits of both rewards and incentives. In terms of the employee, the morale, motivation, and job satisfaction increase, resulting in a positive work environment. Employers, on the other hand, can benefit from improved efficiency and productivity, which can translate to higher profitability.
Summary:
Reward vs. Incentive
• Rewards and incentives are human resource management techniques used by employers to manage their workforce effectively.
• Rewards and incentives are used within the workplace for motivation, to improve morale, increase productivity and encourage workers to contribute their best quality of work.
• A reward is a benefit that is provided in recognition of achievement, service, commendable behavior, etc.
• A reward is given to an employee only after he /she has provided evidence of his / her positive behavior and achievements.
• Incentives are benefits that are promised to employees to motivate them to achieve their best and to improve their behavior, productivity and output continuously.
• Incentives are granted to workers that perform below par, and to encourage them to achieve the desired level of performance or set goal.
• The main difference lies in the timelines in which each is offered. A reward is offered after the job is completed and after the employee proves his / her worth. An incentive is offered beforehand and is aimed at improving performance of employees who are not meeting expected standards or established goals.
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