May 20, 2024
March 1, 2024

Employee Rewards vs. Employee Awards

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When building your total rewards strategy and planning your employee value proposition, one question you may ask yourself is this: what’s the difference between employee rewards and awards, and where should we focus our budget?

Rewards and awards are very similar, but there are key differences that make them both important to the overall health of your workplace culture and the engagement of your people.

In this post, we’ll discuss the differences and similarities between rewards and awards, the benefits of each, use cases for each, and everything else you need to know to both motivate employees and show them appreciation.

Reward vs. Award: Key Differences and Similarities

A reward is something given as a response to a certain behavior or action. Rewards encourage those specific behaviors and act as a prize for those who hit certain expectations. Often, rewards have predetermined criteria for how to earn them. 

An award is given to honor a person’s achievement or recognize a job well done. Unlike rewards, the criteria for earning awards is usually more vague or less strict.

Examples of rewards:

  • Prize for completing an incentive
  • Yearly bonus
  • Compensation bumps

Examples of awards

  • An Oscar or Olympic medal
  • Employee of the Month
  • Service anniversary awards

To break it down into a simple sentence, rewards are used to motivate employees while awards are great for showing them appreciation. Now let's look at some of the differences in a more granular way.

Rewards vs. Awards: Formality

Rewards are usually less formal and can be given in a public or private setting. Because the criteria for earning the reward should be clear and previously shared, those who earn rewards won’t be surprised.

Awards are typically a little more formal, but they can also be given publicly or privately. Awarding the employee of the month should be a big deal, while awarding someone some points or cash for a job well done can be casual.

Rewards vs. Awards: Frequency

Both rewards and awards run the gamut when it comes to frequency. If you’ve implemented an incentive with a reward, you’ll probably be handing out rewards frequently. However, rewarding top performers with bonuses or raises is usually a yearly event.

Using our previous example, employee of the month awards are—you guessed it—given out on a monthly cadence. But awarding the small daily wins of your employees is important, too.

Rewards vs. Awards: Cost

Prizes for both rewards and awards vary greatly. Rewards can range from cash to extra PTO to the best parking spot at the office. Awards can be anything from points on a recognition platform to a certificate signed by the CEO to a gift basket of snacks.

For both rewards and awards, the cost is less important than the impact and meaning behind them.

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The Psychological Impact of Rewards and Awards

There’s actually a theory of motivation called the incentive theory that explains how human behavior is driven by a desire for external rewards—cash, good grades, trophies, or respect from peers are all examples of this.

Rewards activate the release of dopamine, the pleasure chemical, which makes people happy and more likely to repeat the action that earned them the reward. Rewards also strengthen learning and memory in relation to the behavior that earned the reward.

On the downside, when rewards don’t meet the expectation of the receiver, their dopamine response is much lower. If rewards are repetitive, they get less effective over time, as well.

Awards show employees that their work and their efforts are noticed and cared about. This can reduce amygdala activity in the brain and release oxytocin, which increases feelings of security, safety, and peace. This also lowers stress levels. Oxytocin can also strengthen the bond of trust between two parties and strengthen relationships.

Examples of Workplace Rewards

How do you incorporate effective rewards that drive specific behaviors, increase motivation, but avoid any sort of disappointment? Here are some examples to keep in mind.

Incentives of All Kinds

Incentives are one of the best ways to offer rewards. Different types of incentives include:

  • Sales incentives, which reward salespeople for hitting goals, making a certain number of calls, etc.
  • Wellness incentives, which reward employees who participate in wellness programs
  • Safety incentives, which reward safety and compliance
  • Referral programs, which incentivize employee referrals, online reviews, etc.
  • Professional development incentives, which reward those who take their growth seriously by participating in company-sponsored career development.

Incentives need to have clear and established criteria and rules so that employees know exactly how they can earn rewards. The rewards themselves can be anything you think employees will want—cash, prizes, PTO, or anything else you can think of.

If you want to offer the perfect incentive rewards, consider Lifestyle Spending Accounts. These automatically reward employees who exhibit certain behaviors with points based on the budget and cadence you set—and then employees can use those points on whatever reward is most exciting for them.

Promotions or Raises

Reward employees for their specific achievements with promotions or raises. Compensation like this is based on how employees performed during a specific time period. 

Try to be as open and clear about what employees can expect. If a high performer is expecting a 10% raise and they only get 3%, you’re likely to need to replace them after they leave for greener pastures. 

Professional Development Rewards

We mentioned professional development incentives above, but instead of rewarding people who participate in professional development incentives, you can also reward employees WITH professional development opportunities.

For example, for employees who show their passion and interest in their work, you can reward them with a mentorship, paid continuing education, or the cost of a workshop.

Examples of Workplace Awards

Employee awards can be big or small—the important thing is that employees feel like their work is seen and appreciated. Here are some award ideas for your workplace.

Spot Awards

Spot awards, or on-the-spot, are small compliments or expressions of gratitude that are given to employees on the spot. For example, if someone completes a project quickly, when their manager gives them a public shoutout in a company meeting, that’s a spot award.

Spot recognition through Awardco makes spot awards easy for both leaders and employees to give out whenever and wherever they are.

Monthly Awards

Whether you call it employee of the month, A-team, or anything else, these bigger awards are a great way to call out the top people in your organization. A great way to get everyone involved in this type of award program is to accept peer nominations.

A great idea for these types of programs—and spot awards, too—is to tie them into your core values. When employees exemplify a value, award them. That way, they’ll be more likely to repeat those types of behaviors in the future.

Work Anniversary Awards

Service anniversary awards are another great milestone that you should celebrate with your employees. Don’t make these dependent on anything other than tenure—each employee deserves to be celebrated for spending an entire year at your company.

Don’t fall into the trap of only celebrating service anniversaries once every five years. Instead, recognize employees each year with a meaningful award. These don’t have to be big or expensive. Even a hand-written message from the CEO or the employee’s manager is a great idea. 

How Technology Helps With Employee Rewards and Awards

Offering rewards and awards can seem daunting, especially if your organization has hundreds or thousands of employees. However, creating a culture of appreciation from top to bottom is easier than ever with technology like Awardco.

Our employee recognition platform makes it easy to both reward and award employee behaviors, and with millions of items available, employees can choose reward and award items that are meaningful to them. With our peer recognition and top-down recognition, everyone can recognize anyone—so the responsibility isn’t always on HR.

Rewards & Awards: Motivate and Appreciate Employees

A mixture of rewards to motivate and awards to appreciate is the best way to build a culture that employees love. Offer incentives, prizes, anniversary gifts, holiday bonuses, and anything in between to show your people that you care about them.

To refine your approach to rewards and recognition, schedule a demo with Awardco today.

Jefferson Hansen
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An avid lover of fantasy books, a proud Hufflepuff, and a strong proponent of escapism, Jeff has a love of good storytelling. He relies on that for both his professional work and his writing hobby (don’t ask about the 10+ novel ideas collecting virtual dust on his computer).