Difference Between Reward & Incentive

by Louise Balle; Updated September 26, 2017

To manage employees effectively you must monitor and guide them toward success. Rewarding and providing incentives to employees is a part of that process. Managers who choose to ignore the concerns and needs of workers risk problems with low morale. Explore the difference between rewards and incentives before you setup your own employee recognition program at the job.

Rewards

A reward is a prize that you give to your employees for doing an exceptional job at work. Rewards can be monetary -- cash or gift certificates -- or non-monetary. Non-monetary rewards include plaques, parties or even just a pat on the back to say “great job.” The idea is to show appreciation to the employee to encourage him to continue achieving.

Incentives

An incentive is a way to motivate employees to do a better job going forward. Offering an incentive is like dangling a carrot in front of a rabbit — if he jumps higher, he can grab and claim the carrot. Common incentives include offering sales commissions, stock options or the promise of a bigger corner office. The idea is to encourage better performance from workers who may not be meeting desired goals.

Highlighting the Differences

One difference between a reward and incentive is the time line. You offer incentives before work starts and offer rewards after the work is completed. You give rewards to employees who already perform well while offering incentives to employees who aren't yet up to par. The reward is the prize that you give your employee as a result of offering the incentive program, so in a way the incentive is a cause and the reward is an effect.

Suggestions

It makes sense as a manager to set up an employee recognition program that uses both incentives and rewards. This way you can target all employees, from the ones who experience challenges to the top producers. Communicate your incentives program to all employees to encourage them to start making improvements. Reward employees publicly as another way to motivate other workers to boost performance levels.

About the Author

Louise Balle has been writing Web articles since 2004, covering everything from business promotion to topics on beauty. Her work can be found on various websites. She has a small-business background and experience as a layout and graphics designer for Web and book projects.