Why Incentives Fail

An odd topic for a blog on employee recognition. But it’s true. Incentives fail. Recognition for effort works. What's the difference?

The answer lies in understanding the fundamental difference between incentives and recognition. I liked very much a client's definition of incentive as "push the button, get the pellet." You are told in advance "if you do this, you get that." You are pre-directing effort in a way that eliminates the need for creativity and can actually discourage innovation and the desire to give additional discretionary effort - often with unintended consequences. Incentives are all about the stuff – the reward.

Recognition, however, is a more intensive effort that delivers the positive results companies are looking for when they think about these programs. Recognition is based on fostering an environment in which employees WANT to perform, then letting managers and even colleagues acknowledge exceptional effort and praise deserving employees for it. It is more intensive because it requires people to actually notice and then demonstrably appreciate the efforts of those around them. But that effort is well worth the result -- a true culture of appreciation.

The confusion arises because recognition can include a reward, but it is not about the "stuff." Recognition is about encouraging, acknowledging and appreciating desired BEHAVIORS. This is a critical difference to understand by any company desiring to influence employee behavior without stifling innovation, action and creativity.

Don’t misunderstand me. Globoforce offers incentives plans as part of our strategic offering. Incentives can have their place in a strategic recognition and reward strategy – for example in a sales incentive campaign or a call center initiative. But such usually short-term, end-goal campaigns cannot be confused with the overarching, long-term and ultimately cultural goals of recognition.

What is your experience with incentives v. recognition? Do you think I’m splitting hairs or do you agree with the very real difference between “incenting” and “recognizing”? Be sure to take our weekly poll.