Tag: performance

understanding the difference between recognition and reward

UNDERSTANDING THE DIFFERENCE BETWEEN RECOGNIZING AND REWARDING YOUR PEOPLE

Written by Kai Donesa on . Posted in Resources.

When was the last time you acknowledged your people for a job well done?

It’s easy to get caught up in the daily grind and forget to recognize the efforts of those around us. As leaders and managers, it’s crucial to understand the difference between recognizing and rewarding the hard work of our staff.

While recognition and reward are essential in motivating and encouraging employees, they are vastly different. Each word carries varying connotations and outcomes. Recognition is about acknowledging staff for improving at their jobs, while reward is about commending individual staff for their exceptional performance and achievements.

Knowing the difference between both strategies can transform your workplace dynamics. In this blog post, we will explore the nuances between recognizing and rewarding staff and how you can strike a balance to create a culture of appreciation and excellence in your organization.

Why you must distinguish between reward and recognition

Recognizing and rewarding staff are two distinct concepts often misunderstood and used interchangeably. Distinguishing between the two is critical because it informs how your organization appreciates and incentivizes its people. At the same time, recognition and reward complement each other in creating a balanced and positive workplace culture.

A common mistake in organizations is using recognition and reward synonymously. However, this mindset can lead to a skewed view of what motivates staff. Recognition and reward have different impacts, and implementing a balanced approach can significantly improve your human resources strategies.

Understanding recognition

At work, recognition can be a powerful motivator. Recognizing the growth in your people’s skills and knowledge boosts their morale and promotes a positive work culture. It’s an often-overlooked gesture that can significantly affect job satisfaction. When staff members feel valued and appreciated, they are more likely to put in their best effort.

The role of employee recognition in fostering a motivated, satisfied, and high-performing workforce cannot be overstated. As we better understand what recognition focuses on, remember that each point holds unique value in shaping an employee’s job progression.

Valuing knowledge. The knowledge and expertise of your people are the driving forces behind your organization’s innovation, problem-solving, and decision-making. Recognizing and appreciating the depth and breadth of your staff’s knowledge can foster a culture of learning and growth. It encourages employees to continue expanding their knowledge base, contributing to their personal and professional development.

Appreciating skills growth. Skills are the practical application of knowledge. They are tools that enable staff to work effectively. Recognizing the skills of your people, from technical prowess to interpersonal abilities, is important. By acknowledging the growth in your staff’s skill sets, you confirm their value to the organization.

Recognizing capacity. Capacity refers to a person’s ability to meet the demands of the job. Recognizing an employee’s capacity is acknowledging their potential and ability to take on challenges. You trust their abilities and are confident in their growth potential. This recognition can empower staff to push them beyond their limits and strive for achievement.

Focusing on professional development. Professional development is important in an employee’s career progression. Recognizing your staff’s commitment to continuous learning and improvement shows you value their drive to better themselves.

Managing fair and objective pay increases. When your staff feel that their hard work and dedication are recognized with appropriate compensation, it boosts their morale. Additionally, fair pay increases demonstrate that your organization values and appreciates their contributions, encouraging staff to continue improving their skills and knowledge.

Recognizing and appreciating employees’ efforts creates a positive work environment where everyone feels valued. The Birches Group approach to recognizing employees is rooted in skills growth. Managers and staff members collaborate and have equal ownership of measuring and growing their skills. Providing your people with a framework that objectively measures and recognizes their skills growth, you enable the following opportunities:

  • Your managers and staff provide input on the pace of their growth
  • Your people are recognized and compensated as they become better at their jobs.

Understanding reward

Reward is integral to an organization’s approach to managing people. Most organizations tend to link reward to high-achieving, outstanding employees. However, at Birches Group, we also reward a majority of the staff who meet the expectations of their jobs.

So, what differentiates reward from recognition?

Recognizing results. Reward is often tied to specific outcomes or achievements, such as exceeding targets or completing a project successfully. It is a way to acknowledge and celebrate the results that staff members have delivered. Recognizing staff accomplishments reinforces the importance of their contributions and motivates them to perform at their best.

Acknowledging impact. Whether it’s through ideas, client service, or an ability to solve complex problems, the impact of one’s work is felt throughout the organization. Rewarding this impact is a powerful way to show staff that their job matters and makes a difference. By focusing on output, your organization can encourage employees to think creatively. More importantly, focusing on getting things done gives your staff the flexibility to try different paths to achieving their output.

Highlighting critical incidents. Critical incidents are situations that require immediate attention and exceptional handling. When your staff successfully navigates these challenging situations, it’s important to recognize their quick thinking and problem-solving skills. This will boost their confidence and motivate them to manage future incidents with the same level of competence.

Celebrating achievements. Achievements deserve credit and kudos. By celebrating your staff’s achievements, you acknowledge their efforts and foster a sense of pride in their work. When you take time to celebrate individual or team accomplishments, it also encourages a spirit of camaraderie and communal success.

Offering bonuses. Bonuses are a tangible way of rewarding exceptional performance. They show your employees that you notice and appreciate their hard work. Offering bonuses as a form of recognition can incentivize employees to continue performing at a high level.

recognizing the difference of recognition and reward

Why your organization should both recognize and reward staff

A successful organization is like a well-oiled machine, with each part playing a role in supporting smooth operations. Employees are the most vital, powering the machine with their skills, dedication, and creativity. Thus, organizations must not only recognize but also reward staff.

As discussed earlier, recognition is a powerful tool that can significantly increase staff morale. When employees feel their hard work and dedication are recognized, they feel valued in the organization. This, in turn, can boost their productivity and enthusiasm for their work. Moreover, recognition fosters a positive work culture where employees feel appreciated and are likelier to go the extra mile for their job.

While recognition fuels pride in one’s work, reward reinforces this sentiment. Whether monetary or otherwise, rewards are a tangible acknowledgment of an employee’s contributions. They function as a driving force, motivating staff to exceed their performance levels and strive for higher achievements.

How to balance recognition and rewards in your workplace

Recognition and rewards help foster a positive work environment. They reinforce the behaviors and values that contribute to an organization’s success. However, striking the right balance between the two is a delicate process. If not appropriately managed, it can lead to discontent and demotivation among staff.

An overemphasis on rewards may make recognition seem hollow, while focusing too much on recognition may leave staff members feeling undervalued due to the lack of tangible benefits. Your organization can achieve an optimal balance by maintaining a consistent pattern of recognition and tying rewards to clearly defined performance benchmarks.

Recognize effort and reward results. Recognition should be frequent and consistent, aimed at acknowledging effort. This approach motivates all team members and not just top performers. Employees who see their efforts recognized will likely continue contributing to their best abilities. On the other hand, rewards should be linked to significant achievements and results. This approach reinforces the link between performance and rewards, encouraging employees to strive for excellence.

Implement a fair and transparent system. Fairness is vital in balancing recognition and rewards. Ensure that all employees understand how the recognition and reward system works and that it is applied consistently and uniformly across teams. Make sure the rules and criteria for recognition and reward are well-defined and communicated to each staff member. This involves outlining the performance standards or behaviors that will be rewarded or recognized, and the types of rewards or recognition that employees can earn.

How Birches Group’s approach and tools can help

At Birches Group, we understand the importance of recognition and rewards in engaging your staff. Our Community™ approach has made it possible to distinguish recognition from reward, where pay movement is linked to skills growth, and performance is linked to rewarding achievement.

Our online platform offers comprehensive tools and resources to help your organization recognize and reward employees effectively. In addition, our compensation and benefits surveys provide data and insights into what similar organizations in your labor market are doing to recognize and reward staff.

We also offer training and consulting services to help you develop and implement effective recognition and rewards programs. Our team of experts is ready to guide your organization using Community™. Contact Birches Group today and let us guide you in distinguishing recognition and reward.

Carla is a part-time copywriter in our marketing team in Manila. Before shifting to freelance writing in 2020, she worked as a marketing and communications specialist at the offices of EY and Grant Thornton. She has written about HR and career development for Kalibrr. 

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Performance Rating

WHY A FIVE-POINT PERFMORMANCE RATING SYSTEM MAY BE DETRIMENTAL TO PEOPLE MANAGEMENT

Written by Kai Donesa on . Posted in Resources.

You probably finished 2022 with a performance evaluation round with a five-point performance rating system. To evaluate yourself, your supervisor, and your colleagues, you were probably given a scale of 1 to 5, with 5 being the highest rating.

I’ve worked with several employers, including at large firms and a nonprofit organization, and I’ve noticed that they follow the same approach to evaluating staff performance. To assess yourself, your supervisor, and your colleagues, you’re given a scale of 1 to 5, with 5 being the highest rating.

Most organizations use the traditional five-point performance rating system. But a five-point system carries with it a range of people management issues. Instead of motivating staff, it does the complete opposite. And the root cause is that employees want to receive a perfect rating of 5 out of 5. Anything less than that, even a 4, would be undesirable and be seen as a failure.

I’ve experienced this dilemma firsthand. When my work performance was rated a 4, I was disappointed. I couldn’t help but compare myself to my coworkers, who received higher ratings closer to a perfect 5. Looking back, this traditional five-point system for measuring performance is far from helpful for several reasons.

In this article, we’ll explore why a five-point performance rating system may be detrimental not just to people managers and human resources but to the organization. We’ll also share what your human resources department can do to address this all-too-common mistake.

Does striving for excellence work?

To achieve success and become a market leader, organizations ‘aim high’ in setting employee expectations and performance standards. The strategy: celebrate the few exemplary and high-performing staff members who will inspire others to do the same. Additionally, employees are encouraged to do exceptionally well at their job every time.

The consequences of such an approach are potentially disastrous, however.

What are the drawbacks of aiming for a perfect rating?

Many organizations believe that setting ‘exceed’ or 5 out of 5 as the gold standard for performance is the best way to meet their goals. But this can lead to undesired behaviors, as seen in the situations below.

Divide and conquer. Setting extraordinarily high expectations can lead to false confidence and optimism. If staff work hard to exceed expectations, there is a greater chance of being adamantly focused on their own goals than collective goals. This can lead to division and conflict as staff members try to reach lofty individual goals.

Expectations versus reality. Setting ‘exceed’ as the performance standard can also create unrealistic expectations. When staff members believe they can achieve incredible things, they may be disappointed when reality doesn’t meet their expectations. As a result, they become too critical of their work, always striving to improve, even when the work is satisfactory. Employees may feel they can’t succeed, leading to demoralization and frustration and harming team morale and productivity.

Under pressure. Doing one’s job well can sometimes be challenging, but it is even more problematic when it involves working under conditions that aren’t conducive to success. When the pressure is high, it is easy for performance to suffer.

Compare and contrast. Instead of working on their tasks and achieving their goals, employees may be more likely to focus on how they compare to others. And when comparing their work with that of their colleagues, staff may feel they need to do more. This can lead to resentment and conflict, and it can also damage morale.

Alienation. When managers reward only high-performing staff members, they may inadvertently harm employee engagement. Managers who target star employees may risk alienating others who feel they cannot meet expectations. This hurts employee engagement and affects the organization’s culture and vibe.

At a certain point, striving to excel and exceed expectations may become frustrating or demotivating. To avoid setting up your organization for failure and to keep staff accountable, consider shifting to a performance standard that is more realistic and meaningful to them.

What does Birches Group recommend?

Remember that people want to feel valued and that everyone in the organization matters. Setting the attainable goal of achieving targets and improving one’s skills and performance are better ways to motivate people.

In contrast to the traditional five-point performance rating system I’ve seen in several organizations, Birches Group uses a simpler, less problematic four-point system. At Birches Group, performance is measured on a four-point system—Fail, Needs Improvement, Achieve, and Exceed—where Achieve is the gold standard and Exceed is the highest and reflects exceptional work. What I appreciate about this more straightforward approach is that there is less pressure, politics, and alienation. Everyday achievers are held in high esteem. Most staff are achievers who deliver what is expected of them in a performance year. Through the Birches Group four-point rating system, the organization can celebrate the many ‘good’ or the many achievers while allowing the exceptional few to be rewarded accordingly. The fact that there are different kinds of performers—the good, the great, and the exceptional—is acknowledged.

Bottom line

Recognize only a few exemplary employees, and you could set up your organization for failure. If you want staff to remain productive, engaged, and empowered, celebrate the many achievers across your organization and aim for progress. Doing so will also help your people stay focused, deliver results, and ultimately help them feel that they matter.

Contact us to learn more about Birches Group’s Community™ Performance and schedule your demo today.

Carla is a part-time copywriter in our marketing team in Manila. Before shifting to freelance writing in 2020, she worked as a marketing and communications specialist at the offices of EY and Grant Thornton. She has written about HR and career development for Kalibrr. 

Follow us on our LinkedIn for more content on pay management and HR solutions.