Why All Incentive Programs Should Incorporate a Recognition Component

By HMI Performance Incentives

Scenario: you’re being acknowledged by your employer for the excellent work you’ve done. Which reward would you find more value in – a plaque celebrating your success at the next company gathering (digital or in-person) or get a formulaic “thanks!” email from your boss?

The answer is obvious. Though it may seem like an afterthought to many incentive-program sponsors, the truth is that recognition is a vital part of fostering a thriving workplace atmosphere. No matter what the tangible award is, the act of recognition allows your achievers to display their achievement (and your appreciation) to their co-workers, friends, family, prospects, clientele, etc.

It's important to understand the difference between incentive and recognition programs: both are great, and it’s important to know when to use which type of program. We’re going to dive a bit deeper into the recognition programs: what they are, why they’re so important, and why your incentive program should include a recognition component.

Recognition vs Incentives: The Basics

The difference between recognition and incentives is simple and can be boiled down to a couple fundamental formulas.

Incentives: If… then…

  • If you increase your sales by a certain amount, then you get a reward: a fancy new appliance, a trip to somewhere special, concert tickets, you get it. They are quantitative in nature and performance-based where the individual is rewarded for their performance.
Recognition: Now that…

  • Now that you’ve raised your sales by a certain amount you’ve become one of your company’s top sellers and will be recognized accordingly. Recognition is about appreciation and promoting the success that an individual, or company, has had and a lasting reminder of the achievement.
In essence, incentives drive program participants to improve their performance by promising a reward at the end of the road. Recognition rewards top performers for having gotten there. Recognition offers a social, personalized way to celebrate those who have contributed most to your company’s success and a socially acceptable way to promote the achievement. It addresses, and reinforces, the top two levels in Mazlow’s Hierarchy of Needs.

Generally speaking, recognition has two essential components: award and delivery. In other words, it’s as much about how you present it as what the award is. 

An all-inclusive trip to the Caribbean for two is a fun and exciting reward for achieving a sales goal, but a simple, elegant plaque commemorating the moment is an award that they can cherish and display forever. 

Whether you do one or both, it’s all in the delivery. Done right, the way that you present them with their recognition should inspire feelings of pride and accomplishment in them, and make sure they’re acknowledged among their peer group.

The Power of Individual/Company Recognition

The effects of individual recognition go beyond boosting the individual’s self-esteem: they also drive long-term loyalty and positive attitudes towards the organization that has recognized them. As we’ve discussed at length on this blog, the most successful incentive programs go beyond the merely transactional and end up creating real emotional resonance for people.

Awards and recognition can also help to boost a company’s credibility and expertise. For example, a manufacturer walks into a manufacturer rep’s office and sees a number of plaques in their conference room from various manufacturers for sales performance. The manufacturer comments that they have a lot of awards for how they’ve performed for their manufacturers. This instills confidence in the manufacturer and gets the rep agency more business. What the manufacturer doesn’t see is the rewards given to the reps for their performance as well like cash bonuses, incremental commission, principal trips, etc.

This is where the power of recognition programs can best be seen. While the mechanics of incentives revolve around getting the numbers – sales, engagement, what have you – they should also incorporate the values and mission of your company. A successfully implemented recognition component should instill pride not just in their performance but in being associated with your business. Done right, it will be mutually beneficial: the recognition supports employee development, and they in turn support your business’s development.

The power of recognition is a well-researched phenomenon. In the 1950s, sociologists developed the idea of Social Exchange Theory (SET), the idea that people’s behavior is shaped by wanting to receive positive stimuli or avoid negative stimuli, which includes positive and negative social recognition. The Incentive Research Foundation (IRF) recently published an in-depth meta-analysis of SET research over the decades, finding that SET is “central to the efficacy of recognition, incentives and rewards outcomes.”

Basically, recognition acts as a positive stimulus and as such people will act in such a way as to achieve it. Over the years, SET research has found that people are willing to work harder and continue certain behaviors that allow them to gain recognition in their workplaces, leading to more flourishing culture. As the IRF notes, recognition leads to higher engagement, better performance, and less turnover. On the flip side, a lack of recognition is often cited as a key reason that many workers in the United States are currently looking for new jobs.

While “Recognition,” largely refers to the social process of acknowledging someone’s achievements, it’s important not to forget about the tangible component as well. As the IRF observes: “Organizations that hope to leverage SET through social recognition programs that do not include some element of tangible reward risk creating the impression that recognition is insincere and empty.” 

An example of a failed partnership program could be when a manufacturer cuts back on their recognition program for their distributors. A manufacturer one year may spend $50-200K in recognition plaques for various achievements for their distributors. Distributors strategize around achieving the recognition so that they can promote it in their marketing. 

So, if this program gets cut, distributors may comment that they don’t feel the supplier values them, the relationship becomes more transactional, and the manufacturing company loses its allure let alone the collective morale within the distributorship, who can no longer say that they’re “part of an award-winning XYZ distributorship” or mention the number of years the firm has earned the award.

The praise is great, but don’t forget about the award as well.


If your company runs an incentive program but hasn’t thought about incorporating a recognition component, there’s no time like the present to consider building it in. Your top performers have worked hard to achieve their success, and that deserves to be celebrated – for both you and them. Make them feel important, appreciated, and seen, and they’ll repay you with even more loyalty.