What is the Difference Between Rewards and Recognition?

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A healthcare CEO recently wrote to me with a question about incentives.

He had read The Service Culture Handbook, and was surprised that I did not include a section on incentivizing employees to align with the culture. The CEO was looking for resources to motivate and reward his team.

A lot of leaders have this same question. My advice is surprising.

• A rewards program is a very bad idea.

• Employees don't need to be motivated.

• Recognition can be helpful, if you do it right.

I've covered this topic in previous posts, so here are a few links if you'd like a refresher:

• How incentives crush motivation

• Why internal competition is a bad idea

• Why you should stop trying to motivate employees

It's important to note that none of the customer-focused companies I researched for The Service Culture Handbook emphasized rewards to incentivize employees. Recognition, however, often does play a role.

This post focuses on the critical difference between those two terms: rewards and recognition.

What are employee rewards?

Rewards and recognition often get conflated, but they're really two different concepts. Recognition can be useful if done correctly, but rewards generally cause harm.

Here's a definition of rewards from my book, Getting Service Right:

Rewards are if-then propositions that are designed to incentivize employees to engage in certain behaviors. The actions or results required to earn the reward are spelled out ahead of time so employees know how to win the prize.

Examples of rewards I've seen customer service leaders use include:

• Cash incentives for earning good survey scores.

• Contests to see who can reply to the most emails.

• Prizes for getting good mystery shopper results.

• Games where employees can earn badges for completing training modules.

• Company swag for achieving perfect attendance for a month.

Rewards typically cause two big problems.

The first is rewards can diminish employees' natural motivation. Offer a $100 gift card for good survey scores one month, and employees will come to expect a $100 gift card for good survey scores going forward. 

The second problem is even worse. Rewards often incentivize the wrong behaviors. For example, offering a reward for good survey scores often leads to manipulated survey results, not better service.

What is employee recognition?

Recognition can be very helpful, if used correctly. Here's a definition from Getting Service Right:

Recognition is given when an employee does something positive as a way of encouraging the employee to repeat the behavior. It can be something tangible—like a gift card or a day off—or something intangible, such as praise from the boss or an employee-of-the-month award. Unlike rewards, the path to earning recognition isn't shared with employees beforehand. It's an unexpected surprise for a job well done.

Examples of recognition I’ve seen customer service leaders use include:

• Praise for helping an upset customer.

• A gift card as a thank you for solving a tough problem.

• Lunch for the team to celebrate a successful project.

• A “wall of fame” where positive customer feedback is displayed.

• Company swag to commemorate a big accomplishment.

Unlike rewards, recognition is difficult to game. That’s because it happens after the behavior occurs and is not predictable. Used in this way, rewards are a clear signal to employees that their performance is valued.

Customer-focused companies I've studied often use peer recognition programs where employees are recognized by coworkers for outstanding contributions. 

Infographic

In summary, rewards often promote unhealthy behaviors while recognition encourages employees to continue positive behaviors.

Here's an infographic you can use to share this concept.

Amazingly Simple Graphic Design Software - Canva

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The REAL Way to Motivate Customer Service Employees

Employee motivation has been a hot topic in customer service for as long as anyone can remember.

In the old days, the threat of punishment was used to motivate customer service employees. The message was clear — do a good job or be fired. 

That approach didn’t work because employees would do just enough to avoid getting fired.

In more recent history, rewards and incentives became an import facet of management philosophy. The idea was you could get employees to do something they’d normally find distasteful by incentivizing them with cash and prizes. 

That approach didn’t work because employees would do just enough to win a prize.

The current management thinking revolves around gamification. Think of it as rewards on steroids. A perfect attendance prize gets a lot more exciting if you can win points, badges, and work your way up the team leader board.

Unfortunately, there’s plenty of evidence to suggest that gamification doesn’t play well with customer service employees.

So, what does work?

Intrinsic Motivation - The REAL Motivator

In his book, Drive, author Daniel Pink examines reams of evidence on employee motivation and comes to a clear conclusion:

The carrot and stick approach doesn’t motivate knowledge workers to do a better job. In fact, it’s counterproductive and often results in poorer performance.

Pink discovered that knowledge workers, such as customer service employees, are intrinsically motivated. He found three specific factors that motivate employees to do a better job. Unfortunately, these factors are sorely lacking in many customer service environments:

1. Purpose
2. Mastery
3. Autonomy

Purpose

People want to belong to something and know their work has meaning.

In customer service, this means creating a customer service vision. This is a clear definition of outstanding customer service that is shared by all employees. It serves as a compass to point everyone in the same direction.

Most customer service teams don’t have a clear purpose. My own research revealed that only 62 percent of companies have clearly defined outstanding service. Of those companies, only a few can honestly say their employees can give a consistent answer to two critical questions:

1. What is our customer service vision?
2. How do I personally contribute to the customer service vision?

If you want to know why customer service at In-N-Out Burger is so much better than McDonald’s, look no further than purpose. Both started with the same core values, but only In-N-Out has made them a real part of their culture.

Mastery

People love developing their skills. It feels good to be good at something.

Many customer service teams are anti-mastery. Companies keep salaries low by hiring low skilled employees. They skimp on training. Leaders find themselves with very little time to give coaching and feedback unless something goes wrong.

Amazing things can happen when you give employees the opportunity to grow and be their best. Not in a superficial, here’s your “Knowledge Badge” and ten experience points sort of way. True mastery is that process where people become increasingly better at their jobs.

Earlier this year, I wrote about Jesse, a new employee at a bagel shop. She was awkward and lacked confidence because she hadn’t been properly trained.

Jesse underwent a complete transformation over the course of a few weeks. She stuck with it and figured out how to do her job. She asked questions and learned from her experiences. Now, Jesse engaged customers with confidence and personality because she had mastered her basic responsibilities.

Autonomy

Ask customer service employees what they dislike most about their jobs and many will tell you it’s a lack of autonomy.

• They don’t like scripts, because it feels like they aren’t trusted to say the right thing.
• They don’t like rules, because it seems like they aren’t trusted to do the right thing.
• They don’t like data, because it appears to be a tool for micromanagement.

Engaged employees are given the autonomy to do what’s right.

They have a clear purpose they believe in and are trusted to work towards that purpose. They are given opportunities to learn and grow so they can master their ability to contribute to the purpose.

Creating a clear purpose, helping employees develop mastery, and giving employees autonomy can be time-consuming. Many managers fall back on the carrot and stick approach because it seems easier. In the long run, any time savings is lost in lower productivity, lower morale, and higher turnover.

If you’d like to see more, check out this amazing ten minute video that summarizes Pink’s research on employee motivation:

Never reward employees for outstanding survey scores

The Westin Portland is one of my favorite hotels. Their warm and attentive associates always make me feel welcome and you can’t beat their location in the heart of downtown Portland, Oregon. I’ve stayed their many times over the years and have come to feel like the hotel is my home away from home.

When I started writing my customer service book in 2011, I interviewed then General Manager Chris Lorino to learn some of the hotel’s service secrets. One of Lorino’s strongest beliefs was that you should never reward employees for achieving outstanding survey scores. He felt it was important to build a team of people who naturally wanted to serve guests at the highest level. In Lorino's opinion, a reward system would inevitably get in the way.

Both leading research on employee motivation and Lorino’s own success as a General Manager suggest that he is absolutely correct.

Rewards vs. Recognition

It’s important to differentiate between rewards and recognition. The purpose of this post is to demonstrate that employees shouldn’t be rewarded for outstanding service, but go ahead and recognize them all you want.

Rewards are if-then propositions. The prize and the criteria for earning the prize are spelled out ahead of time. For example, if you average a certain score on your customer service survey, then you will get a gift card.

Recognition is unexpected reinforcement of results that have already been achieved. An example would be giving an employee a gift card out of the blue to thank them for achieving a high average score on their customer service survey.

Eyes On the Prize

The biggest problem with rewarding employees for good customer service is it takes their attention away from providing outstanding service and re-focuses them on winning the prize.

We’ve probably all seen examples of the behavior changes this can cause:

• Directly asking customers to provide the top score on a survey
• Selectively encouraging only highly satisfied customers to complete a survey
• Submitting phony surveys to bolster scores (yes, this happens)

The Goal is not the Goal

What’s the purpose of conducting a customer service survey?

When employees are rewarded for achieving a certain score they may act as though achieving that score is the ultimate goal. However, most customer service professionals will tell you that the survey is really a tool that can be used for continuous improvement.

Here are a few ways that focusing solely on a survey goal might prevent continuous improvement:

• Employees may care less about service failures if the average looks good.
• It lessens the need for analysis to identify customer pain points.
• Employees may stop trying if they feel there’s nothing left to prove.

Let’s imagine a survey of 100 customers where 90 are satisfied and 10 are unhappy. If my employees are focused on achieving a specific target, they may feel great about a 90% customer satisfaction level. However, they’ll be much more eager to find out how to win over the other 10% if their true focus is continuous improvement.

So, how do I motivate the team?

If you want to learn more about the science behind rewards and employee motivation, check out Daniel Pink’s fascinating book, Drive. Pink's biggest point is that the true motivating factors are purpose, autonomy, and mastery. Let's look at each one in a customer service context:

Purpose
The very best organizations have a clear and compelling customer service vision that describes the type of service they're hoping to provide. It's amazing what happens when the whole team is unified around a common objective. 

Autonomy
Nobody wants to be micromanaged. Give people the resources, training, and authority to get the job done right and then get out of their way and you'll see people taking responsibility for the results they achieve.

Mastery
We all want to be good at what we do. Help bring out the best in employees through coaching, training, and continuous feedback and you'll find that people will step up to the challenge of becoming the very best they can be.