Difference Between Reward and Incentive

Edited by Diffzy | Updated on: May 13, 2023


Difference Between Reward and Incentive

Why read @ Diffzy

Our articles are well-researched

We make unbiased comparisons

Our content is free to access

We are a one-stop platform for finding differences and comparisons

We compare similar terms in both tabular forms as well as in points


To effectively manage its personnel, human resource management takes a strategic strategy. The implementation of various systems or programs, including reward and recognition, incentives, and other measures, is done to raise performance levels. As a result, the tools of human resource management such as the reward system, reward strategy, reward policy, incentive plan, incentive program, incentive structure, etc. are only for regulating employee behavior. The distinction between a reward and an incentive marks an important value for studying human resource management. A reward is a gift by an employer to an employee for exceeding expectations on the job. As a motivational component, the incentive, on the other hand, constantly pushes the employee to perform better at work.

Reward vs. Incentive

Although they both aim to inspire and motivate employees to perform at higher levels, there are some differences between the two. The timescales in which each is provided make up the majority of the differences. After the task is finished and the employee has proven his value, a reward is given. Employees who are not performing up to expectations or predetermined targets are given an incentive in advance to help them.

Rewards are advantages given to employees who are currently performing well, whereas incentives are perks given to employees whose performance is below average. When an employee exceeds the expectations, an incentive turns into a reward and the promised benefit is given to the employee. An incentive is a motivation to perform better. Rewards and incentives both have many important advantages. A pleasant work environment is created as a result of the employee’s increased motivation, morale, and job satisfaction. However, increased productivity and efficiency can also lead to higher profitability for employers, who stand to gain from this.

Difference Between Reward And Incentive (in Tabular Form)

MeaningThe reward can be thought of as a gift given to someone in appreciation for their efforts or accomplishment.Anything that inspires or motivates a worker to accomplish a goal is considered an incentive.
What is it?A material gift is given to acknowledge and celebrate success or accomplishment.A driving force is used to adjust the desired behavior.
NatureIt’s retrospective.It’s looking forward.
InvolvesAcknowledging someone for achieving a goal or reaching a given degree of competence with money or without.Encouraging others to reach goals or improve performance.
ObjectiveTo acknowledge and show gratitude for someone’s work.To inspire workers to accomplish a goal

What Is A Reward?

The reward, which can be monetary or non-monetary, is the commendation provided to the employee for completing a task, providing a service, or accepting responsibility. It aims to attract and keep the types of workers the business needs while fostering actions that positively affect the achievement of organizational objectives. It resembles offering him or her something extra to show appreciation for their efforts, on par with the usual level of respect.

Nowadays, the idea of a fair day’s labor has lost some of its clarity and has been replaced by a competitive compensation package that includes creative ways to provide benefits. The compensation is a material acknowledgment of the employee’s contributions to the business. Rewards are frequently viewed as being more enduring motivators. By demonstrating to staff that their contributors are respected and appreciated, they can foster commitment and corporate loyalty. Rewards can also inspire workers to work harder and deliver better work by fostering a spirit of healthy competition among them.

Rewards may come in the form of cash or gifts. Anything with a monetary value, also known as a financial reward, is something of value. The following is only one illustration:

Monetary Rewards

  • Digital or physical gift cards: Many businesses provide branded office supplies like water bottles, coffee mugs, and gift cards. The more attractive and useful these products are, the more thrilling they might be as a reward. Gift cards for restaurants, online stores, spas, or any other place that appeals to the majority of people can be obtained.
  • Profit-sharing plan and Company stock options.
  • Bonuses and Commissions: Bonus offers the recipient the freedom to spend it on whatever they want or need, and money is a powerful motivation.

Non-Monetary Rewards

  • Time-off: one of the largest incentives for employees to achieve their goals is giving them paid time (PTO). It would be difficult to find an employee who wouldn’t value more time off from the office.
  • Skill-Sharing: Team members have the chance to advance their careers by learning from one another through skill-sharing. Give them time to participate in webinars or lunch and learn.
  • Professional development opportunities: Employees frequently have suggestions on how to improve the workplace, so they could value the chance to talk to a stakeholder about how to enhance a process or method. Additionally, the executive will have the chance to discuss business updates and learn more about an employee’s achievements.
  • Upgraded tools: When productive technologies are available at work, employees appreciate being able to work more effectively. Consider upgrading your software if it could make workflow more efficient.
  • Remote Workday: Whether working from a coffee shop or their couch at home, employees can thrive and some are even more productive when they leave the workplace. The opportunity to take a short break from their workweek is provided by this reward.

What are the Advantages of a Reward?

  • It shows the worker that his or her efforts and performance are valued and acknowledged. Sometimes the reward itself is the main motivator, but most of the time it’s the associated acknowledgment that encourages an employee to work a little more.
  • It also draws qualified individuals who work for other organizations and retains the talented ones over time.
  • It keeps employees’ healthy competition going as they work towards the same objectives. A strong team will relish the opportunity to test one another while being able to be rewarded for their performance. Competition is energizing, and leaders may observe the effort that their team expands to win.
  • It fosters a sense of dedication and commitment among workers. It raises staff morale, increases productivity and efficiency, and motivates people to continue producing high-quality work. As everyone works towards the same objective of assisting the business in succeeding, employees feel the support of their coworkers and leaders, which helps to boost team morale.
  • You can increase a sense of accountability by using team-based incentives and rewards, where the entire team must achieve specified objectives or carry out certain tasks to receive the prize. Individuals hold themselves accountable so they don’t let their team down, and team members hold each other accountable so they can succeed together. Accountability at work often results in fewer mistakes, which is very advantageous for organizations.
  • Coworkers should collaborate better if a leader establishes rewards and incentives for the entire team as they work together on a project or divides the group into multiple teams to work on various aspects of the task at hand.

What Is An Incentive?

Incentives suggest the unintentional persuasion of motivating workers. It controls how employees behave, urging them to put forth effort at work to meet the company’s standard performance level. It results from the desire to recognize and value people for their commitment and hard work. Practically speaking, showing your staff the respect they deserve when it is due meets their inner needs. Therefore, it can be anything that catches employees’ attention and motivates them to work tirelessly towards achieving it.

The incentive is recognized as the factor that most significantly affects a worker’s motivation since it motivates them to work more by boosting their enthusiasm. The interaction between the employer and employee tends to expand, making this an excellent strategy to increase job happiness. It includes a variety of programs put out by the company to motivate workers or teams to meet goals on time, including skill-based plans, target-based plans, sports prizes, and team incentives.

Employee incentives are frequently considered to be transient motivators. When utilized consistently, they can be a very powerful tool for motivating employees and assisting them in maintaining their motivation. They are intended to create urgency and focus around a certain objective or outcome.

For instance, to qualify for the incentive, the employee must complete a task or goal by the end of the third quarter of the year. Goal-oriented incentives are frequently used in conjunction with rewards. Incentives are mainly monetary, they can also take the kind of incentives like bonuses, commissions, prizes, or recognition. Incentives might also include benefits provided by the employer, such as healthcare or wellness benefits. Offering to cover a portion of the employee’s health care expenses in exchange for their completing a health test is a fantastic incentive. You can also use an incentive program that enables kids to get paid for taking part in particular healthy activities, like signing up for a gym membership or doing a home workout routine. Employees, therefore, benefit from a variety of discounts and benefits when they reach wellness milestones.

Main Differences Between Reward And Incentive (in Points)

  • Reward includes any type of monetary compensation, tangible benefits, and perquisites that are provided to an employee in exchange for their performance and contributions to the organization. In contrast, an incentive is a material or moral system that a business provides to persuade workers to increase production and raise performance standards.
  • The real thing (cash or kind) given as a congratulation or celebration of success or achievement is the reward. The incentive, on the other hand, is a motivational element created especially to nudge employees toward the desired behavior.
  • The primary distinction between a reward and an incentive is one of timing; rewards are given after work has been completed successfully and satisfactorily, whereas incentives are announced before the start of the task.
  • While the recognition for the employees’ efforts, performance, and accomplishments is retrospective in nature. Incentives have a forward-looking aspect, which functions as a stimulant to control an employee’s behavior and performance to get the best results possible.
  • Recognizing past accomplishments and providing compensation as well as other financial and non-financial incentives based on an employee’s or team’s commitment to the organization are the main goals of reward. In contrast, an incentive is a factor in motivation that tends to inspire and energize men at work to perform better in the future by giving them the chance to receive both monetary and non-monetary incentives.
  • The primary goal of employee rewards is to recognize their dedication and hard work, which can serve as an example for other employees. Contrarily, the main goal of offering incentives is to inspire workers to work hard and meet the goal to receive the benefit in the form of an incentive.
  • The timescales in which each is provided make up the majority of the differences. After the task is finished and the employee has proven their value, a reward is given. Employees who are not performing up to expectations or predetermined targets are given an incentive in advance to help them.


Employers need reward and incentive programs just as much as employees do since they help to retain staff, keep them motivated, and increase productivity. This is because it focuses on the employee’s ability to work effectively to meet the objectives of the business.

In other words, the lack of an efficient reward and incentive system may have a detrimental impact on employees’ performance, and they may even be more likely to leave for a company that offers greater pay for their work. In other words, it will lower their performance level, which may prevent the organization from achieving its goal. Employers may effectively manage their employees by using human resource management strategies like rewards and incentives. Incentives and rewards are used in the workplace to motivate employees, boost morale, boost output, and motivate employees to do the highest quality work possible. Both rewards and incentives have several significant advantages. Positive work environments are created as a result of increased employee morale, motivation, and job satisfaction. On the other hand, employers stand to gain from increased production and efficiency, which may result in greater profitability.


Cite this article

Use the citation below to add this article to your bibliography:



MLA Style Citation

"Difference Between Reward and Incentive." Diffzy.com, 2024. Thu. 22 Feb. 2024. <https://www.diffzy.com/article/difference-between-reward-and-incentive>.

Edited by

Share this article