Incentives Versus Rewards
Understanding the difference and when to use them.
In today’s workplaces, it’s super important to know the difference between incentives and rewards. They’re like secret weapons that can make people work better and safer, especially in construction. Let’s break it down so it’s easy to understand.
INCENTIVES. DO THIS, GET THAT.
Incentives are proactive motivators that encourage individuals to put in extra effort or to meet specific performance targets by promising a tangible reward. They are often based on a “carrot and stick” approach or a “do this, get that” model.
Construction workers might be offered cash bonuses, additional time off, or promotions if they achieve certain goals. Incentives have a clear and immediate focus on achieving specific behavior-based outcomes. They provide a direct correlation between effort and reward, making them particularly effective in driving attention and effort towards particular behavior, and usually for a limited time. A meta-analysis of 64 different studies on incentives found that incentives increased performance by 22% on average, with cash incentives the most impactful. The focus of incentives is most often to increase individual productivity, though incentives can be used to improve task quality, innovation, or teamwork.
Incentives are like friendly nudges that push you to do better. They promise you something cool if you hit certain goals, like finishing a job on time or being super safe. Rewards, on the other hand, are more about saying “great job” after you’ve done something awesome. They’re like high-fives or pats on the back for doing well without any conditions.
AFTER-THE-FACT-RECOGNITION.
Recognition provides a reward after an individual or team has demonstrated outstanding performance. Recognition is not offered with “if/then” agreements where the reward is contingent on behavior or performance. Rather, it uses tokens of appreciation to acknowledge the efforts already exerted. The goal of recognition is to make employees feel seen and appreciated. Recognition has a longer-term impact on broader success metrics such as employee productivity, satisfaction, and retention.
As an example, imagine a colleague voluntarily works over the weekend to create a presentation for a client. It would be socially unusual – if not inappropriate – to suggest that if she works over the weekend, she will receive money for a nice dinner the following week. However, after she has voluntarily done so, it is socially appropriate (and good business practice) to send her a personal thank you note that highlights the impact her presentation had on the client, and to offer a “dinner on me” (worth $100) as a thank you.
Using both incentives and rewards can really make a difference in performance, culture and outcomes like safety. Say you’re working on a construction site and your boss offers you a bonus for being safe and getting things done on time. That’s an incentive. But if they also say “wow, you guys did an amazing job keeping things safe this week,” that’s recognition. Together, they make you feel appreciated and motivated to keep up the good work.
Science says these things work because they tap into how our brains and feelings work. Incentives make us want to keep doing good things because we like getting rewards. And recognition makes us feel proud and happy, which makes us want to do even better next time.
In the construction world, it’s important to make incentives and rewards fit the people doing the work. Maybe incentives could include things like gym memberships to keep workers healthy, while rewards could be things like certificates for a job well done or a team pizza party.
In a nutshell, mixing incentives and rewards is like having a secret recipe for success. They make people want to work hard and be safe, all while feeling appreciated for their efforts. So, if you’re a leader in construction, remember to sprinkle a little of both into your plans for a job well done!
