Compensation Is Transactional. Recognition Is Relational.

Recognize This! – Compensation and recognition are two entirely different things. Be sure to not confuse the two.

On Wednesday I discussed why the end-of-year bonus practice should be ended. Then I read this post from Jill Geisler on Poynter.

Jill is speaking more to the problem of managers who believe “your paycheck is thanks enough,” but if her main point applies equally well to using cash bonuses as the “currency” of appreciation and recognition. She says:

“Your paycheck is your thanks” … is not uncommon. I hear about it from staffers and managers alike, those who complain about it and those who defend the philosophy.

“Here’s my take: It’s wrongheaded thinking. It’s counterproductive for the staff, the boss, and the organization. Make no mistake: paychecks are great. (Ask anyone desperate for one these days.) But they represent one half of a transaction, a baseline act of reciprocity. When I pay my cable or heating bill, I’m forking over what I owe; I’m not sending appreciation.”

That last sentence above (emphasis mine) is the heart of the matter. Cash is the currency of transaction. Cash is payment for services rendered. Cash should never be the currency of appreciation and recognition.

When cash is used for employee recognition, appreciation and reward efforts, it is easy for employees to not even realize they’ve received that recognition. Think about the last time you may have received a cash bonus in your paycheck. In today’s direct-deposit world, it’s not unusual to hear stories like this one I’ve related before:

“At my last company, I got a $500 bonus directly into my direct deposit account. From the time I left work to the time I arrived home, my wife saw that bonus in the bank account and went shopping with the girls. I never even saw it.”

That’s why you need a different currency and deliver method for recognition and appreciation than for compensation. But always, the most important bottom line in this discussion was put best by Jill in the Poynter article reference above:

“When it comes to employees and co-workers, appreciation matters.”

How does your organization, your manager – or you – express appreciation to your peers and colleagues? Is it memorable? Does it make you feel valued for your efforts and contributions? Or does it feel more like a simple transaction?

Derek Irvine

About Derek Irvine

The VP of Client Strategy and Consulting at Globoforce, Derek Irvine is one of the world’s foremost experts on employee recognition and engagement, helping business leaders set a higher vision and ambition for their organizations. As a renowned speaker and co-author of Winning with a Culture of Recognition, he teaches companies how to use recognition to proactively manage company culture. Derek holds a B.Comm and Masters of Business Studies from the Smurfit Graduate Business School at University College Dublin.

6 Responses

  1. [...] be quite clear on this. Recognition is not and should never be a replacement for proper compensation. The two are very different things. Trying to use recognition as a replacement for deserved [...]

  2. [...] be quite clear on this: Recognition is not and should never be a replacement for proper compensation. The two are very different things. Trying to use recognition as a replacement for deserved [...]

  3. [...] Why is this so bad? Aside from the fallout of a destroyed relationship between manager and employee, this practice violates Rule #1 of strategic employee recognition – Never muddle compensation and recognition. [...]

  4. [...] same is true with compensation and recognition. Fair and appropriate pay is the baseline. Without that, no amount of recognition and rewards will [...]

  5. [...] same is true with compensation and recognition. Fair and appropriate pay is the baseline. Without that, no amount of recognition and rewards will [...]

  6. [...] same is true with compensation and recognition. Fair and appropriate pay is the baseline. Without that, no amount of recognition and rewards will [...]

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