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The difference between employee rewards and incentives

Posted on 11 January 2023
Read time 4 mins
Author Sophia 🌱

The terms ‘reward’ and ‘incentive’ are often used interchangeably, and while they both offer benefits to employers and their employees, they’re not actually the same. 

This blog looks at the importance of rewards and incentives, what they are, how to use them, and what effect they can have on your business.

What are rewards?

The Cambridge Dictionary describes a reward as:

‘something given in exchange for good behavior or good work


In a business context, rewards can be both monetary and non-monetary. While they tend to be offered as additional compensation for exemplary performance, they’re also used as gifts and a means to express gratitude, especially during the holiday season.

What are incentives?

The Cambridge Dictionary describes an incentive as
’something that encourages a person to do something'
The key word here being encourage


While rewards may be non-monetary, incentives tend to have a financial focus, whether directly or indirectly.  Much of the confusion surrounding rewards and incentives stems from the fact that rewards become an incentive when their underlying purpose changes.

When a reward is attached to a goal or a target, it becomes an incentive.


So what's the difference between a reward and an incentive?

The critical difference between rewards and incentives is why you’re using them.

🚀 If you are trying to motivate, encourage or drive targets, you’re offering an incentive.

🎁 If you’re expressing gratitude, showing appreciation, or giving a gift without motive, you’re offering a reward. 


Examples of employee rewards ideas and incentives 

Rewards and incentives take many forms, both monetary and non-monetary. Examples are listed below.  You will likely want to include a combination of different rewards and incentives when considering your program. 

💵 Gift Cards, Vouchers, and Cash

Whether given as a cash bonus or as a gift card, money is a significant motivator, which is why it’s also one of the most popular forms of reward and incentive.

When rewarding or incentivizing your employees this way, remember to consider their wants, needs, and preferences while keeping the reward personal to each individual.

The easiest way to do this is with a Tillo Choice Link, which allows you as a business to keep your reward personal while giving the recipient a choice of where to spend it.


🏋🏽 Subscriptions and Memberships

Complementary subscriptions and memberships can be a big hiring incentive, but they’re also fantastic rewards. Hence they’re often included as a part of a robust employee benefits package.

Tillo provides employees with access to many well-being and health brands on its network, but you could also consider applying for a gym membership, music streaming service, or access to premium apps to show you care about your employees' physical and mental health both in and outside of the workplace. 


🍫 Office snacks

Sometimes small gestures, like providing access to complimentary tea, coffee, cold drinks, and snacks, can be some of the most powerful.

Nobody produces their best work when they are hangry, and providing free food and drink in the office demonstrates that you value and care about the well-being and comfort of those who work for you. Or consider giving your employees a daily gift card allowance so that they can purchase a snack of their choice? 


🌯 Free Lunches

If free snacks weren’t enough, you could go a step further and offer your employees a paid-for lunch. 

You don’t need kitchen facilities to start offering a complimentary lunch to your staff; plug into Tillo and take advantage of our network of food delivery bands. You control the lunch budget, and your staff can choose what they eat - it’s a win-win.


🧢 Branded items 

Branded items like water bottles, sweatshirts, notepads, and mugs can make successful employee rewards and incentives, and they’re also a clever marketing strategy.  

Ultimately, the success of branded items as rewards and employee incentives depends on how valuable the items are to the user, not just in terms of cost but also practicality. You’ve also got to consider how you distribute and ship these items if you’ve got a remote workforce.  

Tillo customer, Reachdesk, solves this problem by offering both physical branded gifts and digital gifting opportunities to their partners, harnessing the power of the Tillo network to produce a gifting solution that is truly global.


🎓 Personal development opportunities

Whether it’s paying for a training course or giving your employees free time to work on their personal projects, rewards and incentives related to personal development can be very powerful. 

Not only do they show that your company is invested in the growth and progression of the people who work for you, but offering personal development time can also boost morale and is a great way to upskill your workforce. 

The Tillo platform gives you access to employee benefits partners such as RewardGateway, while also connecting you to thousands of brands that can be used to enhance your personal development strategy. 



The impact of rewards and incentives in the workplace

A thoughtful rewards and incentives strategy can have a measurable impact on your business. Here are some of the benefits you can expect with a rewards and incentives program in place. 

📈 Greater productivity

A happy and motivated workforce is a more productive workforce. A recent study found that an incentive program tailored to employees individually has the potential to increase employee performance by between 25% – 44%.

🥳 An improved company culture

A massive 85% of HR leaders agree that having a rewards and recognition program in place will improve a company's culture.

👏 Better employee engagement

Employee engagement can directly impact your profits. A study by Deloitte found that employee engagement was 14% higher in companies with a recognition program.

🔒 Improved employee retention

Employees who feel motivated at work and appreciated by their employer are less likely to look for jobs elsewhere. According to Glassdoor, the average cost-per-hire is $4000 per employee in the US and £3000 in the UK, making rewards and incentives good value for money. 

Giving your employees the rewards and incentives they want

For your rewards and incentives to be effective, they need to offer real value to the person receiving them. In short, they need to be something the person wants, and that means tailoring your rewards and incentives program to each of your employees. 

In recent research by the IRF, employees (specifically those working remotely or hybrid remotely) ranked a visa-gift card as the number one reward or incentive they’d like to receive from their manager, ranking it above an additional day off, a weekend away for two, and even the option to receive a luxury gift. 

The preference for flexible rewards and incentives is consistent with research elsewhere and highlights the importance of choice when selecting tangible rewards for your workforce. Put the power of choice in your recipients’ hand with, Tillo’s Reward Pass - our open-loop prepaid Mastercard that works at over 32 million locations worldwide,

To learn more about how Tillo can help you reward and incentivize your employees with Choice Links or a Reward Pass, get in touch with us today, and we’ll show you how quick and easy the process can be. 

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