| Purpose | Rewards serve as recognition and appreciation for past performance, accomplishments, or contributions of employees. They help strengthen the relationship between the organization and the employee by acknowledging their hard work. | Incentives are meant to motivate and influence future behaviour or performance by offering a specific benefit or compensation for achieving predetermined goals. |
| Timing | Rewards are retrospective and given after an employee has achieved a goal or completed a task. They act as a form of acknowledgement for the employee's hard work. | Incentives are prospective and announced beforehand, providing employees with a clear objective to work towards to receive the promised benefit. |
| Impact on motivation | Rewards can boost employee morale and satisfaction by acknowledging their accomplishments and making them feel valued. | Incentives, however, create a sense of anticipation and motivation for future performance by offering employees an additional reason to strive for better results. |
| Tangibility | Rewards can be both tangible such as monetary rewards, gifts, and promotions, and intangible such as recognition, praise, or appreciation. | Incentives are often more tangible, as they usually involve a clearly defined benefit or compensation that employees can expect upon achieving a specific goal. |
| Flexibility | Rewards can be more flexible, as they may be given on an ad-hoc basis or as part of a regular performance review process. | Incentives are usually tied to specific targets or milestones, making them less flexible in terms of when they can be awarded. |
| Conditionality | Rewards are typically unconditional, as they are given in recognition of past achievements without any further requirements. | Incentives, however, are conditional, as they are only provided if an employee meets or surpasses the specified goals or objectives. |
| Distribution | Rewards can be distributed more broadly within an organization, as they can be given to employees for various achievements or performance levels. | Incentives are often tied to specific targets, making their distribution more limited to those who meet the established criteria. |
| Performance measures | Rewards can be based on a range of performance measures, including individual or team achievements, subjective evaluations, etc. | Incentives are generally based on clearly defined, measurable goals or objectives provided by the organisation. |