Every organisation has a reward system.
Even if you haven’t consciously designed one, you still have one. It shows up in what gets paid, what gets praised, and what gets ignored.
And it’s one of the most powerful – and often most misunderstood – drivers of how your organisation actually behaves.
At a simple level, a reward system needs to address four things:
- Compensation
- Benefits
- Recognition
- Appreciation
Most businesses do a reasonable job on the first two.
Salaries are benchmarked. Bonus schemes are introduced. Benefits are reviewed. These are tangible, measurable, relatively straightforward to manage.
But the real leverage sits in the other two – and this is where most organisations fall short.
The problem with focusing only on pay
If your reward system is heavily weighted towards compensation and benefits, you will get exactly what you’ve designed for: people focused on individual gain and measurable outputs.
There’s nothing inherently wrong with that. Performance matters. Results matter.
But it’s only part of the picture, because what tends to get lost is everything that makes the organisation work effectively:
- collaboration
- ownership beyond the job description
- initiative
- constructive challenge
- supporting colleagues
These are harder to measure and harder to formalise. And therefore, often left to chance.
What are you actually rewarding?
This is the really useful question.
Because your organisation is always learning what matters – not from what you say, but from what you reward.
For example:
- Do you reward people who stay late… or people who improve how work gets done?
- Do you reward individual performance… or collective success?
- Do you reward visibility… or genuine contribution?
Left unchecked, many organisations drift towards rewarding busyness, visibility and firefighting, rather than clarity, efficiency and accountability.
And then they wonder why things feel harder than they should.
Recognition and appreciation: the missing levers
This is where recognition and appreciation come in. They are often seen as “nice to have” – informal, optional, dependent on the personality of the leader.
In reality, they are core components of organisational performance – and a vital leadership skill.
Recognition is about publicly acknowledging specific behaviours or achievements that matter.
Appreciation is more personal – expressing genuine gratitude for someone’s contribution and the impact it has had.
Both are powerful. Both are underused. And neither requires a complicated system.
The consistency problem
Most leaders believe they recognise and appreciate their people. Many do – occasionally.
But consistency is the issue: people need regular, specific feedback that what they are doing matters.
Not a generic “well done”. Not a passing comment in a busy meeting.
But clear, deliberate acknowledgement of:
- what they did
- why it mattered
- and the impact it had
Without that, people start to disengage – not dramatically, but gradually.
This isn’t about being “nice”
It’s tempting to see recognition and appreciation as soft, almost indulgent. They’re not.
They are a way of reinforcing the behaviours your organisation depends on.
If you want:
- better collaboration
- more ownership
- stronger performance
…you need to make those things visible and valued.
Otherwise, people default to what is easiest or most obvious – and that’s rarely what the organisation actually needs.
Aligning reward with how your organisation needs to work
This is where many growing businesses hit a tipping point.
In the early stages, performance is driven by individuals, effort is visible and results are immediate. But as you scale, that model starts to break down.
You need:
- clearer roles
- individual accountability, but shared measures
- people working together effectively
And your reward system needs to evolve to support that.
Because if it doesn’t, you create tension between how the organisation needs to operate, and what people are incentivised to actually do.
Practical steps to review your reward system
If you want your reward system to genuinely support performance, start here:
1. Be clear about the behaviours you need – not just the results
What does “good” look like in your organisation in terms of:
- collaboration
- ownership
- communication
- delivery
2. Check what is actually being rewarded
Look at:
- pay structures
- bonus criteria
- informal praise
Are they aligned with the behaviours you say matter?
3. Build recognition into your rhythm – don’t leave it to chance
Make recognition part of:
- team meetings
- one-to-ones
- leadership conversations
4. Make appreciation specific
Avoid vague praise. Instead:
- name the behaviour
- explain the impact
- connect it to the organisation
5. Lead it from the top
If you don’t model this, it won’t happen.
Recognition and appreciation are not HR initiatives. They are leadership disciplines.
Final thought
You get what you reward.
Not what you intend. Not what you say. But what you consistently reinforce.
If your organisation isn’t behaving in the way you’d like, it’s worth asking, “Is our reward system – formally or informally – driving the wrong things?”
Because when you align what you reward with how your organisation needs to operate, people naturally gravitate to the right behaviours, performance becomes far easier to achieve, and everybody benefits.