Incentives vs Appreciation – Dilemma of Managers


Incentives vs Appreciation has always been confusing words for a first-time manager.There is a huge difference between the two words. Yet in corporate both are used so interchangeably and that is a huge problem. Managers and leaders don’t realize that using these two powerful words in contexts can make or break a team’s morale.

First, let’s understand the literal meaning of these words in the dictionary –

  • Incentive

a thing that motivates or encourages someone to do something.

“give employees an incentive to improve their performance”

  • appreciation

recognition and enjoyment of the good qualities of someone or something.

“I smiled in appreciation”

Now let’s look at the basic difference between Incentives vs Appreciation

1 It is not discretionary It is discretionary
2 Have a time-period, are measurable Not measurable all the time
3 It is generally tangible It is generally non-tangible
4 It is transactional It is relational
5 It is conditional It is non-conditional
6 It is expected It is surprise
7 It is outcome driven It is based on behavior


Now let’s look at this in practical scenarios –

  • A person achieves his/ her metric on the target. Hence this is an achievement which demanded incentive and the person know that If I do X I will get a Y. It follows all the properties of the incentive mentioned above.
  • A person goes out of the way to help the customer and solve all his/ her issues, it is a situation which demands recognition. This was not something that was planned or could be measured. This came as a surprise and was non-conditional. Hence it follows all the properties of appreciation.
  • A simple thank you in the morning for coming on time is a recognition for the person’s value system. Appreciation generally comes when the person’s value system matches the value system of the company.
  • A simple mail to the team about what happened yesterday and who did well is appreciation, however, when a value has driven tangible thing given as per planned achievement is an incentive.


Hence it becomes very critical for the managers to demarcate between the two and make sure the team understands this. Both are important but the way and the situation in which they are used can create a lot of difference.

Appreciations can have more frequency but not over the line which reduces the effect of this appreciation. On the other hand, incentives are one’s or twice a year based on your performance on the paper.

This creates employee engagement which is one of the most important things according to me which defines a company’s success.

One more important thing to note here is that you cannot motivate everyone to give their 100% and hence you should follow the 80-20 rule where you make sure that you motivate at least your 20% employees using incentives and appreciation who do 80% of your work. Not the next question is what motivates them? The answer to this lies in your company’s vision and first principles and why in the first place the person joined the company.

We must understand this that everyone works for money as an outcome. But what we don’t understand is that the process of getting there is also important and this is what makes the most difference.


I have tried a couple of things with my team some worked some didn’t but what I realize that the incentives and appreciation also depend on what is the respect level of that person in people’s mind. Thus make sure that the team is always appreciated for what it has achieved but incentives can be purely goal driven.

Learnings from last day at practo

leader and learning

Sitting at airport at Mumbai got me thinking of my last day at practo. In my 2 years at practo, I learned many things and worked with a lot of people, but the last day was the sum of all the learnings given to me in a precise format by Mohan Sir. He told me many things which I am representing here in the best of my understanding.

  • Success is not the only function of talent, rather it depends more on your effort.

Success = Talent * Effort

Talent = Skill * Effort

Success = Skill * Effort2

So, skill is not the only thing defining success. In fact, success is more dependent on one’s effort and persistence of doing so. So, keep doing great and make sure you strive for it as nothing comes easy. (Courtesy – Grit)


  • Problem solving

Here, you must think compartmentalized. Stick to what all you can do in the smallest amount of time to get to a logical conclusion. A simple method to do it is list all the possible scenarios and weigh them on risk vs impact or any other two-dimensional scale depending on the situation. Here we need two key things which are mentioned below –


Once you get here with all the information you can get in an hour and then try and reason the solution if possible. If not we move to the ½ day solution and so on till we reach 7 days. And if you can’t come to a logical conclusion in 7 days you probably won’t be able to solve that piece and in that case, you should ask for help.

We name it as analytics because to take any decision here we need data (without data any decision will be a fluke).

  • 1 hour solution
  • ½ day solution
  • 1 day solution
  • 3 day solution
  • 7 day solution

Critical Reasoning

You should build a lot of hypothesis. This is the only to eliminate what you think fast by looking at the data and then move forward. Once you have data this becomes one of the most important thing. A person who can look at different scenarios and think critically will be the one who will be able to take fast and right decision. Sometime data limits our thinking it is the time when your experience of such things come out and then make sure that you go on a more correct path.


  • People Management

Influence without authority

One of the most important thing for a leader to be successful is to influence his/her team but make sure you don’t become too authoritative. Once that happens you lose the leverage you have over the team and hence it becomes difficult to drive everyone to a common goal or a vision.

Inspire and lead by example

This is by far one of the most awesome way to get your team out of their nests and get them started. Although this is a double edge sword and can lead to people taking undue advantage of yours’s but this is by far the most effective thing I have come across both as a leader and the follower.

In last 2 years I have worked with some great minds and I also penned down my journey at practo here