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Reward vs. Incentive: What's the Difference?

Edited by Aimie Carlson || By Janet White || Published on December 7, 2023
A reward is a benefit given after an action is completed, recognizing achievement or performance, while an incentive is an offer made beforehand to motivate future behavior or actions.

Key Differences

A reward is typically given as recognition for achieving a specific goal, completing a task, or performing well. It serves as a form of appreciation or compensation for effort or results achieved. In contrast, an incentive is presented as a potential gain or benefit, intended to encourage or motivate a person to act or perform a certain way. It's a proactive approach to influence future behavior.
Rewards are often tangible, such as bonuses, trophies, or certificates, acknowledging past actions or achievements. They are retrospective, acknowledging what has already been done. Incentives, on the other hand, are usually promises or offerings set in place to drive future actions. They can be tangible or intangible, like a bonus for meeting future sales targets or recognition for potential performance.
The concept of a reward revolves around the idea of giving someone something in return for their efforts, as a way of saying 'thank you' or 'well done'. It's a response to a deed or achievement. Incentives, however, are about setting up a prospective gain or benefit that encourages someone to aim for a specific outcome or behavior, often used as a motivational tool in various settings.
In terms of usage, rewards are prevalent in various settings, from academic to professional environments, to acknowledge accomplishments. They help in fostering satisfaction and loyalty. Incentives are widely used in business and educational environments to stimulate interest and effort towards desired goals, often helping to boost productivity and engagement.
Rewards, being reactionary, depend on the completion of an action or reaching a milestone. They are the 'carrot' that is given after the task is done. Incentives are the 'carrot' dangled in front of an individual or a group to entice them towards a future action, serving as a lure or a motivator to reach a set target or goal.

Comparison Chart


Given after an action is completed.
Offered before the desired action.


To recognize and appreciate past actions.
To motivate and encourage future actions.


Often tangible and concrete.
Can be tangible or intangible.


On past achievements or performance.
On future goals or behaviors.

Role in Behavior

Acts as a recognition.
Serves as a motivator.

Reward and Incentive Definitions


Something given in exchange for good behavior, service, or achievement.
He earned a reward of a free meal for winning the cooking contest.


A benefit, reward, or cost-saving that motivates economic action.
Tax incentives were introduced to encourage investment in renewable energy.


A benefit given in recognition of one's service, effort, or achievement.
She received a cash reward for her outstanding performance in the project.


A thing that persuades or influences someone to perform better.
The company offered a bonus as an incentive for improved performance.


A return for good behavior or work done, often used as an encouragement.
The company offered a reward to its employees for meeting the annual targets.


Something that motivates or encourages someone to do something.
The promise of extra vacation days served as an incentive for employees to achieve higher sales.


Compensation offered or given for some service or attainment.
The reward for finding the lost dog was set at $100.


A motivational tool used to enhance the likelihood of specific outcomes.
The teacher used the incentive of a class party to encourage students to complete their assignments on time.


A prize or other mark of recognition given in honor of an achievement.
The gold medal was a reward for years of hard training and dedication.


An inducement or supplementary factor that serves as a reason to act in a particular way.
The chance to lead a new project was an incentive for her to work harder.


A consequence that happens to someone as a result of worthy or unworthy behavior
The rewards of exercise.
The rewards of lying to your boss.


Something, such as the fear of punishment or the expectation of reward, that induces action or motivates effort.


Money offered or given for some special service, such as the return of a lost article or the capture of a criminal.


Serving to induce or motivate
An incentive bonus for high productivity.


Can rewards be tangible or intangible?

Yes, rewards can be both tangible, like bonuses, and intangible, like recognition.

How does an incentive function?

An incentive functions as a motivational tool to encourage future actions or behavior.

What is a reward?

A reward is a benefit or recognition given after an action is completed, acknowledging achievement or performance.

Are incentives always monetary?

No, incentives can be monetary, but they can also be non-monetary, like flexible working hours.

Can rewards be used as incentives?

Yes, rewards can sometimes be used as incentives when they are promised beforehand for future achievements.

Can incentives be harmful?

If poorly designed, incentives can lead to unwanted behavior, such as cutting corners to achieve targets.

When is a reward typically given?

A reward is given after the completion of an action, task, or achievement.

What is a common example of an incentive in sales?

A common sales incentive is a commission or bonus for reaching or exceeding sales targets.

What is an incentive?

An incentive is an offer made beforehand to motivate or encourage future behavior or actions.

How do incentives influence behavior?

Incentives influence behavior by providing a goal or benefit that motivates individuals to act in a desired way.

What is the psychological impact of rewards?

Psychologically, rewards can create a sense of accomplishment and boost self-esteem.

Can rewards lead to dependency?

Yes, an overreliance on rewards can lead to dependency and reduce intrinsic motivation.

Are rewards always expected?

Not always; sometimes rewards can be unexpected, which can increase their impact.

Why are rewards important in the workplace?

Rewards are important for acknowledging employees' efforts and achievements, boosting morale and loyalty.

Are rewards effective in education?

Yes, rewards can be effective in education for motivating and recognizing student achievements.

What role do rewards play in customer loyalty programs?

Rewards in customer loyalty programs serve to acknowledge and thank customers, encouraging repeat business.

How do incentives drive innovation?

Incentives can drive innovation by motivating individuals or teams to develop new solutions or improvements.

How do incentives differ in public vs. private sectors?

Incentives in the public sector often focus on service improvement, while in the private sector, they are more profit-driven.

What is a long-term incentive plan?

A long-term incentive plan is a plan that offers rewards based on performance over an extended period.

Is an incentive always a positive thing?

While often positive, incentives can sometimes create unhealthy competition or stress.
About Author
Written by
Janet White
Janet White has been an esteemed writer and blogger for Difference Wiki. Holding a Master's degree in Science and Medical Journalism from the prestigious Boston University, she has consistently demonstrated her expertise and passion for her field. When she's not immersed in her work, Janet relishes her time exercising, delving into a good book, and cherishing moments with friends and family.
Edited by
Aimie Carlson
Aimie Carlson, holding a master's degree in English literature, is a fervent English language enthusiast. She lends her writing talents to Difference Wiki, a prominent website that specializes in comparisons, offering readers insightful analyses that both captivate and inform.

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