In short, cash awards seemed to have a demotivating effect overall. We also have found instances in which 'pay' for certain types of intellectual performance tends to denigrate the performance. In short, cash awards seemed to have a demotivating effect overall. Recognition boosts employees' esteem and performance. Recognition, on the other hand, is what you do above and beyond what people are paid to get the best effort from employees.
Recognition has multiple functions beyond simple human courtesy.
To the employee, recognition signifies that someone notices and someone cares. To illustrate the power of recognition on individual behavior, Daniel Boyle, vice president and treasurer of Diamond Fiber Products Inc. in Thorndike, Massachusetts, tells an anecdote in a Harvard Business Review March-April 1987 article. A teller at a local bank told me once that a woman came in and proudly modeled her bay blue 100 Club jacket for bank customers and employees. She said, 'My employer gave me this for doing a good job. In her mind, she'd provided a service for her earnings.