Report - 2026
The Science of Reward at Work:
Why it's not landing the way organisations expect
Foreword:
Leaders need to care about how their people experience reward and recognition
Organisations are not short of intent when it comes to reward and recognition. Most employers understand there is value in rewarding and recognising people effectively, and aim to do so. What is less well understood is the difference between how reward is designed, and how it is experienced in practice.
This matters because work is not simply a thing we do or a place we go. It has a deep psychological dimension. Individuals bring not only their skills to work, but their effort, identity and sense of self.
In this environment, recognition functions as a signal. It indicates what is noticed, what is valued and whether an individual's contribution is acknowledged. Get that right, and confidence, trust, engagement and belonging all follow. So too does performance. Get it wrong, and individuals can begin to question their place.
Reward and recognition need to be understood not simply as systems or strategies, but as lived experiences that can make or break how valued people feel at work – and how much they are willing to deliver in terms of effort, loyalty and engagement. Understanding how people feel about how they are rewarded and recognised – whether they feel meaningfully valued – can only bring benefits.
Our purpose at Perkbox is to make every employee feel valued. This research shines a light on how well organisations are achieving that aim, where they are falling short and how they can bridge the gap to create cultures of recognition that drive organisational outcomes. I hope this paper supports you to reflect on how you can embed emotion into your reward and recognition strategy as deeply as economics, building value and feelings of being valued at every level.
Clinical Director, Perkbox
Introduction:
Unpacking the psychology of reward and recognition
At their most powerful, reward and recognition do more than boost performance, motivation and retention: they tap into deep emotions, making people feel valued. And people who feel valued drive more value for organisations.
To dig deeper into the vital emotional experience of reward and recognition, Perkbox surveyed 4,000 UK employees and 1,000 UK employers.
We found a gap between employer intention and employee experience. What is designed to communicate value often lands as tokenistic, formulaic, inconsistent or unfair. When that happens, investment is wasted, and even risks undermining motivation, trust and meaning. To drive value and make our people feel valued, it's time to take emotion as seriously as economics.
business journalist
Executive summary:
Key findings for people leaders
01
Recognition is the exception, not the norm
Recognition matters to how valued people feel at work, but it is rare. Recognition is almost entirely absent in how many people experience work. And if people don't feel valued it risks eroding engagement and performance.
02
Employers believe they are delivering meaningful reward and recognition – but employees don't feel it
There is an intent-experience gap around reward and recognition. Employers are confident their approach is delivering meaning and value, but employees do not feel it day-to-day.
Say employees feel valued through reward and recognition.
Say reward and recognition feels meaningful, not a formality.
03
Managers make or break how people experience reward and recognition
Reward lives or dies at manager level, but inconsistency undermines meaning and impact. Employees value manager recognition the most, but rarely experience it. Employers recognise this as a major challenge.
04
Peer recognition is emotionally resonant but rarely received
Employees find recognition from their colleagues deeply meaningful, but the majority never receive it.
05
Employees lack clarity around reward and feel unfairly treated
Many employees do not understand their organisation's reward and recognition structures. Confusion breeds frustration and perceptions of inconsistency and unfair treatment – and it's worse among women.
06
Smaller organisations feel more human
Employees in smaller organisations consistently report more positive perceptions of reward and recognition, suggesting that scale brings complexity and confusion. As organisations grow, reward risks becoming more tokenistic, less meaningful and less clear.
employer
employer
07
Reward drives different emotional outcomes for different demographics
Gen Z workers value financial rewards more (unsurprising in today's cost-of-living crisis) but still want reward to feel personal and meaningful. Older workers (55+) are less motivated by reward as a novelty, and value being trusted almost as much as financial rewards.
18 – 24
55 – 64
Reward and recognition:
Reward and recognition:
Recognition:
Reward:
"Employees just don't see reward as a policy. It's a signal. Authentic recognition strengthens emotional connection to the organisation. That increases motivation and drives up productivity and morale. And it signals that the organisation values individuals, not just the output."
Tracey Paxton
Clinical Director
Chapter 1:
Emotions meets economics: Driving value by making people feel valued
Decades of research have confirmed that the perceptions employees have of whether their organisation values their contribution and cares about their wellbeing predict performance, wellbeing and commitment. When organisations demonstrate they value people, people reciprocate. When employees feel valued and supported, they are more likely to give discretionary effort, contributing more to organisational effectiveness and performance.
According to Perkbox's Clinical Director Tracey Paxton, recognition at work is so powerful because it reinforces what matters. Neuroscience research shows that recognition triggers the release of dopamine in the mesolimbic pathway, the brain's reward circuit. "When someone's effort is acknowledged, the brain tags that behaviour as worth repeating," Paxton explains. "Over time, that shapes habits, individual performance and the culture of an organisation."
And when recognition is absent, what is lost is not just motivation. "You create ambiguity about what good looks like," says Paxton. "And that can create issues around trust." In other words, it becomes more simply than a governance issue, hitting the core of how people feel about work.
Our survey finds that employees see reward and recognition – done right – as powerful drivers of positive emotional indicators including motivation, engagement, belonging and wellbeing. Almost two-thirds (63%) say reward and recognition boost their confidence in their role, while 59% say it improves their sense of belonging and 57% their wellbeing.
Two-thirds of employees agree that recognition and rewards strengthen their loyalty to an organisation, while 56% say they are more productive when they are recognised at work.
Employees say reward and recognition boost:
"When someone’s effort is acknowledged, the brain tags that behaviour as worth repeating. Over time, that shapes habits, individual performance and the culture of an organisation."
Tracey Paxton
Clinical Director
Chapter 2:
The intent-experience gap: How employees feel about reward
Our data finds a clear and concerning gap between employer intent and belief around reward and recognition and on-the-ground employee experience. All too often, what is designed to communicate meaningful value is landing as tokenistic, formulaic, inconsistent or unfair.
Employers have a relatively high degree of confidence about the effectiveness of their reward and recognition strategies – 34% rate them as highly effective while 29% say they work well but could be improved. Three-quarters (75%) say their employees feel valued through reward and recognition, with the same proportion believing reward and recognition feels meaningful at their organisations. Just over two-thirds (67%) say their employees are being recognised regularly.
But in reality? Employers often wear rose-tinted glasses, consistently rating their reward and recognition practices as more positive than employees experience them. (See graphic for more.)
For most employees, meaningful recognition is the exception, not the norm. Only 37% of employees have been recognised in the past month, and one in four people say they are rarely recognised for their work. Just over half of employees (53%) say their organisation’s reward and recognition makes them feel valued, and a third say they are never rewarded beyond salary. Employers may have set their reward mechanisms, but recognition remains largely absent in lived experience.
Recognition is largely absent in employee experience
Q: In the past month, have you received recognition or reward for your work that made you feel valued?
*(Remaining proportion unsure)
employees say recognition in their organisation happens throughout the year
Reward and recognition: HR perception meets employee reality
How often people feel recognised for their work
Weekly
More than weekly
Monthly
Quarterly
Once a year
Rarely
Never
say employees feel valued through reward and recognition
say their reward and recognition makes them feel valued
How often people feel rewarded for their work beyond salary
Weekly
More than weekly
Monthly
Quarterly
Once a year
Rarely
Never
say reward and recognition feels meaningful at their organisation
say reward and recognition feels meaningful rather than a formality
"For most employees, meaningful recognition is the exception, not the norm. The biggest issue with reward is that it’s not happening at all. The gap between employer and employee perception is important. How employees experience what is being offered matters almost as much as what is being offered in the first place."
Tracey Paxton
Clinical Director
Chapter 3:
Managers and missed opportunities: Recognition in practice
When it comes to how employees experience recognition, practice is consistently patchier than employers believe. For example, while 59% of employers say recognition is limited to formal performance reviews, 71% of employees think this is the case, signalling that the majority of employees view recognition as a formulaic, infrequent process. And while nearly half of employers (43%) believe recognition is happening throughout the year at their organisation, only one in four employees report this to be the case.
Managers are a clear bottleneck in the emotional experience employees have of reward and recognition. Almost a quarter of employees (23%) say how they are recognised and rewarded depends on who their manager is, with only 29% saying their manager uses recognition to acknowledge good work on an ongoing basis.
say employees feel valued through reward and recognition
but only
say their reward and recognition makes them feel valued
"When managers get it right, recognition is one of the most powerful tools to shape behaviour and build trust."
of employees find colleague recognition very meaningful
but only
ever receive colleague recognition
Employers, once again, believe things are more positive than they are: 48% of employers believe managers use recognition to acknowledge work on an ongoing basis. But they nonetheless rate manager inconsistency as a top barrier to effective reward and recognition (rated second after budget constraints). This inconsistency is particularly concerning given managers can make or break reward and recognition strategies: manager recognition is rated as very meaningful by 47% of employees and somewhat meaningful by a further 41%.
"One of the biggest opportunities is helping managers understand the role they play," says Paxton. "Recognition isn't always intuitive, especially when someone is under pressure, as many managers are. But when managers get it right, it's one of the most powerful tools to shape behaviour and build trust."
We also find that while employees find recognition from their colleagues deeply meaningful, the majority never receive it. While 46% of employees rate recognition from colleagues as very meaningful, only 35% say they receive it.
"Cultures are built more in peer-to-peer moments than in top-down messages. There's nothing better than someone you work with saying: you did a brilliant job there."
Chapter 4:
Lack of clarity breeds resentment
Employers are confident that their people understand how and why reward decisions are made. Once again, this confidence is misplaced. While 64% of employers believe their employees understand how reward decisions are made, only 39% of employees agree. And only a quarter of employees perceive reward and recognition in their organisation to be structured and clearly defined.
Confusion around reward doesn't just frustrate employees, it makes them feel unfairly treated and breeds resentment. A third of employees believe reward in their organisation is unfair and inconsistent, and the same proportion believes reward is not distributed fairly. This feeds into almost a quarter (23%) believing that rewards are based on personal relationships rather than contribution.
employersbelieve
Employees understand how reward decisions are made
employeesagree
Some structure, but not consistent
Rarely happens
Structured programme, clearly defined
Mostly informal
Not sure
That fairness gap has a troubling gender dimension: female employees are consistently less likely than their male counterparts to view their organisation's reward practices as fair, consistent or equitably distributed. The gap is not dramatic in percentage point terms, but it is persistent.
This finding echoes a broader and well-documented pattern in research. Women often feel their contributions are less visible and less valued than those of their male colleagues. Indeed, our data also shows that women are less likely than men to perceive that when someone is recognised, it is visible to others, and are less likely to believe their manager recognises their work on an ongoing basis. When informal, unstructured or opaque reward structures dominate, these issues risk compounding, impacting equity more broadly. The basis for recognition must be visible, consistent and not dependent on who you know.
"If employees don’t understand how decisions are made, they are going to feel it is inconsistent… Once doubt creeps in, it’s hard to rebuild trust."
Tracey Paxton
Clinical Director
A consistent trend across our data is that employees in smaller organisations – those with 50 - 249 employees – report feeling more positive about their employers' reward and recognition approach, particularly when compared to employees in larger organisations (more than 1,000 people).
Those in smaller organisations are more likely to have received reward or recognition for their work that made them feel valued in the last month. Those in larger organisations are significantly less likely to agree that reward is distributed fairly. This suggests that with scale comes complexity and confusion.
As organisations grow, reward risks becoming more tokenistic, less meaningful and less clear. Larger organisations invariably rely more on process, meaning personalisation and human connection can be squeezed out. "As an organisation grows, rewards can become more structured," says Paxton. "The danger is it becomes more distant, more symbolic and more formulaic."
In large organisations, reward and recognition also becomes more dependent on the consistent application of policy by managers, which is often where things break down. Those in large organisations are more likely to agree that how they are recognised and rewarded depends on who their manager is. "Educating managers becomes critical," Paxton advises. Maintaining meaningful human connection around reward and recognition at scale isn't easy, but nor is it insurmountable – as we will explore later.
In the last month I have received reward or recognition for my work that made me feel valued
I am never rewarded for my work beyond salary
Reward in my organisation feels fair and consistent
Reward is fairly distributed in my organisation
How I am recognised and rewarded depends on who my manager is
Chapter 5:
What good looks like: Building meaningful reward and recognition
Having established the issues facing organisations when it comes to building meaningful reward and recognition, let's now explore what good looks like. Our research finds that employees value both financial reward and non-financial recognition highly, and that the biggest impact comes when the two work in tandem.
The majority of employers (84%) believe that recognition and financial reward are most effective when used together, and 78% of employees say they are more motivated when recognition is combined with financial rewards. But for those organisations struggling with limited budget and resources, it will be welcome news that 72% of employees say verbal or written recognition alone increases their motivation.
It's how reward and recognition lands and makes an emotional impact that matters, says Paxton. "You don't need huge budgets to make reward effective," she says. "Frequency and authenticity matter far more than the value. A strategy which is well timed and meaningful will always outperform something bigger but impersonal."
"You don't need huge budgets to make rewards effective. Frequency and authenticity matter far more than the value."
Tracey Paxton, Clinical Director, Perkbox
And while financial reward comes out on top for what motivates employees at work, feeling trusted, career progression and flexibility are also valued by employees.
of employees say they are more motivated when recognition is combined with financial rewards
of employees say verbal or written recognition increases their motivation
Increase motivation
Strengthen employee loyalty
It makes me feel genuinely appreciated
It recognises effort or achievement
It feels personalised to me
It feels proportionate to the effort involved
It has practical value in my day-to-day life
It feels like a box-ticking exercise rather than genuine recognition
It feels generic or impersonal
It does not reflect the effort involved
It feels inconsistent with what others receive
The value feels too small to matter
Chapter 6:
Building value and meaning through reward and recognition: Recommendations for practice
When asked their top barriers to effective reward and recognition, employers primarily cited budget constraints, lack of consistency across managers and lack of time or focus.
So, with those barriers in mind, here are eight recommendations on where to focus when it comes to building greater value and meaning through your reward and recognition strategies.
Improve manager capability around reward and recognition
Managers have an outsize influence on people's experience of work, including how they feel about reward and recognition. Despite manager recognition being the most highly valued type of recognition, only 29% of employees receive it regularly. Managers should be trained to understand not just the processes around reward and recognition, but the psychological role they play in applying it. Recognition should become a standing agenda item in team meetings. And given that 23% of employees say how they are recognised depends on who their manager is, consistency matters as much as capability.
Align financial reward and non-financial recognition
Our data shows the majority of employees want both financial and non-financial reward and recognition. Financial rewards like bonuses and pay increases are powerful, but they are infrequent, and many organisations are struggling with limited budgets. Non-financial recognition such as praise, development and visibility, can be delivered more regularly and costs nothing, as can custom rewards like 'passes' that allow employees to leave early or start late. The two should be aligned and consistent, linked to company values and desired behaviours.
Design strategies to enable flexibility and choice
With our data finding clear differences in how different demographics perceive and experience reward and recognition, reward and recognition strategies should be designed around that. Flexibility and personalisation are not optional, but key to ensuring reward and recognition does not alienate anyone. Consider whether your current approach serves the financial priorities of younger workers, as well as the ask for visibility and respect that matters to older ones. Collect your own data to inform design.
Ensure recognition feels personal and earned
The message recognition sends matters as much as the mechanism. Employees want personalised recognition that signals that their employer understands and appreciates their unique contribution. Be sure that recognition is clearly linked to contribution, both the what (work outputs) and the how (behaviours).
Clearly communicate how reward decisions are made
Ambiguity around how reward decisions are made risks eroding trust and breeding frustration. If people don't understand how decisions are made, they fill in the gaps – and their explanation is rarely positive. Improving communication around reward and recognition, clearly communicating how decisions are made, helps people see the link between actions, behaviours and rewards. It provides clarity over the desired behaviours and values that matter most to an organisation. This is especially important in larger organisations and for addressing the gender gap.
Ensure reward and recognition is fair and consistent
Perceptions of unfairness can be corrosive to reward and recognition strategy, but our survey finds they are widespread, particularly in larger organisations and among female employees. And once that perception takes hold, it can be hard to shift. The basis for reward and recognition must be visible and explicit, with clear criteria, consistently applied and disconnected from relationships.
Enable and encourage peer recognition
While 46% of people find peer recognition very meaningful, only 35% receive it. Scale and organisational hierarchies can make peer recognition tough to achieve organically, so build a mechanism to easily enable it, such as via a digital platform. Actively encourage and even reward peer recognition, for example via celebrating it publicly, to build a culture where it happens naturally.
Focus on frequency and authenticity over budget
Budget may be an issue for many HR teams, but the good news is that frequency and authenticity matter more. Well-timed meaningful recognition will outperform big but impersonal gestures, serving to communicate value in a genuine and meaningful way. Frequent and authentic recognition strengthens emotional connection to the organisation, signalling that the organisation values individuals as much as their outputs.
Conclusion:
From mechanics to meaning
Reward and recognition can do more than drive performance, motivation and retention – as essential as those things are. Done right, reward and recognition goes deeper, tapping into what makes people feel valued at work. When that emotional connection is made, people drive more value for organisations, and feel better about doing it.
Our survey data finds however that while most organisations have the mechanics in place, the meaning is missing. Employers are investing in reward and recognition that is all-too-often falling short, and employees aren't feeling the value or impact intended. The process exists and may be sound, but it is failing to translate into day-to-day experience.
Grounding reward and recognition in emotion as much as economics is the foundation of making people feel genuinely valued. Because as Tracey Paxton puts it, reward and recognition is more than a process: it's a signal of what matters to an organisation. And in today's climate, getting the frequency and wavelength of that signal right matters more than ever.
"Reward and recognition is more than a process: it's a signal of what matters to an organisation."
Case study:
How AX does reward and recognition
At AX, a credit repair facilitator providing motorists with accident assistance and after-care services, the mantra is: 'A thank you goes a long way.' It may sound simple, but it has proved to be effective in creating a positive and appreciative workplace culture.
"Saying 'thank you' and it being visible to other people is powerful," says Communications and Engagement Manager Caroline Hope. "Being recognised for a job well done makes people feel valued." Over the past four years, the company's reward and recognition scheme has evolved from an outdated and time-consuming paper-based system to Perkbox's slick online platform.
In 2025, AX's 500 colleagues gave more than 1,400 Thank Yous to each other, an increase of 48% year-on-year. And entries into the annual colleague recognition awards increased from 220 nominations and votes in 2022 to 324 in 2025, with a participation rate of 67.5%.
While recognition alone is motivating, AX combines it with financial reward: employees are given £25 for every 12 Thank Yous they receive. All rewards are linked to company values, ensuring they drive desired behaviours.
"It's about how we can make our recognition a bit more fun," says Hope, citing engaging events like colouring competitions and walking challenges. "We align these initiatives with a financial reward because we appreciate people taking the time to get involved. That's what creates the culture: people talk about reward and recognition and that's what makes AX a great place to work. It all adds up."
There has been learning along the way, for example the importance of educating managers about reward and recognition. "It's educating them to be mindful of what they are doing, being consistent and taking in the bigger picture," says Hope. And leaders are encouraged to communicate and lead by example, using the platform to recognise staff publicly. As Hope says: "You change culture by leading and posting: it's about visibility, usage and appreciation."
Having a mechanism for public recognition has also helped increase cohesion across a dispersed workforce. "It's a way for us to remain connected and breaks down perceptions that only office-based staff get recognised," says Hope. "The key word is belonging: you're part of a bigger picture."
Spotlight:
Reward and recognition in the public sector
In the UK, over 6 million people work in the public sector, representing 18% of the total workforce. Does reward and recognition look different for them?
Our data finds that public sector employers lack confidence in their reward and recognition strategies. In particular, large employers (1000+ people) in the public sector have concerns that their reward and recognition strategies are not effective and lack meaning.
Public sector employers are also less likely to feel their reward and recognition strategies drive positive employee and organisational outcomes like engagement, connection and wellbeing. And they are less likely to see reward as fair or consistent.
Only 39%
of large public sector employers* feel their organisation's approach to reward and recognition is meaningful rather than symbolic
Only 14%
of large public sector employers* rate their reward and recognition as highly effective
Half (49%)
of public sector employers say budget constraints are their top barrier to effective reward and recognition
*More than 1000 employees
Nat Jutla shares her 5 top tips for Public Sector organisations
Nat Jutla
Head of Financial Wellbeing & Workplace Strategy, Perkbox
Perkbox's Head of Financial Wellbeing & Workplace Strategy Natalie Jutla has more than a decade of experience leading reward and recognition in the public sector. To her, the results are not a surprise.
"The intention is there but the infrastructure and access to budgets often isn't," she says. The answer isn't always more money, but a shift in approach.
1. Focus on meaning and individual contribution
"Many public sector organisations take a blanket approach to reward and recognition," Jutla says. "Treating everyone the same can seem like the fairest option. In organisations with stretched resources, it's often the path that creates the least friction."
But uniformity and fairness aren't the same; conflating them can drain the meaning from recognition. Don't be afraid to single out and recognise individuals who have done an exceptional job. Meaning is what matters.
2. Embrace social recognition
Peer-to-peer recognition feels more consistent, fair and meaningful. "Being nominated for a reward or recognised by people who have seen you do the work can be far more powerful and inclusive than top down reward alone," Jutla says.
Social recognition surfaces quieter contributions, which might otherwise go unnoticed. "It creates a shared sense of value," says Jutla. "When people feel seen by their peers, they feel they belong." Done well, social recognition connects individual effort to collective purpose.
3. Consistency beats big bang
Saving recognition for year-end is one of the most common mistakes Jutla sees. It's also one of the costliest. Spreading budget across 52 weeks transforms recognition from an annual event into everyday culture. "Recognition done consistently, little and often, creates wellbeing, engagement and value," Jutla says.
Timeliness is key, and immediate recognition is more tangible and powerful: "It means people give twice as much and are twice as engaged."
4. Build your business case around employee voice
In her time leading reward and recognition strategies, Jutla has proven one thing time and again: "Employee voice is the foundation of everything. No leadership team will argue with what their people are telling them."
Ask your people how they want to be recognised and what matters to them. Their answers are your strategy, and paired with data from organisations already seeing the results, you can show how investment could solve leadership risk areas. That creates a case that is hard to dismiss.
5. Champion any solution
Launch is just the start. "If you put something in as a tickbox, it's not going to work," says Jutla. "Too many reward initiatives launch well but fade quietly; a platform no one talks about or a programme that loses momentum because no one took ownership."
And if it falls flat, employees notice. "Champion it, not just as an HR initiative, but as a business one," Jutla urges. Use leaders as advocates and use real stories from your people to maintain momentum. As Jutla says: "That's when the magic happens."
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