Employee Appreciation vs Compensation: Know the Difference, Make an Impact 

  • postauthorRaj
  • postdateMarch 2, 2023
  • postreadtime3 min read
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As a HR manager, you cannot undervalue employee appreciation. It is a simple and effective tool that will boost employee morale and make your company a more attractive place to work. However, it is very common for some people to confuse appreciation with compensation.  

You must know there is a huge difference. Both are equally vital to ensuring your employees are happy. With remote working, we know it is hard to create a caring office environment. That’s why employee appreciation matters more than ever.  

Both appreciation and compensation have their roots in Maslow’s hierarchy of needs. It is possible you might have heard or come across this. Compensation forms the second layer, I.e. Safety. Employee appreciation is part of the fourth layer – Esteem.  

Employee Compensation 

Simply put, compensation is the salary or pay you give your employees for their job. Both you and the employee would have agreed on a salary before he/she joined the job. A fair compensation will fulfil the employee’s Safety needs, such as paying rent, buying food and looking after their family.  

It is very unlikely an employee will join an organization whose compensation is not up to industry standards. If you are a HR at a large corporate, chances are this won’t be an issue. However, if you work at a startup or small enterprise, it is often hard to compete with the salary packages of larger companies.  

That’s where employee benefits come in. Employee medical insurance, holidays, wellness membership plans and holidays are good ways to compensate employees for their hard work. They are indirect ways to compensate your employees. 

employee appreciation vs compensation
Employee Appreciation  

Employee appreciation is defined as the act of recognizing and rewarding employee contributions. They can be done both formally and informally, depending on your company culture. Some common appreciation tools are ‘Employee of the month’ awards, thank you cards, gifts and bonuses.  

Such tools help improve an employee’s esteem, thus fulfilling the fourth layer of Maslow’s hierarchy. Even if compensation is low, an employee who is regularly appreciated is more likely to stay because you are appealing to a higher need.  

By appealing to that higher need, you are giving employees a greater reason to stay. It is very common for people to quit for a higher-paying job, but it is even more common for employees to quit if they don’t like their workplace or aren’t being appreciated enough. 

Employee communications platform Smarp found that 69% of employees say that they would work harder if they were better appreciated. Employee appreciation has a direct impact on your team’s productivity, which is why you cannot ignore it.  

It is wise to remember that employee appreciation is not a substitute for compensation. You can’t keep sending appreciative emails to your hard-working employees and not give them a raise or a promotion. After a while, employees will start looking for other opportunities. However, the right appreciation means can help give employees more reasons to stay.  

Go Further with Onsurity 

The right company culture will give equal importance to employee appreciation, healthcare and compensation. That’s an all-round approach you should adopt to make your company a more exciting place to work.  

As an SME or startup, we know it’s hard to attract employees with paychecks like large corporations. However, did you know that you can now provide affordable employee healthcare plans that don’t eat into your working capital? 

Onsurity’s health benefits for startups are designed to be flexible, economical and comprehensive. Our digital first plans are designed to help you give healthcare benefits like doctor teleconsultations, discounted health check-ups and medicine delivery, fitness tracking and group health insurance for MSMEs and startups 

An Onsurity membership will appeal to your employee’s safety and esteem needs. It is a simple and easy way to make them feel valued, while putting their health first. As a HR, you can benefit too. Onsurity’s digital dashboard is easy to manage, saving you valuable time and effort. Our business health plans also help you save up to 50% on your healthcare costs.  Click on the button below. 


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