Recognition and appreciation. We often use these words interchangeably, and think of them as the same thing. But while they’re both important, there’s a big difference between them. For leaders who want their teams to thrive and organizations that want to create cultures of engagement, loyalty, and high performance, it’s important to understand the distinction.

Recognition is about giving positive feedback based on results or performance. Sometimes this happens in a formal way: an award, a bonus, a promotion, a raise. Sometimes recognition is given more informally: a verbal thank you, a handwritten note. All of these methods can be meaningful, especially if they’re done in a timely and genuine way. They’re also motivating and exciting — everyone wants their good work to be applauded.

But there are some limits to recognition. First, it’s performance-based, so it’s conditional. Second, it’s based on the past, so it’s about what people have already done. Third, it’s scarce. There’s a limited amount of recognition to go around — everyone can’t get a bonus or be mentioned by name in a memo — and it can be stressful when many people are vying for a finite amount of praise. Fourth, it generally has to come from the top. Many organizations have set up programs that allow peers to highlight each other’s efforts, but the major forms of recognition (promotions, raises, and so on) usually are given by senior leaders.

And while recognition that includes monetary compensation can be great, researchers from the London School of Economics found that financial incentives can actually backfire when it comes to motivating employees. According to an analysis of 51 experiments, “these incentives may reduce an employee’s natural inclination to complete a task and derive pleasure from doing so.”

Appreciation, on the other hand, is about acknowledging a person’s inherent value. The point isn’t their accomplishments. It’s their worth as a colleague and a human being.

In simple terms, recognition is about what people do; appreciation is about who they are.

This distinction matters because recognition and appreciation are given for different reasons. Even when people succeed, inevitably there will be failures and challenges along the way; depending on the project, there may not even be tangible results to point to. If you focus solely on praising positive outcomes, on recognition, you miss out on lots of opportunities to connect with and support your team members — to appreciate them.

Oprah Winfrey spoke about this in a powerful way when she gave a commencement speech at Harvard a few years ago:

I have to say that the single most important lesson I learned in 25 years talking every single day to people was that there’s a common denominator in our human experience….The common denominator that I found in every single interview is we want to be validated. We want to be understood. I’ve done over 35,000 interviews in my career. And as soon as that camera shuts off, everyone always turns to me and inevitably, in their own way, asks this question: “Was that OK?” I heard it from President Bush. I heard it from President Obama. I’ve heard it from heroes and from housewives. I’ve heard it from victims and perpetrators of crimes. I even heard it from Beyoncé in all of her Beyoncé-ness….[We] all want to know one thing: “Was that OK?” “Did you hear me?” “Do you see me?” “Did what I say mean anything to you?”

What Oprah was talking about is appreciation. And when we show appreciation to our colleagues, customers, managers, and partners, we’re more likely to build trust and connect.