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Extrinsic And Intrinsic Rewards Essay

1231 words - 5 pages

Extrinsic and Intrinsic Rewards

In this paper I will answer the following questions:
1. Compare and contrast extrinsic and intrinsic rewards within the workplace.
2. How have you observed extrinsic and intrinsic rewards working well?
3. How can managers and leaders improve extrinsic reward and pay for performance plan?
Introduction
Motivation in an organization is a key element to increase overall operational efficacy. Proper motivation keeps employees working at high productivity levels, increases morale and increases retention of valuable employees. All of those dimensions are critical to a successful operational structure. In addition, these are also central ...view middle of the document...

When all of these elements are in place in an organization employees will be motivated to perform to the best of their abilities.
Intrinsic motivation works within the Maslow theoretical hierarchy of human needs. According to the theorist, human beings have the following needs: physiological, safety, social, esteem and a need for self-actualization 2.With the exception of physiological needs, the rest of the needs in this hierarchy is achievable by intrinsic motivation.
Though compensation for employees is critical for motivation, research has shown that it generally is considered most at the time of accepting employment 3. Fair compensation at or above an industry standard is a necessary foundation for motivation. Once terms are accepted and the employee begins the job, the extrinsic reward factors generally become less important 3. At this point, the employee has decided that his or her physiological needs have been met through the compensation and benefits. Extrinsic rewards continue after the employee accepts the position. They have to be meaningful and targeted. For example, a simple annual pay increase for on the job that does not take into account performance is not as impactful as having a pay reward structure that is performance based. Thomas 3 explained, “Motivational dynamics have changed dramatically to reflect new work requirements and changed worker expectations. One of the biggest changes has been the rise in importance of psyche, or intrinsic rewards and the decline of material or extrinsic reward”. Motivation, after this point tends to be more intrinsically based. Intrinsic rewards, once extrinsic salary based manifestations have been established, can be used to build a high engagement culture 3. From an outside perspective extrinsic reward is generally considered to be the easiest and most commonly used formal tactic for motivation. While this is not innately flawed due to its connections with physiological needs, it is only focusing on one element of the needs hierarchy.
How have you observed extrinsic and intrinsic rewards working well?
For eleven years I worked for consumer goods Company that blended a compensation package with a recognition structure. Each employee could earn a bonus on top of their salary that was based on the individual sales and goal performance, added to this was a company wide recognition program executed through a series of regional awards given out during the annual national sales meeting. Employees were given awards at the closing ceremonies of the meeting and were given a plaque to hang in the office to commemorate to accomplishment. This combination of extrinsic and intrinsic rewards motivated all levels of employees to higher level of production and performance. In my first year I received the New Comer of the Year award. It made me excited about the prospects at the company for advancement as well as how I could impact the business to get an award the following year.
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