Extrinsic Rewards

Definition

Extrinsic rewards are tangible benefits or incentives provided to employees by an organization to motivate and encourage desirable behavior and performance. These rewards can include bonuses, raises, benefits, and recognition, which help create a positive work environment and boost employee engagement. By focusing on external factors, extrinsic rewards play a crucial role in enhancing employee satisfaction and productivity.

5 Must Know Facts For Your Next Test

1. Extrinsic rewards can significantly impact employee motivation and retention by offering financial incentives that recognize performance and contributions.
2. These rewards can vary in type, including monetary compensation like bonuses or raises, as well as non-monetary benefits such as awards or public recognition.
3. While extrinsic rewards are effective for short-term motivation, they may not sustain long-term employee satisfaction if not balanced with intrinsic rewards.
4. The use of extrinsic rewards must be carefully managed to avoid fostering a culture of entitlement where employees expect rewards without demonstrating effort.
5. Research shows that when combined with intrinsic rewards, extrinsic rewards can lead to higher levels of employee engagement and overall workplace morale.

Review Questions

• How do extrinsic rewards influence employee motivation and performance in a workplace setting?
  • Extrinsic rewards influence employee motivation by providing tangible benefits that encourage desired behaviors and enhance performance. When employees receive bonuses, raises, or public recognition for their efforts, they are likely to feel valued and motivated to maintain or improve their performance. This creates a positive feedback loop where motivated employees contribute to overall productivity, fostering a more engaged workforce.
• What are the potential downsides of relying too heavily on extrinsic rewards for employee motivation?
  • Relying too heavily on extrinsic rewards can lead to several downsides, such as creating a culture of entitlement where employees expect rewards without significant effort. This can diminish intrinsic motivation, causing employees to focus solely on external incentives rather than finding personal satisfaction in their work. Additionally, if the rewards are perceived as inadequate or unfair, it can lead to frustration and disengagement among employees.
• Evaluate the relationship between extrinsic and intrinsic rewards in creating a sustainable employee engagement strategy.
  • The relationship between extrinsic and intrinsic rewards is essential for developing a sustainable employee engagement strategy. While extrinsic rewards provide immediate motivation and recognition, intrinsic rewards foster a deeper sense of fulfillment and purpose in the workplace. By balancing both types of rewards, organizations can create an environment where employees feel appreciated externally while also experiencing personal growth and satisfaction internally. This dual approach enhances overall engagement levels and contributes to long-term retention and productivity.

Related terms

Intrinsic Rewards: Intrinsic rewards refer to the internal satisfaction or personal fulfillment an employee experiences from completing a task or achieving a goal, driven by personal values and motivations.

Employee Engagement: Employee engagement is the emotional commitment an employee has to their organization, characterized by enthusiasm and dedication towards their work.

Motivation:

Motivation is the process that initiates, guides, and maintains goal-oriented behaviors in individuals, influenced by both internal and external factors.