Intrinsic and Extrinsic Rewards with Examples

Cite this article as: Shraddha Bajracharya, "Intrinsic and Extrinsic Rewards with Examples," in Businesstopia, January 11, 2018, https://www.businesstopia.net/human-resource/intrinsic-and-extrinsic-rewards.

Reward is benefits provided by the employers, usually money, promotion or benefits and satisfaction derived from the job itself such as pride in one’s work, a feeling of accomplishment or being part of a team.

– DeCenzo and Robbins

A reward is basically a token of appreciation, given by the employer to the employee for his/her service to the company. A well-designed reward system motivates employees and helps in building positive emotional response towards the job. It also leads to higher and better performance of employees which has a direct impact on the productivity of the company.


Intrinsic rewards

Intrinsic rewards are the non-physical rewards. They cannot be seen or touched but are emotionally connected with the employees. In other words, intrinsic rewards can be defined as the feeling of contentment one finds in the completion of any task.

Intrinsic reward is directly related to job performance as a successful task automatically produces it. Higher the success rate, higher will be the rate of intrinsic rewards one receives.

Different people have different perception and therefore, there are various forms of intrinsic rewards, some of which are:

Sense of achievement

It takes lots of efforts, skills, and courage to perform any task and there is no better feeling than the joy one feels seeing his hard work pay off.

Words of praise from the seniors

A clipart of a man standing on top of a hill


Employees become more than happy when their seniors or supervisors speak few words of appreciation for them in front of peers or co-workers.

Recognition

Everyone wants to be renowned at the place where they work. It is rewarding for employees when they are recognized by the co-workers and other members of the company for the work they’ve done. If implemented properly, employee recognition can benefit both employer and employees more than any monetary rewards.

Taking pride from the job

 

A clip art of a man speaking and other people approving

People try to avoid the credit when the jobs are wrongly done. But they feel proud of themselves when the work is perfectly done. Such feeling of pride plays a vital role in motivating them to give continuity to make even better outputs.

Work freedom or autonomy

When employees continue to make better output, supervisors may bother less to manage them. The freedom that employees receive to make their own decision and work as per their schedule is also a form of intrinsic reward.


Extrinsic rewards

A clipart of a man and his motivations

Extrinsic rewards are the physical ones that come from an external source (employers) only. A properly designed extrinsic reward can also be emotionally attached with the employees as employees value such rewards.

An extrinsic reward is also directly related to the job performance of the employees but it is not necessary that employees receive a reward every time they accomplish a task. It depends upon the policy of the company.

There are various ways a company can choose to reward its employees. Some examples of extrinsic rewards are:

Pay

A company can design good payment for the employees as the reward for contributing their precious time and energy in achieving the organization’s goal. A good payment is motivational and is a major factor that affects job satisfaction.

Bonus or commission

When a company earns profit due to the effort of an individual or group of employees, the company should appreciate their contribution by giving them additional payment as a bonus or commission. Financial rewards are always known to have received more value from the employees.

Fringe benefits

Fringe benefits are extra facility provided to the employees in addition to their salary. Fringe benefits can be a company’s car, free life/health insurance, employee discount scheme, pension plan, etc.

Cite this article as: Shraddha Bajracharya, "Intrinsic and Extrinsic Rewards with Examples," in Businesstopia, January 11, 2018, https://www.businesstopia.net/human-resource/intrinsic-and-extrinsic-rewards.

Improved working condition

 

A clip art of a workspace from above

An employee spends a lot of time at the workplace, completing tasks of the company and for the company. A company must acknowledge such attribution and reward its employees by providing a comfortable workspace.

Comfortable furniture, air-conditioned rooms, latest models of computers, etc are some factors that contribute to an improved workspace.

Promotion

Some employees are average performing, while some others are intensely hard-working, as a result of which they make a huge difference in the company’s status. Such employees can be rewarded by handing them over new responsibilities and duties. Promotion is directly related to increment in status, payment, and power.

Profit sharing

Employees are equally creditable for the organization’s progress or success as much as the employers are. Therefore, a responsible company rewards its employees by sharing the profit with its employees.