Intrinsic and Extrinsic Rewards with Examples

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

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 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 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

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


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.

Taking pride from the job


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 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

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 job performance of the employees but it is necessary that employees receive reward every time they accomplish the 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:


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.

Improved working condition


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 for an improved workspace.


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