Using Extrinsic And Intrinsic Motivation To Reward Employees

Rewards have taken on increasing importance for employees and employers, in the context of performance management and engagement at the workplace. Not only does a rewards programme motivate employees to perform better, it also aids in retaining talent and attracting new hires. 

A complete rewards package can include various components, from fixed and variable pay, annual bonuses, to non-cash incentives like training and development incentives and leave entitlements. For employers to design a rewards programme that better fits their employees, it is crucial to understand the “why” behind the “what”. 

One way to start is by looking at the extrinsic and intrinsic motivations shared by employees. 

Everyone shares both types of motivations in life and at work. However, some are driven more by intrinsic factors, while others are primarily motivated by extrinsic ones. Understanding both types of motivations can help employers reward them in a more effective way. 

Differences between extrinsic and intrinsic motivators and rewards 

Workplace motivation can be broken down into two broadly defined categories: extrinsic and intrinsic motivations. 

Intrinsically motivated employees are driven to perform tasks or pursue opportunities because they satisfy personal fulfilment. More psychological in nature, intrinsic motivation can look different for every employee. For instance, the pursuit of knowledge, skills development, and purpose at work are all examples of intrinsic motivators. 

BI WORLDWIDE’s methodology to employee engagement, the 12 New Rules of Engagement, offer insights into the ways managers can tap on intrinsic motivations. By making it personal and uniting them, managers foster a sense of belonging that goes deeper than purely transactional workplace relationships among employees. Giving employees opportunities to lead imparts ownership and autonomy over the work that they do, which is another common intrinsic motivator. 

Extrinsically motivated employees, on the other hand, act on goals that come from the external environment. More often than not, these rewards take a financial or tangible form, such as salary increments, bonuses, and promotions. 

For example, employers might choose to reward an employee with a $5,000 cash bonus for excellent performance. Alternatively, they could also provide options like an all-expense paid vacation that is worth $5,000. The emotional experience brought on by such non-cash rewards leave a strong impression on employees, satisfying both personal satisfaction and external behaviours. BI WORLDWIDE’s Rewards Marketplace provides the opportunity to offer non-cash rewards that tangibly fit within extrinsic motivators. 

How do you create an impactful recognition program? 

A holistic employee rewards programme is one that considers both intrinsic and extrinsic motivations. While extrinsic rewards can function as an initial nudge for employees, they can help lead your employees into the intrinsic realm. Using extrinsic rewards to motivate employees can encourage them to pick up new skills with the desire to keep doing better when they initially may not have had the understanding of the benefit this brings. Consistent recognition throughout the process from the organisation and its managers, with the understanding of when to use extrinsic rewards, will help create a beneficial feedback loop that can increase employee engagement and productivity.