Intrinsic Rewards: Why They Matter In the Workplace

An intrinsic reward is an internal reward that employees achieve from completing their tasks or projects successfully. These rewards are mostly psychological and are based on the person’s own effort and abilities. Intrinsic rewards elicit a positive emotional reaction and work to motivate employees to continue to improve as well as make lasting behavioral changes when needed. For example, when someone completes a task successfully, they will often experience a sense of satisfaction and achievement. This intrinsic reward then motivates the employee to continue to complete that task successfully in the future to further experience those positive emotions.

Examples of intrinsic rewards in the workplace include:

• Pride in your work
• Feelings of respect from supervisors and/or other employees
• Personal growth
• Gaining more trust from managers
• Doing work that’s enjoyable
• Feelings of accomplishment
• Learning something new or expanding competence in a particular area
• Allowing employees to choose which projects they work on
• Being part of a team

Extrinsic motivation is a drive to accomplish a goal or task based on an external source, such as the promise of external rewards like praise or money. For example, sales employees who are promised a bonus for making a set amount of sales calls each month are more likely to make these calls than employees who are not promised a bonus. This form of motivation comes from outside of the employee, whereas intrinsic motivation comes from within.

Examples of extrinsic motivation in the workplace include:

• Weekly, monthly, or yearly monetary bonuses
• Recognition from supervisors
• Commissions
• Fringe benefits
• Promotions
• Employee profit sharing
• Raises

Intrinsic rewards and extrinsic rewards are essentially the opposite of each other — one reward is internally based while the other is externally based. For example, an intrinsic reward is the feeling of satisfaction after completing a large project, and an extrinsic reward is a monetary bonus received for finishing that project. In most instances, an intrinsic reward is based on the employee’s personal feelings and interpretation of a situation, while an extrinsic reward is not related to a person’s feelings but rather on whether a specific task or other work-related duty is completed in a successful way.

External rewards are used in a number of situations, including:

• When motivating an individual to learn a new task or skill
• To encourage more interest in a particular task or skill
• To show employees they are valued and that their performance doesn’t go unnoticed
• To reinforce quality performance so that it continues
• To allow employees to benefit from the profits earned by the company
• To encourage more production or output from employees

An intrinsic reward system is also useful in several scenarios, with the most common being:

• To encourage employees to take pride in their work
• To promote an overall sense of teamwork
• To increase employee satisfaction by improving workplace happiness
• To empower employees to take on more responsibility
• To support the mastery of new skills
• To instill a sense of purpose in employees

There are several benefits of using both of these forms of rewards in the workplace. A few benefits of incorporating external rewards into your place of work include:

• Improved productivity
• Lasting changes or improvements in certain processes
• Increased desire to accomplish tasks and achieve goals
• A constant source of inspiration and motivation
• An external way to show employees they are valued

Benefits of using an intrinsic reward system in the workplace include:

• Higher rates of persistence when attempting to learn or achieve something new
• Increased employee engagement
• More effective learning
• A higher level of overall job satisfaction
• An increased level of commitment to the company
• Less need for supervision over employees
• Reduced labor costs
• Higher levels of creativity and innovation

While sometimes used interchangeably, rewards and motivation are actually two different things. Motivation is a feeling or the encouragement that occurs before and during the completion of a task or project, while rewards are what results from the completion of a task or project. For example, the thought of receiving a bonus will motivate you to accomplish a particular goal, while receiving the bonus once the goal is accomplished is the reward. Most motivations are not tangible, even if the promise of a reward is what motivates an employee.

Several different types of motivation can occur in the workplace, including:

• Affiliation motivation: This type of motivation is when someone wants to be part of a particular group or organization. Individuals who are affiliation motivated thrive when working as part of a team and often cooperate well with colleagues and clients to contribute to that team’s success.
• Incentive motivation: This type of motivation is when an employee is driven to perform work in order to achieve a particular inventive, such as a weekly bonus or an additional paid-time-off day.
• Competence motivation: This form of motivation is when a person is motivated to accomplish a goal in order to feel competent in a particular area.
• Achievement motivation: Achievement motivation is similar to intrinsic motivation in that it’s based on achieving a sense of satisfaction or recognition upon the completion of a task or goal.