Organizations that recognize an employee’s contribution and incentivize worker performance will maintain an ever-growing workplace productivity curve. The term ‘reward’ means everything a worker receives from their employer after work. There are two types of employee rewards:
1. Intrinsic Rewards
Intrinsic rewards include all the psychological benefits an employee gets out of achieving an impactful contribution at work. Because they are intangible, intrinsic motivators make an employee feel valued and appreciated for their contribution. A positive work environment boosts employee morale, drives workplace efficiency, and increases productivity / job satisfaction (happiness).
Examples of intrinsic rewards include:
- A conducive social climate of an organization.
- Security of tenure and protection from harassment.
- Non-monetary awards of recognition e.g trophies, medals, or pinning an employee on leaderboards.
2. Extrinsic Rewards
These are tangible rewards with an attached monetary value. Extrinsic rewards include:
- Direct pay (salaries, commissions, brokerage fees, overtime payments, bonuses, and wages).
- Other benefits such as promotion at work, salary increment, pay reliefs and tax exemptions, grants, discounted mortgages, and medical / housing allowances.
How Rewarding Employees Affects Workplace Contribution and Organizational Performance
Intrinsic rewards guarantee a worker long-term enjoyment of their employment. On the other hand, extrinsic rewards provide the short-term relief needed to quickly achieve a company goal.
The following are the effects of a total reward system on employee contribution and organizational performance.
a) Rewards build a sense of satisfaction and employee loyalty. A gift card or a free prepaid card, for instance, makes 86% of workers feel valued and more loyal to the employer. It motivates 81% of employees to work harder according to a Hannah Prince(2023) research.
b) Rewards as a result of increased performance gives the employee an incentive to contribute more and to perform better in future tasks.
c) Studies reveal that a good reward system is a remedy to absenteeism and it improves workplace attendance patterns.
d) Rewards contribute to improve employee and job satisfaction which, in turn, positively impacts individual and organizational performance. The more satisfied employees are, the more they will engage, commit, and go the extra mile to meet organizational goals.
Conclusion
There is research evidence that a balanced strategy with both intrinsic and extrinsic rewards encourages higher productivity through enhanced job satisfaction and employee efficiency. Studies also support that rewards foster a positive workplace climate leading to more commitment, a positive relation with employers, and thereby boosts the overall organizational performance.
References
The Impact of Reward Systems on Employee Performance in 7 Statistics.
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