Explain the advantages or disadvantages of intrinsic and extrinsic rewards in the workplace

An advantage of an extrinsic reward system in the workplace is that they are typically appreciated by employees. Sometimes, however, extrinsic rewards can lead to unhealthy competition among employees. An advantage of an intrinsic reward system is that it identifies those employees who are most committed to the organization. In the process, there may be more turnover as some employees choose to leave in the absence of more tangible rewards.

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Extrinsic rewards are those that originate from the company itself, providing a fairly tangible means of recognizing an employee's hard work. Employees thus want to work harder and complete tasks well because they want to reap the rewards of their efforts. Companies may offer things like bonuses, promotions, extra time...

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Extrinsic rewards are those that originate from the company itself, providing a fairly tangible means of recognizing an employee's hard work. Employees thus want to work harder and complete tasks well because they want to reap the rewards of their efforts. Companies may offer things like bonuses, promotions, extra time off, raises, gifts, a larger office, better parking, free lunches, or a relaxed dress code to those employees who meet its goals. These types of rewards are usually much-appreciated by employees, particularly when the rewards are significant. Employees who know that they will receive a $15,000 Christmas bonus if they meet production goals each month are much more likely to work hard all year long in order to obtain that extra money.

The disadvantage of an extrinsic reward system is that it can lead to unproductive relationships among employees as they all compete for those rewards. Google, known for its sense of innovative work environments, tackled this problem by phasing out monetary rewards and using rewards of "experience" instead. They found that offering extrinsic rewards, such as travel and tech gadgets, better improved employee performance overall. Extrinsic rewards may also not affect long-term productivity; if employers remove the reward system due to factors like a decreased budget, they may find that employee performance decreases as well.

Intrinsic rewards rely on employees' feelings of pride in the job itself completely independent of any external reward system. In this way, an employer may demonstrate that they trust an employee by giving him more responsibility. They may not "check up" on the employee with as much frequency. The employee may be given a choice in the work she wants to complete. The great advantage in this type of reward system is that it identifies those workers who are most committed to the goals of the organization. While some workers may leave in the absence of external rewards, those who remain prove themselves to be more effective and motivated; this means that companies retain the best workers. This type of reward system is sustainable, and workers generally report higher levels of job satisfaction.

One negative aspect of intrinsic rewards is that some workers simply do not have the self-awareness necessary to work in the absence of other perks, so there is bound to be conflict and turnover in trying to find the best workers. This reward system also requires insight within the company to build a meaningful purpose into the work environment that helps employees to "buy in" to the vision of the organization from the beginning.

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Extrinsic rewards are, simply, the tangible rewards an employer gives to an employee. Such rewards are presented in the form of increases in pay, bonuses, commissions, promotions, improved working conditions, profit-sharing and other fringe benefits. These awards are, of course, related to work performance and have to be presented consistently each time a task is achieved. Such regularity promotes the desire to do better and inspires confidence in employees. If applied fairly, extrinsic rewards lead to loyalty and the desire to remain with an employer. This commitment to a company ensures a low staff turnover.

Intrinsic rewards are non-physical and are emotionally connected with employees. They are presented in the feelings of contentment employees experience in the completion of their tasks. Just as extrinsic rewards, intrinsic rewards are also related to job performance. The higher the success rate, the higher the rate of intrinsic reward. Intrinsic rewards present in many forms. They may occur in the sense of achievement a worker feels for having completed a difficult task. The greater the difficulty, the higher the sense of achievement. Words of praise from employers for a job well done also encourages employees and is reflected in their positive performance.  

Recognition from fellow staff and others also enhances feelings of well being, and adds to an employee's sense of achievement. Furthermore, an employee's sense of pride is also amplified when he or she has adequately completed a task. When employers show trust in an employee by providing him or her greater autonomy in the completion of tasks, the sense of freedom he or she enjoys may add to the employees' feelings of well-being and will generate a positive atmosphere. Also, employees also feel that their work is meaningful if their contributions are acknowledged. They achieve a sense of purpose and do not feel as if what they do is irrelevant.

The only disadvantage of rewards possibly lies in the allocation of extrinsic awards. Employees might feel that because of nepotism, graft, bias or any other prejudice a fellow employee unjustly benefits. In such instances, fellow workers may become disgruntled and refuse to perform at their best or, at least, become demotivated. 

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Extrinsic rewards: The advantage to an extrinsic rewards system is that is it is fairy simple to implement. One rewards desirable behaviours with money or other immediately tangible benefits (better parking, more vacation. etc.) Financial rewards, or even types of prestige award such as "Employee of the Month" that can go on resumes are ones most employees will appreciate. Disadvantages are that this can get expensive and also that employees will focus not on doing all aspects of the job well, but just on getting the extrinsic rewards, as when CEOs maximize their bonuses by going for short term profits over long term health of the company. It can also foster a corporate culture of competition rather than cooperation. Also, employees working merely for extrinsic rewards may leave if offered more money by another company,

Intrinsic rewards: The advantage is that if the job is intrinsically rewarding, employees will be loyal and dedicated and work hard because they enjoy what they are doing. Many non-profit organizations rely on intrinsic rewards, people who feel rewarded because they can see that they are benefitting others. The disadvantage of intrinsic rewards is that they are much harder to implement, especially for inherently routine tasks and often they require management to trust and empower employees.

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