Intrinsic Rewards and Employee Performance: A Guide
Updated February 3, 2023
Managers often seek unique ways to motivate their teams and maintain high levels of engagement. One way to accomplish this is to create an environment where employees can receive intrinsic rewards. Understanding this concept can help you understand why it's important in the workplace.
In this article, we discuss intrinsic rewards and their role in creating an efficient workplace, and we offer examples for you to use as a guide.
What are intrinsic rewards?
Intrinsic rewards are those that employees receive when they perform well in their job. These are often psychological and can include pride and fulfillment for achieving certain things in the workplace. Each person might have different intrinsic rewards, as everyone could feel rewarded for unique achievements, like completing activities, gaining skills or contributing to a team effort.
What are extrinsic rewards?
Extrinsic rewards are tangible rewards that companies offer their employees. These are often rewards like bonuses, raises or other incentives that management gives to employees for effective performance. Extrinsic rewards can change depending on the employee, department or industry and can vary between unique company cultures.
Intrinsic rewards examples in the workplace
Below are some intrinsic rewards that may impact your workforce. Fostering these activities and feelings in the work environment could help your team grow and thrive:
Completing tasks that are meaningful
When employees complete meaningful tasks, that could provide an intrinsic reward. Managers can encourage this reward by talking to employees to determine what they think are the most important parts of their job. From there, they can help them structure their day around tasks that give them a feeling of purpose.
Example: Shelly works as a shift manager in retail and feels like the most meaningful part of her job is training employees. Shelly's manager decides to include Shelly in training planning sessions going forward. As a result, Shelly is motivated to be the best retail manager because she's doing something she finds personally rewarding.
Letting employees be selective
Some employees feel rewarded when they get to make choices throughout the day and structure their own workday. Giving employees some freedom to prioritize their own tasks and complete them as they see fit could be an intrinsic motivator for your team. This helps encourage agency and motivation with employees.
Example: As a media producer, Carson knows that every day he's responsible for certain tasks that comprise creating the daily news. Carson feels rewarded when his employer lets him choose how to structure his day, as long as all his tasks are completed successfully. Carson's employer recognizes this trait in Carson and embraces it by making sure Carson has the freedom to schedule his day, provided the news is produced efficiently.
Gaining a sense of competence
When employees feel like they're doing a good job, that can be a reward. If your employees complete complex tasks, simply doing those tasks over and over again until they feel comfortable and confident in their abilities offers intrinsic reward opportunities. This can also increase employee confidence.
Example: Minerva is a chemical engineer who studies metal alloys. She started using a new piece of equipment that posed a new challenge, but as she became more comfortable with the equipment and her competence grew, she felt rewarded. Minerva's employer could keep Minerva motivated by letting her be the person who learns new equipment and processes, then teaches them to the team.
Making noticeable progress
When people can see their progress, they're more likely to receive intrinsic rewards from it. As a manager, you can create an environment where people can see progress and learn from mistakes to receive the benefits of motivation. Consider frequent check-ins with employees to track progress for this reward.
Example: Henry is a personal trainer. He asks his clients to take before and after photos. Henry has worked with dozens of clients at the gym that employs him. When he's feeling like he needs some motivation, he looks at the wall that shows all of the before and after photos and feels motivated to continue doing his good work. His motivation comes from the sense of accomplishment he feels when he sees the good work he has done.
Feeling inspired to be more responsible
Earning increased responsibility is a way some employers show that their employees perform well. When people feel inspired to take on more responsibility, they may get a greater sense of accomplishment even though their role hasn't changed too much.
Example: Martha is a cashier at the grocery store. She feels rewarded when she gets there early and her supervisor lets her clock in to help with daily sandwich prep at the deli counter. Martha's intrinsic motivation is that she's learning a new skill and developing at work. Martha's employers could take that as a sign that Martha is ready to develop, and they could give her more responsibilities.
Being an important part of an organization or team
Feeling like your role is an important part of the team or organization you work within offers intrinsic rewards that could motivate employees to do more and stay focused. Recognition by your team members as playing a vital role can feel good and increase motivation.
Example: Hadley is a project manager in a DevOps workforce. Today, Hadley is starting his first sprint. As scrum master, he will play an important role in keeping the team on track to meet goals. This makes Hadley feel important, accomplished and recognized for his good work.
Mastery of knowledge or a skill
Gaining knowledge of a new skill provides intrinsic benefits that could result in greater motivation. This one is relatively simple for employers to set up to reap the benefit of motivated employees by offering training and opportunities for employees to gain new skills. This could be in the form of online courses, on-the-job cross-training between roles or group retreats geared at education.
Example: Percy is an accounting specialist. He has the opportunity to train with the company's controller to learn new skills. This makes Percy feel motivated to continue to do great work in accounting because he wants to build a career in the field and getting special attention from the controller feels like a step in the right direction.
Feeling pride in what you do
Taking pride in your work can offer intrinsic rewards. Achieving a sense of pride from having others admire your work can have the same effect. When people feel like they've accomplished something substantial, they're likely to feel proud.
Example: Velma is a house painter. She completed the trim of a house in bright white. Her supervisor said, “You did a really great job, Velma. Keep it up.” She felt a strong sense of pride in her paint job. That feeling of pride motivates Velma to keep doing good work. She especially appreciates words of affirmation because they make her feel accomplished.
How to create high engagement at work
To create a work culture featuring high engagement, you should:
1. Create engagement purposefully
Your company can benefit when intrinsic motivators are a part of the company's culture and values. This could include creating new training initiatives, sponsoring manager or corporate retreats, giving motivational speeches, deploying new management styles and more. Consider the motivating factors that are important to your employees and how to purposefully make them an engaging part of the corporate culture.
2. Focus on your mid-range engagers
Once you've established a company culture where intrinsic rewards are prioritized, HR can develop a measurable program that employees are likely to understand. An effective group to focus on is the mid-range engagers, or people who are occasionally engaged. This can help as there tend to be more of them than outlying categories, so you have the opportunity to move a larger group toward intrinsic rewards. They also represent a group of people who are already somewhat engaged, so they may be more receptive to intrinsic rewards than lower engagement groups.
3. Consider change management
Making an entire culture shift and implementing new intrinsic reward programs simultaneously is a lot of change for any organization. Look to large organizations that have made similar cultural shifts to understand the best change management practices for your company. Consider open communication and ensure clear expectations for employees to fulfill.
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