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Human Resources - Do Intrinsic Rewards Provide for Better Employee Retention?

Updated on July 11, 2012

The question we face is whether or not an employer should offer intrinsic rewards, extrinsic rewards, or a sort of combination of the two. Companies and individuals disagree in their answers to the question with strong supporting arguments for each side. Still, the idea of a “total package” or combination of extrinsic and intrinsic rewards seems to be most appropriate for any career. This would align with the ideas of those who favor intrinsic and extrinsic reward systems, not just extrinsic.

Intrinsic Rewards

Intrinsic rewards are those that we do not receive a tangible or monetary payment for. They are meant to be a reward that adds a favorable and positive outlook to our jobs within us. If I finish a report or deadline early and my boss sees fit that I should receive a reward for that, an intrinsic reward might be recognition for a job well done. This recognition would instill in me a sense of purpose and true value in my being at the company. While this type of award may be thought of as cheap or unfulfilling, it is hard to deny the positive feeling a man or woman gets when they receive a reward like this of their own. The argument for intrinsic reward systems becomes very strong when discussing the value of job satisfaction. We spend over forty hours a week at our place of employment. That equals out to over 2000 hours a year. Now, if a person is unfulfilled by his career or wishes he could have a job that paid well and also made him happy, he would be in essence saying that he would rather sacrifice one third to one fourth of his life for the idea of having more money to use on the other non-work parts of his life.

Those who favor intrinsic rewarding would see this as an unfulfilled life. Intrinsic rewards add to the flavor of the everyday monotony and humdrum feelings we get from having to go to work every day. They are intended to make us want to go to work and enjoy ourselves in the process. The Container Store gives employees an astronomically higher number of training hours than a typical employee. By doing that, they are telling their employees “you are an asset to this company and we believe you deserve to have a full knowledge of our product line in order to be the best you can be at work. We believe in you.” Whereas a worker at another store may get thrown into his job with little training and be frustrated by the fact that he knows little of what he sells or what it is he actually does. When we are more confident in ourselves, we perform better and are happier people overall. This does not mean that we do not want some form of extrinsic rewarding. It is part of the total reward package. But the point is that those on this side believe solely giving extrinsic rewards is missing the point.

Extrinsic Rewards

Then there are those of us who refuse to listen to this. We think we ought to come to our senses and demand our employers cough up the cash if we are to be happy. It sounds like sarcasm but is it really so bad? If I do far more work than the person who sits one cubicle away from me and we have the same job title, I will undoubtedly be a bit put off if he or she receives the same monetary compensation as I do. How many times have employees complained that their bosses reward them in every possible way except by giving them a bonus or more pay in some way? It happens all the time. When higher pay, bonuses, stock options, or other benefits such as these are not given, we take that to mean that our employer is cheap and doesn’t think we are worth the little bit of profit we would take for ourselves. This is a strong case. How can more training possibly make me happier at what I do if I am not rewarded for my improvement as a worker that I obtained from the training? People favoring extrinsic rewards do not see the fulfillment of their jobs of equal importance as monetary compensation. After all, would most of us not leave a job if another offered us more pay? Many would. We are at work to make money, not friends and reasons to love going to work. Many would argue that there is no substitute for high pay and benefits and that this is the reason they remain with an employer, regardless of what they must put up with or how happy they are at work.

A Package Deal?

While I agree that extrinsic rewards will make our non-work life significantly more appealing, I find it hard to agree that this type of reward should be given priority. Those who think it should are not looking at their life from the big picture. They are always searching for the next big thing. What is on the horizon? When will I finally have the money to get that new car? Those who see intrinsic rewarding as the ultimate reward see life differently I think. They refuse to sacrifice time for more money. If they are going to have to be at work, they are going to try to make the most of it. In my opinion, it is the employers’ job to see to it that we receive a total reward package. We ought not to feel so insignificant and replaceable that all we can see is our job as a means to make more money. However, we also should not have the feeling that we are of little value to our company because we never receive any type of monetary bonuses or a reward of the same nature.

There needs to be a total reward package. In this package there needs to be a balance of both intrinsic and extrinsic rewards. More research needs to be done in studying this. For instance, would workers at the container store be a bit happier if a bit less was invested in training and a bit more added to their paycheck? Perhaps they would. Still, neither extrinsic nor intrinsic should be a reward on their own. A total reward package is what will aid employee retention. It is with such a balanced reward system that we find a balance of happiness in our lives. No individual should be unhappy with his career for the sake of a bigger paycheck. Even so, no individual should be paid so poorly in a good job that it creates a sense of worthlessness to that person. Job fulfillment and fair pay are equally important and should be attended to with the employees overall satisfaction as the main point.


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    • Darrylmdavis profile image

      Darrylmdavis 5 years ago from Brussels, Belgium

      An interesting hub and a "popular" question in reward circles. In my experience, there are a lot of market factors which can influence the attractiveness and relative worth employees (and employers) place upon intrinsic rewards (effectively determining how well they work) but at the end of the day it's really more of a differentiator for employers rather than a hard-core A/R tool. A company that gets classic C&B right and intrinic reward wrong might have some regreted attrition here and there that well-implemented intrinsic reward could have prevented. The opposite - however - cannot be said.