Extrinsic reward definition
/What is an Extrinsic Reward?
An extrinsic reward is a tangible form of compensation or recognition given in exchange for achieving something. Extrinsic rewards can be applied to virtually any situation, including tasks that are not of any particular interest to an employee. As an example of an extrinsic reward, an employee is offered a bonus if he can produce 100 widgets by the end of the day; the work may not be overly satisfying, but the bonus represents a significant motivation. Other examples of extrinsic rewards are piece rate pay (where compensation is based on the number of units produced), team-based compensation, and pay rate upgrades based on the number of new skills acquired. There can be a definite cause-and-effect relationship between extrinsic rewards and desired outcomes. However, these rewards can be overused, causing employees to become accustomed to them, which minimizes their motivational impact. To maintain their effectiveness, consider varying their nature and timing. For example, a positive reinforcement for meeting a sales goal could be a message from the president once every five or six months, while a reward could vary from a local vacation to business-class airfare to Las Vegas for a weekend of partying.
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Examples of Extrinsic Rewards
Examples of extrinsic rewards include cash awards for cost savings, certificates of achievement, employee-of-the-month awards, posting of letters from customers that praise specific employees, promotions to a more advanced positions, public praise, stock options, verbal thanks, written thanks, and years-of-service pins.
Advantages of Extrinsic Rewards
There are several advantages to using extrinsic rewards. First, they can be applied to situations in which employees do not have any intrinsic motivation to complete an activity - such as any boring work. Second, extrinsic rewards can align employee actions with the goals of the employer, as long as these rewards are based on company goals. And finally, extrinsic rewards provide employees with tangible feedback that they are doing good work.