Question

“Ensuring people are paid the right amount at the right time is crucial to maintaining employees’ trust and motivation. Now with sharp economic shock, companies of all sizes are under intense pressure to get it right.”
Critically analyse the importance of extrinsic Vs intrinsic rewards in the context of the above statement.   

Answer 1

Paying extrinsic and intrinsic rewards to employees play an integral role in maintaining their trust , commitment and motivation towards the work so that the desired performance outcomes are achieved. The intrinsic rewards refer to those rewards which are associated with the psychological and emotion strings of employees and help them to raise their internal state,, such as recognition, praises, sense of accomplishment. These rewards help the employees to raise their self concept, confidence, morale and belief in themselves thus preparing them to take up more challenging targets and jobs, performing beyond their potential to attain objectives which improves the performance. Extrinsic rewards on the other hand refer to all such rewards which are physical and directly related to the job such as compensation, pay, bonus, incentives, perks, etc which provide satisfaction to employees, help them maintain good living standard and accomplish their personal goals which in turn contributes to their increased commitment, enhanced motivation and dedication towards work. When extrinsic rewards are associated with the level of performance or targets then employees demonstrate more commitment towards work to achieve targets for qualifying for such incentives or rewards thus increasing their loyalty towards organisation.

In current situation formulating efficient intrinsic and extrinsic is very important to keep employees motivated and to maintain their trust through eliminating their fears, concerns and insecurities. For example ensuring them severance pay, long term employment, insurance coverage etc will help them to feel secure which will affect their performance positively. Similarly recognising them for their performance, giving them promotions and mire responsibilities will make them feel an integral part of business helping in increasing dedication towards work.

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