Motivation and rewards

Motivation and rewards

In the present day environment an organization is highly dependent on the work motivation level of its employees. Motivated employees are crucial for the success of the organization. The organization can reach some level of success without highly motivated employees but it rarely achieves its full potential. Employees being human need to be rewarded and encouraged for their efforts. Motivation and reward has a strong link. It is therefore necessary for the organization to find out what motivates its employees so that it can suitably plan a reward system and gain better results. The right combination of material and immaterial rewards can boost up the work motivation of the employees and enhanced their commitment to the company.

What is motivation

Motivation is defined as the desire to achieve beyond expectations. It is driven by internal rather than external factors. It means to be involved in a continuous striving for improvement. It is a psychological process that results from the interaction of the employees with the work environment and is characterized by the willingness of the employees to increase their work effort in order to achieve a specific need or desire they hold. Motivation consists of the following three components:

  • Direction –  What an employee trying to do
  • Effort – How hard the employee is trying
  • Persistence – How long the employee keeps on trying.

The process of motivation is shown in Fig.1.

process of motivation

Fig 1 Process of motivation

As seen in the Fig 1, motivation is initiated by the conscious or unconscious recognition of unsatisfied needs. These needs create wants, which in turn become desire to achieve or obtain something. In order to satisfy needs and wants, goals are created and behaviour is selected to achieve the goals. If the goal is achieved, the behaviour is likely to be repeated when a similar need emerges. If the goal is not achieved, the action is less likely to be repeated.

Employees can be motivated through methods such as pay, promotion and praise. Employees can also motivate themselves by seeking work where individual goals, needs and wants will be achieved. These two types of motivations are known as intrinsic motivation and extrinsic motivation (Fig 2).

  • Intrinsic motivation – It is the motivation that comes from inside of an employee. The motivation is generated through satisfaction and pleasure that the employee gets in completing or working on a task. Factors which influence intrinsic motivation include responsibility, freedom to act, scope to use and develop skills and abilities, interesting work and opportunities for advancement. These motivating factors, which are concerned with the quality of life, tend to have a long term effect since they are inherent in individual and not imposed from outside.
  • Extrinsic motivation – This motivation is something that is done to or for people to motivate them. It arises from factors outside an employee, such as pay, position and punishments (criticism). These are rewards which provide the employee that satisfaction and pleasure which the task itself might not provide. An extrinsically motivated employee might work on a task even when he has little interest in it. This type of motivation usually has an immediate and powerful effect, however it does not tend to last for long.

intrinsic and extrinsic motivation

Fig 2 Intrinsic and extrinsic motivations

Theories of motivation

The theories of motivation can be divided into the following two categories.

  • Content theories – These theories of motivation are based on the needs of individuals. These theories try to explain why the needs of individuals keep changing with time and therefore focus on the specific factors that motivate them. These theories, in general, explain motivation as the product of internal drives that encourage an individual to move towards the satisfaction of his needs. Major content theories of motivation are (i) Maslow’s hierarchy of needs (Fig 3) (ii) McClelland’s learned need theory and (iii) Alderfer’s ERG theory and Herzberg’s motivation-hygiene theory.
  • Process theories of motivation – These theories tries to explain how behaviour change occurs and why individuals act in different ways. They focus on how an individual needs influence his own behaviour. These theories originate from early cognitive theories, which state that behaviour is the result of conscious decision making processes. Major process theories of motivation are (i) reinforcement theory (ii) expectancy theory (iii) eqqquity theory and (iv) goal setting theory.

maslows hiearchy of need

Fig 3 Maslow’s hierarchy of needs


Employees change their behaviour by working harder or prioritizing their actions if they know that by doing so they will be rewarded with something of value to them. Hence incentives are a great way to reward effort and behaviours which the performing organizations always encourage. Incentives paid to employees in return for efforts and behaviour of employees that contribute to the organization goals, enhance organizational effectiveness and productivity and hence generate a positive outcome both for the organization and the employees.

Rewards are the benefits that arise from performing a task, rendering a service or discharging a responsibility. Pay is the most significant and motivating benefit that is received by an employee in return for performing a task or service. Pay can also be a powerful demotivator if the employee is not satisfied with the pay packet. Rewards are of following two types:

  • Tangible rewards – Tangible rewards are also called transactional rewards. These arise from transactions between the employer and employee and include rewards such as pay, bonuses and other benefits.
  • Intangible rewards – These rewards are known as relational rewards. These rewards are to do with learning, development and work experience. The examples of these rewards are opportunity to develop, recognition from the management of the organization, colleagues, personal achievements and social life.

Both tangible and intangible rewards are necessary to maximize the positive impacts on the employees with respect to motivation, job engagement and organizational commitments. Both the rewards together are known as ‘Total rewards’ (Fig 4).

Tangible and Intangible rewards

Fig 4 – Tangible and intangible rewards

There are essential attributes that contributes to the success of a reward system for the employees. These attributes are as follows.

  • Recognition of individual differences between the employees
  • Clear identification of behaviour deemed worthy of recognition
  • Allowing employees to participate in the reward system
  • The system should link rewards to performance
  • The recognition process should have clear visibility.

Employee rewards system is not only about tangible and intangible awards. It is also about changing the corporate culture in order to meet goals and initiatives and most importantly to connect employees to the core values and beliefs of the organization. Strategic employee recognition is seen as the most important program not only to improve employee retention and motivation but also to positively influence the financial situation.