What is an Extrinsic Reward?

Extrinsic Reward

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Extrinsic Reward

An extrinsic reward is a tangible reward given to someone as a result of a particular action or behavior. These rewards are external to the work itself and are typically offered as a means of motivation.

Extrinsic rewards can take many forms, such as:

  • Money: This is perhaps the most common form of extrinsic reward. It includes wages, salaries, bonuses, commissions, and other forms of financial compensation.
  • Benefits: These are non-monetary forms of compensation, such as health insurance, retirement plans, vacation time, or employee discounts.
  • Recognition: This includes public acknowledgment for good work, awards, certificates, or praise from superiors.
  • Promotions: Gaining a higher position within an organization, with more responsibility and typically more pay, is a powerful extrinsic reward for many people.

While extrinsic rewards can be very effective in motivating behavior in the short term, they may not always lead to long-term motivation. Overreliance on extrinsic rewards can lead individuals to lose intrinsic motivation, or the internal desire to do something for its own sake, rather than the reward it brings. A balanced approach that uses both extrinsic and intrinsic rewards tends to be most effective.

Example of an Extrinsic Reward

Let’s consider a scenario in a corporate setting to illustrate the concept of extrinsic rewards:

Imagine a software company, TechInc, that has been noticing a decline in its productivity. To incentivize their employees and increase productivity, they decide to implement a performance-based bonus system.

Under this system, the employees who exceed their monthly targets by the greatest margin will receive a significant bonus in their paycheck for that month. This bonus is an extrinsic reward, as it’s an external motivator offered in exchange for a certain level of performance.

Further, TechInc also introduces an “Employee of the Month” program, where the most outstanding employee, based on their performance, teamwork, and positive attitude, is publicly recognized and given a premium parking spot for the next month. This recognition and premium parking spot serve as additional extrinsic rewards.

These measures lead to a noticeable increase in the employees’ productivity as they strive to earn the bonus and recognition. However, TechInc also ensures to foster a positive and supportive work environment to maintain the intrinsic motivation of its employees, understanding the importance of a balance between extrinsic and intrinsic rewards.

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