Rewards and performance
Today I’m to discuss how to best reward your employees and why ‘money is not everything’ to retaining staff strategy.
So, in meeting organisation’s goals, rewards are often used to motivate employees. Some researchers believe extrinsic rewards such as money and other financial rewards are the best way to motivate staff. Others think that the key is intrinsic rewards associated with recognition and praise.
What are Extrinsic and Intrinsic rewards?
Extrinsic rewards are ‘externally administered’ that have value provided by someone to encourage in stimulating or simply acknowledging ‘thank you’. In order to maximize the stimulus impact, rewards should be allocated appropriately that ‘respond to both individual and the organisational needs’.
On the other hand, intrinsic rewards are well-defined as ‘self-administered’ that occur ‘naturally’ during job performance’ and that the motivational stimulus come ‘from within’ using the power of their minds.
The Mishkin’s test of Rational Expectation Model
The test concludes that the management of talents is vital and necessary. They believe the implementation of employees’ reward system positively influence and contributes to the improvement on enterprises’ performance.
Their empirical result illustrates all employees have positive influence linking on extrinsic rewards and performance such as cash bonus, employees’ stock bonus, remuneration of directors, and supervisors and employees’ warrant.
More about Rational Expectation Model
Research on factory workers conducted in 2006 found that money or extrinsic rewards did not improve workers’ performance.
The effect of these rewards in relation to motivating employees in an organisation by comparing ‘the nature of financial and non-financial rewards’ were explored. And that ‘there is no support that says paying people more will encourage them to do better work, especially in the long run’.
What do you think?
Would you believe ‘money is not everything’ and that if an individual views money as a motivator in a career then ‘it would never be satisfied’?
There are findings that are well-supported by academics. In that ‘extrinsic rewards are often seen as necessary but not sufficient’ in contrast the intrinsic rewards have psychological value and last longer.
Therefore, those findings suggest that the strategy for retention of employee cannot be achieved ‘purely through money’.
I hope you find these findings useful and as always I wish you well and the best of luck!