Basic Types of
Reward
·
Extrinsic rewards
– satisfy basic needs: survival, security
– Pay, conditions, treatment
·
Intrinsic rewards
– satisfy higher needs: esteem,development
Rewards by Individual, Team,
Organisation
·
Individual: base pay, incentives,
benefits
– rewards attendance, performance, competence
·
Team
– team bonus, rewards group cooperation
·
Organisation
– profit-sharing, shares, gain-sharing
Types of rewards
Rewards serve many
purposes in organisations. They serve to build a better employment deal, hold
on to good employees and to reduce turnover.
The principal goal is
to increase people's w productivity.
Most people assimilate
"rewards", with salary raise or bonuses, but this is only one kind of
reward, Extrinsic reward. Studies proves that salespeople prefer pay raises
because they feel frustrated by their inability to obtain other rewards,but
this behavior can be modified by applying a complete reward strategy.
There are two kinds of rewards:
· Extrinsic
rewards: concrete rewards that employee receive.
o
Bonuses: Usually annually, Bonuses
motivates the employee to put in all endeavours and efforts during the year to
achieve more than a satisfactory appraisal that increases the chance of earning
several salaries as lump sum. The scheme of bonuses varies within
organizations; some organizations ensure fixed bonuses which eliminate the
element of asymmetric information, conversely, other organizations deal with
bonuses in terms of performance which is subjective and may develop some sort
of bias which may discourage employees and create setback. Therefore, managers
must
be
extra cautious and unbiased.
Salary raise: Is achieved after hard work and effort
of employees, attaining and acquiring new skills or academic certificates and
as appreciation for employees duty (yearly increments) in an organization. This
type of reward is beneficial for the reason that it motivates employees in
developing their skills and competence which is also an investment for the
organization due to increased productivity and performance. This type of reward
offers long-term satisfaction to employees. Nevertheless, managers must also be
fair and equal with employees serving the organization and eliminate the
possibility of adverse selection where some employees can be treated superior
or inferior to others.
o
Gifts: Are considered short-term. Mainly
presented as a token of appreciation for an achievement or obtaining an
organizations desired goal. Any employee would appreciate a tangible matter
that boosts their self-esteem for the reason of recognition and appreciation
from the management. This type of reward basically provides a clear
vision of the employee‘s correct path increasing
their efforts to achieve higher returns and attainments.
o
Promotion: Quite similar to the former
type of reward. Promotions tend to effect the long-term satisfaction of
employees. This can be done by elevating the employee to a higher stage and
offering a title with increased accountability and responsibility due to
employee efforts, behaviour and period serving a specific organization. This
type of reward is vital for the main reason of redundancy and routine. The
employee is motivated in this type of reward to contribute all his efforts in
order to gain
managements trust and acquire their delegation and
responsibility. The issue revolved around promotion is adverse selection and
managers must be fair and reasonable in promoting their employees.
o Other kinds of tangible rewards
o
Intrinsic rewards: tend to give personal
satisfaction to individual Information / feedback: Also a significant type of
reward that successful and effective managers never neglect. This type of
rewards offers guidance to employees whether positive (remain on track) or
negative (guidance to the correct path). This also creates a bond
and
adds value to the relationship of managers and employees.
o Recognition: Recognition: Is recognizi
appreciation. This type of reward may take the presence of being formal for
example meeting or informal such as a - esteem―patand on happiness which will
result into additional contributing efforts.
o
Trust/empowerment: in any society or
organization, trust is a vital aspect between living individuals in order to
add value to any relationship. This form of reliance is essential in order to
complete tasks successfully. Also, takes place in empowerment when managers
delegate tasks to employees. This adds importance to an employee where his
decisions and actions are reflected. Therefore, this reward may benefit
organizations for the idea of two minds better than one.
Intrinsic rewards makes
the employee feel better in the organization, while Extrinsic rewards focus on
the performance and activities of the employee in order to attain a certain
outcome. The principal difficulty is to find a balance between employees'
performance (extrinsic) and happiness (intrinsic).
The reward also needs
topersonalitybe. accordingForinstance,sports fantowill the be really happy to
get some tickets for the next big match. However a mother who passes all her
time with her children, may not use them and
therefore they will be wasted.
When rewarding one, the
manager needs to choose if he wants to rewards an Individual, a Team or a whole
Organization. One will choose the reward scope in harmony with the work that has
been achieved.
· Individual
o Base pay, incentives, benefits
o
Rewards attendance, performance,
competence
·
Team: team bonus, rewards group
cooperation
Organization:
profit-sharing, shares, gain-sharing
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