There are two types of rewards, extrinsic and intrinsic. Both are used at different times to achieve different objectives. They are not mutually exclusive, this is not an either/or situation and the best approach is to use a combination of both.
Let's take a look at intrinsic and extrinsic rewards; how they work and when to use them.
It’s important to know when to use which one
- Extrinsic motivation establishes behaviour quickly
- Extrinsic rewards are usually tangible rewards like a gift card
- Focus shifts from intrinsic motivation to the extrinsic reward
- Extrinsic rewards can diminish intrinsic motivation (Incentive Paradox)
- If extrinsic rewards are withdrawn, intrinsic motivation usually doesn’t return
Know your audience
People respond differently to extrinsic and intrinsic rewards so it is important to know your target recipients
- Intrinsic rewards are usually intangible and make us feel good
- Some employees prefer private praise (which makes them feel good) over extrinsic rewards that everyone can see (and maybe covet)
- Be sensitive to employee needs
To understand more about extrinsic versus intrinsic motivation, consider the following motivational theories:
- The Overjustification Effect
- Cognitive Evaluation Theory
- The Incentive Paradox
- And many others
You can read about the differences between extrinsic and intrinsic motivation, read our blog; Understand extrinsic and intrinsic motivation like a boss.