5HR03 AC 1.2 Answer

5HR03 AC 1.2 Assess the contribution of extrinsic and intrinsic rewards to improving employee contribution and sustained organizational performance. *Approx 400 words

Extrinsic and intrinsic rewards are essential for maintaining a motivated workforce and attaining organisational success.

Intrinsic Rewards

Intrinsic rewards constitute internal motivations that revolve around a person’s sense of job satisfaction and are brought about by elements like meaningful work, professional advancement, personal achievements, and recognition. Because they are in line with a person’s values and interests and appeal to psychological requirements like competence, autonomy, and purpose, intrinsic rewards have a favourable effect on employee morale (CIPD, 2022). According to the Self-Determination Theory, intrinsic pleasure is crucial, particularly for occupations requiring creativity and cognitive ability, which encourages organisational innovation (Iyer, 2023). In this case, an organisation can gain from a motivated workforce by encouraging the personal growth of its personnel. In keeping with its environmentally concerned culture, Eco-Insulate UK may provide internal incentives including recognition programs for staff members who creatively contribute to the company’s sustainable production efforts. Additionally, by offering professional development opportunities like coaching and mentorship in green technology, Eco-Insulate UK may better match company objectives with those of individual staff members. Designing successful intrinsic reward systems is complicated by the fact that different employees place different values on these incentives (CIPD, 2022). Additionally, maintaining intrinsic motivation through benefits like meaningful work and career advancement may call for long-term investments, placing a burden on organisational resources.

Extrinsic Rewards

Extrinsic rewards constitute financial or material incentives like bonuses, promotions, and gifts that are given to employees by outside parties. By basing rewards on particular performance thresholds or outcomes, they seek to motivate people in measurable ways (CIPD, 2022). As a result, they provide baseline motivation that is appropriate for encouraging short-term achievements or tasks with little intrinsic desire. For example, Eco-Insulate UK might provide performance-based bonuses to staff members who reach production goals or show resource efficiency by implementing cost-cutting measures. Here, material rewards like presents or coupons might be useful in raising staff morale. Nevertheless, when people are primarily motivated by extrinsic rewards, intrinsic motivation declines, resulting in the overjustification effect (Iyer, 2023). Additionally, relying too much on extrinsic rewards might lead to a competitive workplace.

Eco-Insulate UK must thus create a compensation system that combines intrinsic and extrinsic incentives, using a multipronged strategy to satisfy staff demands. This combination is also essential for achieving a high-performance workplace and guaranteeing that workers are genuinely passionate about their jobs. It is essential for meeting the psychological and financial demands of workers and increasing output.

References

CIPD (2022) INCENTIVES AND RECOGNITION An evidence review. https://www.cipd.org/globalassets/media/knowledge/knowledge-hub/evidence-reviews/incentives-recognition-practice-summary_tcm18-105466.pdf.

Iyer, K. (2023) Differences between intrinsic and extrinsic rewards. https://www.hubengage.com/employee-recognition/exploring-the-differences-between-intrinsic-and-extrinsic-rewards/. 

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