Extrinsic and Intrinsic Rewards - Essay Example

Extrinsic and Intrinsic Rewards College Extrinsic and Intrinsic Rewards Introduction In the contemporary business environment, worker motivation is one of the critical roles of the management team. The management is not only responsible for setting up the organizational goals but also ensuring that they are implemented. Since the management work at the top level, they require to get their employees at the operational level on board their designed projects. To achieve this, the management team designs strategies to motivate their employees and align them to their pre-established goals and objectives. A motivated work team is effective, and produces higher work out put which is vital in the implementation stage (Foss, Minbaeva, Pedersen & Reinholt, 2009). Due to the complexity of organization systems, and existence of many departments, the management have been faced with the challenge of implementing different motivation systems within different teams of work. In the recent past, there has evolved a controversy on whether intrinsic or extrinsic motivational systems are modest for the modern business environment. While extrinsic systems seek to provide tangible rewards, the intrinsic system provides intangible rewards to the employees with the aim of motivating their employees. On this ground, I strongly agree with Boxall & Purcell (2011) statement that “extrinsic rewards such as income and employment security are important drivers of employee satisfaction, but intrinsic rewards are also critical”. Over the history of organizational management, intrinsic and extrinsic motivation approaches have been issues of concern for the top level administration. Extrinsic motivation refers to tangible rewards such as money, high pay, job security and material properties that an organization offers to their employees (Boxall & Purcell, 2011). On the other hand, intrinsic motivation refers to intangible rewards that seek to capture the employees’ inner drive to ensure that they remain loyal to the organization. Sansone & Harackiewicz (2000) are part of large authorship that has focussed on the application of tangible and intangible rewards within an organizations motivational mechanism. The authors have come into a concession that both approaches add value to the motivational systems and organizations have to apply both approaches if they have to be successful in implementing their management goals. However, Frey (2002) notes that organizations have downplayed the role of intrinsic motivational aspect within their organizations. However, he presents the argument that organizations need to focus more on intrinsic aspects to keep their organization alive in the recent era of business completion. Notably, both approaches have their own values that an organization cannot afford to ignore. From the history of the organizational behaviour, great value has been placed on efficient motivation systems. There exists a concession that organizational success depends on the ability of the management to develop an employee appraisal program that allows workers to remain motivated to attain the set goals (Elliot & Harackiewicz, 1994). Worker loyalty ensures that they have a long term association with the organization and hence allows organization to depend on their workers for both short and long term goals. Secondly, motivated workers work as a team and perform their work more efficiently. Motivated groups know the business goals and work towards attaining them in the best way they can. They are able to give their best to the organization as they are able to associate the organizational success with their own success (Lauby, 2005). On the other hand, employees that are not motivated are sluggish in work, have low work output and are not loyal to the organization. Such employees are always looking forward to exit from the organization and hence cannot have their long term goals aligned to those of the organization. Research shows that organizations that fail to motivate their workers are bound to fail. On this note, ability to motivate employees is a necessary competence for the top level managers if the organizational goals are to be met and the organization has to perform optimally. Extrinsic Motivation A wide range of organizations have used extrinsic approaches leverage the value of employee satisfaction within business entities. One strategy that employees have applied in extrinsic approaches includes paying fair wages to their employees. The amount salary is an important factor for any employee as they value an organization that provides the most satisfying salary. Therefore, a fair salary will ensure that employees are satisfied. Unsatisfied employees are always looking for new opportunities and they live as soon as they obtain better paying jobs (Adyasha, 2013). To ensure that there is low employee turnover, firms focus on providing opportunities for promotion that are dependent on merit and the time that an employee has worked for the organization (Hee & Ling, 2011). For instance, an organization may decide increase the employee’s salary by 5% each year, to give them the incentive to continue working with the organization. Since the employees will feel that their long stay within the organization is recognized, they will feel appreciated. To ensure that there is high productivity within the organization, they reward the employees depending on the performance of the company at the end of the fiscal year. Since the employees will benefit depending on the amount of the annual profits, they will be motivated to work harder and to earn more benefit from higher organizational profits. Consequently, organizations engage extrinsic strategies to profit from loyal employees, low labor turnover, high quality work and optimal productivity. Ford Otosan Company is a Turkish company that has used extrinsic motivational strategies successfully to win employee satisfaction. Ford Otosan management takes care of the long term needs of the employees by providing a promotion scheme that is dependent on the employee hard work and the time that the employees have worked in the organization. To start with, the organization provides a salary increase each year depending on the position of the employee. At the end of each financial year, the employees’ monthly salary is increased by 2% per cent as a sign of appreciating their loyalty over the financial. This additional salary allows the employees to remain satisfied and to rise in class as they continue working for the organization (Venkatesh, 2000). In addition, the organization promotes employees after a certain period of time for higher positions in the organizations. For instance, an employee at the technical level is likely to raise the supervisor level after a period of five year. This keeps the employee loyal as they work towards their promotion (Podmoroff, 2005). Promotion is also awarded on the basis of handwork and contribution to the organization success. That is, employees who show exceptional hard work and skills are likely to be promoted before their colleagues. By designing transparent promotion schemes, the organization is able to align its long term goals with the employees’ long term goals. However, Ford Otosan’s extrinsic motivation system has failed for its marketing department. The nature of the marketing department and the nature of their work make them rather unique and quite different from other departments in the organization (Lovewell, 2013). Unlike other departments, marketing employees work an extra mile while rolling out the organizational product. Marketers need the zeal that can only arise from an inward motivation rather than income satisfaction (Murphy & Cleveland, 2005). The outcome of their work more on sacrifice rather than the benefits they accrue from the organization. The complexity of marketing department has forced the management to resort to new approaches of motivation for the marketing department. Given the great value of marketing operations at a time when organizations are competing for customer loyalty, it is crucial for organizations to find effective approaches that will drive efficient marketing. Intrinsic Motivation Marketing is one of the sectors that have attracted the attention of many scholars as they seek to reveal which approaches are crucial in driving effective marketing. In the 21st century, marketing has become an important aspect of organizational management. Organization marketing refers to the strategies that organization deploy to roll out their products to their customers. Marketing has turned out to be one objective that employees can achieve only if they have the passion to work for the company rather than mere satisfaction. In such instances, the extrinsic approaches have turned out to be futile. This is because extrinsic strategies have been linked to bureaucratic systems where employees are obliged to deliver as much as the organizations pay them. In such systems, employees are paid for their performance and the quantity of work that they deliver. However, bureaucratic systems are no longer efficient for modern organizations when customer-employee relationship has become key in defining organizational success (Ryan & Deci, 2000). In the marketing sector, material rewards have little influence on inspiring passion and motivation in employees. Therefore, managers have been forced to resort to intrinsic motivation approaches to streamline their marketing sectors. Boxall & Purcell (2011) note that one important motivational feature in intrinsic approach is efficient communication within the organization. To achieve this, organizations have to open channels for two-way communication within the organization to ensure that both the management can convey the organizational goals while the service people can provide feedback during the implementation process. Communication ensures that there exists cohesion between the management and the service teams during the design of organizational strategies. Before the beginning of any project, it would be crucial for management to communicate clearly the visions and the objectives of the organization (Augier, 2013). The employees should be given an opportunity to contribute in the goal development process to ensure that they are part of the plan. This will provide an inward motivation for the employees to work towards the goal of the organization. Hence, employees are motivated to work not for pay but to achieve goals that they designed. The achievement of these goals gives them an inward feeling of self-reward, even without any tangible reward. This principle applies well in business marketing where constant communication and healthy management-employee relationship counts in the marketing strategies. Starbucks is an international organization that has focussed on intrinsic approach to motivate their employees. The organization allows all the employees to contribute their input in the goal design stage. Since employees have a wide range of experiences, they have their own opinions on how work should be conducted for optimal performance. As unique human beings, they have the way they prefer to do work, and they only feel inspired to work in a given way (Glaub, Frese, Fischer, & Hoppe, 2014). Also, since they are directly involved with brand marketing, they have the ground experience that is desired in designing marketing procedures in the organization. For this reason, Starbucks involves them in the planning stage so that their opinions are represented in the final project. Gathering employee opinions during the planning stage helps to get them on board during the implementation stage (Wang, 2013). Employees feel motivated from within when working on projects that take account of their personal input (Vidaver-Cohen, 1998). In addition, allowing employees to contribute is an intrinsic approach to give the employee an identity within the organization. Starbucks recognizes that when marketers are inspired to achieve organizational goals, they are likely to work with passion, hence driving the business to success. Theories of intrinsic motivation describe it as a motivation that comes from within the employee unlike the case of extrinsic motivation (Achakul & Yolles, 2013). An example of intrinsic motivation is when employees work because they enjoy their work and doing this work they feel self-glorified. The same way a sports player participates in games that they passionately desire, employees work best when they do jobs that they like. This has become relevant in marketing due to the morale that it deserves to make create the image of an organizational brand. In the modern business environment, marketing has become behavioural more than operational. The behaviour of an individual and not the reward that they get motivates them to market the product (Boxall & Purcell, 2011). In the human era of brand marketing, only passionate employees can personify firm products to create a warm relationship between the customers (Çınar, Bektaş & Aslan, 2011). A marketer who is not passionate about their work will achieve results despite the amount of compensation that the organization offers them. A realistic approach to internal motivation is when employees skills match the task that they intend to accomplish (Frick & Drucker, 2011). When employees have the right skills for the job they hold, they are likely to be internally motivated as working would be an opportunity for them to display their abilities in the company. Balancing Intrinsic and Extrinsic Motivation Frey (2002) is among scholars who have come up with a realistic approach to employee motivation within work place. Frey upholds that there is need for organizations to balance extrinsic ad intrinsic motivational strategies to optimize their output. He recognizes that both approaches have their own upper-hands and limitations. Therefore, striking a balance would be the best way that an organization can achieve its goals. While extrinsic systems allow employees to remain satisfied as they work for their organizations, it has the disadvantage that it advocates that employees work as much as they get. On the other hand, intrinsic motivation ensures that there is self-drive on the part of the employees as they seek self-fulfilment while implementing organizational goals. However, this approach may not work well if the employees are not satisfied with the organizational response. On this note, Frey (2002) suggests that managers apply extrinsic and intrinsic methods simultaneously and in a complementary manner. Implementing both approaches will give organizations an opportunity to motivate their employees externally and invite them to develop an inward passion for their work. Conclusion In conclusion, extrinsic rewards are important drivers of employee satisfaction, but intrinsic rewards are also critical for organizational performance. However, it is clear that organizations have downplayed the role that intrinsic models play in sustaining business profitability. Therefore, organizations have remained stuck in belief that tangible rewards are crucial in motivating the employees and stimulating their performance. In the marketing sector where passion for work is crucial, it appears that intrinsic motivation is more crucial than extrinsic motivation. While material rewards make employees feel secure in work and comfortable, they are not a sure promise for employee performance. In marketing, employees need an inner self-drive and the urge to achieve personal gratification while accomplishing organizational goals. To stimulate internal motivation, organizations have a role in engaging employee in goal setting and equip them with the right skills to achieve match the demands of their position. This way, the employees will have a self-drive to implement management objectives as the success of the company is a manifestation of their own achievements. 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