Extrinsic vs. Intrinsic Rewards: Which is Better for Your Team?

this must be the place - intrinsic motivation at work
Photo by Tim Mossholder on Unsplash

How do you get your team members excited and engaged at work? Do you offer them a bonus or another perk like an extra-long lunch hour?

Extrinsic rewards like these are common in most offices, but they’re not as beneficial as intrinsic — or internal — rewards.

Research shows that intrinsic rewards can lead to better performance, increased motivation, and increased employee engagement.

Don’t know the differences between intrinsic rewards and extrinsic rewards? They’re explained in detail below. You’ll also find some intrinsic rewards examples to help you decide what kinds of incentives you can offer to your team.

Intrinsic vs. Extrinsic Rewards

Intrinsic rewards are sometimes described as psychological rewards. When someone receives this kind of reward, they experience a positive emotional reaction.

Intrinsic rewards are often created when employees have opportunities to manage themselves, innovate, and solve problems creatively. They are essential to long-term employee motivation and behavior change.

Extrinsic rewards, on the other hand, are tangible rewards like salaries and pay raises. They can help to jump-start an employee’s initial buy-in, but their impact tends to diminish over time unless they are continually increased.

Features of Intrinsic RewardsFeatures of Extrinsic Rewards
Intangible, psychologicalTangible, physically given
Arise from within the person who does an activity or engages in a specific behaviorOutside recognition from someone else in exchange for doing an activity or engaging in a specific behavior
Create a positive emotional reaction — such as a sense of achievement or satisfactionControlled by someone other than the employee
Essential to sustained, long-term behavior changeCan be beneficial initial, but may have a limited impact over time

Intrinsic Rewards Examples

Intrinsic rewards promote engagement, social interaction, work-life balance, and autonomy. Here are some specific examples of intrinsic rewards you can offer to promote these things among your team:

Engagement

Recognition from employers or team managers is one of the best intrinsic rewards for increasing engagement. After all, 86% of employees say that recognition helps them to feel happier at work.

Professional development also creates a sense of satisfaction in oneself and contributes to higher levels of engagement.

81% of employees report feeling happier and more engaged when their employers invest in their training, professional development, and continuing education.

Note: Before you can increase employee engagement, it’s important to measure current levels of engagement on your team. Pulse surveys are an effective tool for this and can provide more insight into how engaged your employees currently are.

Social Interaction

Intrinsic rewards can also contribute to better collaboration and improved social interactions among team members.

Peer-to-peer recognition is a powerful example of intrinsic rewards that can promote stronger social interactions.

When team members are recognized by their peers, they may feel more supported and encouraged to continue going above and beyond while on the job.

Being recognized by a manager or boss in a social setting — such as a team meeting — can also create a feeling of pride or satisfaction in one’s work.

Furthermore, when a team leader shows appreciation for a team member for speaking up in a social setting, this may encourage that team member to continue speaking up in the future. This can lead to more productive collaboration efforts and a more cohesive team.

Work-Life Balance

One of the strongest examples of an intrinsic reward is a sense of accomplishment in oneself.

When team members feel that they’ve accomplished something at work, they may feel more pride in themselves and their abilities. They may also feel less stressed and will have an easier time leaving work at work and focusing on family and personal matters when they get home.

Making noticeable progress is another example of an intrinsic reward that can contribute to work-life balance.

When employees know that they’re making progress toward their goals, they may notice that they feel less stressed or worried about work when they’re spending time outside of the office. 

Autonomy

A sense of autonomy and responsibility can also act as an intrinsic reward and keep employees motivated.

Many employees feel that having the power to choose causes them to feel more satisfied at work.

For example, if they can prioritize their own tasks and choose how or when they work, they can feel more empowered and motivated to work hard day after day.

When employees feel that they’re an important part of the team, they may also feel intrinsically rewarded.

Letting employees participate in and contribute to weekly planning meetings is a great way to accomplish this. If everyone gets to have a say in what the priorities are for the week, they’ll feel empowered and as though they’re key contributors to the team and the organization.

Final Thoughts on Intrinsic Rewards

Extrinsic rewards, alone, are not enough to improve employee performance and intrinsic motivation. Intrinsic rewards can be more beneficial when it comes to producing long-term results and creating a high-performance company culture.

  • Intrinsic rewards are psychological and experienced from within;
  • They result from changing behavior or taking a specific action;
  • Extrinsic rewards are tangible and given by someone else — typically in exchange for a specific action or changed behavior;
  • Extrinsic rewards can help to jump-start behavior change, but they often don’t yield long-term results;
  • Intrinsic rewards are essential to long-term behavior change and sustained motivation;
  • Intrinsic rewards promote engagement, social interaction, work-life balance, and autonomy;
  • Some intrinsic rewards examples include receiving recognition from employers and higher-ups; opportunities to collaborate with coworkers and feel part of a team; and opportunities to make more choices about one’s work schedule or work environment;
  • Tools like pulse surveys and processes like weekly planning meetings can help you to understand your current rate of employee engagement and make specific plans to improve intrinsic motivation across the board;

Weekdone Team Compass helps you and your team to set goals, connect your weekly plans, evaluate progress, and address problems as soon as they arise. With a tool like this, you'll be able to maintain intrinsic motivation, create more autonomy among team members, improve collaboration, and lead to a better sense of work-life balance.