While most employers’ knee jerk reaction to the tightening market is to increase salaries and bonuses, which is a good tool to drive performance in some instances, but this approach will rarely buy loyalty. And, with unemployment at record lows loyalty is going to be incredibly important for employers. Instead, we recommend the total reward management approach to keep your workforce loyal and motivated to work at high levels of productivity.
To fully understand this approach, it’s important to consider two types of rewards and their power to motivate the workforce.
Extrinsic and intrinsic rewards, what is the difference?
Extrinsic rewards are provided by an external agent such as the employer, supervisor, fellow workers. They include financial rewards such as base salary, salary increases, performance-related bonuses, incentives and paid time off as well as verbal praise, public recognition or awards, or even a better office. Other indirect/non-cash rewards include job challenge, responsibility, autonomy, and task variety.
Developmental extrinsic rewards include learning, training and development opportunities, succession plans, career progression, promotions and additional responsibilities.
Social extrinsic rewards include a positive and supportive organisational climate and management culture, performance support, work group affinity and work/life balance.
Intrinsic rewards are self-administered and self-defined by the employee themselves and include things such as professional growth and a sense of personal achievement, pleasure and accomplishment.
The importance of rewards for organisational success
Workforce motivation is a key factor in organisational success as only when your employees are motivated to work productively can you meet project milestones and achieve your goals.
By contrast, if your workforce becomes disillusioned and demotivated or you have a high staff turnover, your organisation will suffer.
It is therefore imperative to understand the power of employee rewards systems and the impact they have on motivation and performance.
Money is not enough to motivate staff
Leading theorist, Frederick Herzberg, found that, although employees seek both types of rewards from their employers, intrinsic rewards are far more effective when it comes to motivating personnel that extrinsic rewards.
The reason? Simply put, people need to feel that their contributions matter.
How can employers foster intrinsic motivation?
There are several ways to provide intrinsic rewards that motivation your workforce. These include providing them with meaningful work, empowering them to make choices in delivering their duties, and provide them with opportunities to demonstrate their skill and competencies.
It is also important to provide members of your team with frequent opportunities to reward themselves, as well as allowing them to connect with end-users to obtain feedback. Most importantly, provide employees with a clear picture of the overarching goals of the project and the milestones that their work will help to achieve and allow them to monitor their progress along the way.
What is meant by a total rewards approach?
A total reward management takes a holistic approach to employee reward management, acknowledging that employees are not solely motivated by extrinsic rewards, but also by intrinsic awards.
Use the total rewards to create an effective reward system
The total rewards remuneration approach helps employers to create effective reward systems that motivate people at all levels of the organisation by taking a wide range of material and psychological rewards into account.
With a multitude of intrinsic and extrinsic rewards at your disposal, the options for configuring a reward system are also extremely wide. This holistic approach to reward management allows you to select those rewards (whether financial or non-financial) that best align with your organisation’s goals, and which will be most attractive to the type of people you would like to have on your team.
If you would like help configuring your rewards management system to attract the right people and keep them loyal to your organisation, talk to our friendly team today. We have more than 15 years’ experience helping people discover greater.
