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The Empuls Glossary

Glossary of Human Resources Management and Employee Benefit Terms

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Extrinsic rewards

Extrinsic rewards are things that people get for doing something. They are usually tangible things like rewards, money, or a trophy. But they can also be positive feelings like pride and self-satisfaction.

Managers often use these types of rewards to encourage employees to perform better. The theory behind using these types of rewards is that if people receive some external reward or praise for performing a task well, they will continue to work hard to receive more external rewards.

What are extrinsic rewards? 

Extrinsic rewards are things you get for doing something. They are external to your actions and don't come from within you. They are typically monetary in nature, such as pay raises, bonuses, and promotions.

For example, if you have a job that pays $10 an hour and your boss decides to give you a $5 raise, then that is an extrinsic reward.

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Why are extrinsic rewards important? 

Extrinsic rewards are important because they encourage employees to work harder and strive for higher goals. They also help motivate employees to perform better because they give them more money or status in return for their efforts.

Extrinsic rewards can be effective at motivating people if they are used correctly. For example, a bonus tied to a specific goal will likely encourage employees to do whatever it takes to achieve that goal.

When should extrinsic rewards be used in the workplace? 

Extrinsic rewards should be used when you have a specific goal in mind that you know your employees will find rewarding. They are beneficial for motivating employees to work towards one specific organizational goal. For example, offering additional incentives if an employee meets a sales quota is an example of extrinsic rewards used in the workplace.

How do extrinsic rewards work? 

Extrinsic motivation works by giving people an incentive to act a certain way. This doesn't mean that they're not acting on their own accord — it just means that they are acting to get something they want or need.

Extrinsic rewards have been shown to have various effects on human behaviour. These include:

  • They can increase motivation and decrease boredom, especially when a reward is given immediately after completing a task.
  • They can help people persist on difficult and boring tasks — but only if they believe the reward is attainable and likely to come soon.
  • Employees who feel motivated by extrinsic rewards will be more likely to improve their performance over time than those who don't receive any external motivation.
  • Extrinsic rewards such as bonuses or salary increases can help retain valuable employees who might otherwise leave for another company offering better pay or benefits.

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What are the different types of extrinsic rewards? 

Intrinsic rewards can be divided into two types:

  • Autonomy refers to the feeling that you control your actions and how you spend your time. People feel autonomous when they can use their skills and abilities to achieve important goals. This includes having control over their schedule, working in an environment that supports their values, and setting goals for themselves.
  • Purpose refers to having a meaningful reason for doing something, such as helping people or contributing to society. It's essential for people to feel like what they do matters and contributes positively to others' lives — otherwise known as self-efficacy or self-esteem.

What are the advantages of extrinsic rewards? 

Here are some advantages of extrinsic rewards:

  • They can be used as incentives for specific behaviors.
  • They help motivate people who lack intrinsic motivation for an activity.
  • They encourage people to do their best work without worrying about the outcome.
  • They help improve employee performance by increasing engagement and commitment to the organization's mission and goals.
  • They help employees focus on specific tasks rather than getting distracted by other things around them.
  • They can motivate people to work harder and longer than they would without any incentives.
  • They are easy to implement and administer.

Employee pulse surveys:

These are short surveys that can be sent frequently to check what your employees think about an issue quickly. The survey comprises fewer questions (not more than 10) to get the information quickly. These can be administered at regular intervals (monthly/weekly/quarterly).

One-on-one meetings:

Having periodic, hour-long meetings for an informal chat with every team member is an excellent way to get a true sense of what’s happening with them. Since it is a safe and private conversation, it helps you get better details about an issue.


eNPS (employee Net Promoter score) is one of the simplest yet effective ways to assess your employee's opinion of your company. It includes one intriguing question that gauges loyalty. An example of eNPS questions include: How likely are you to recommend our company to others? Employees respond to the eNPS survey on a scale of 1-10, where 10 denotes they are ‘highly likely’ to recommend the company and 1 signifies they are ‘highly unlikely’ to recommend it.

Based on the responses, employees can be placed in three different categories:

  • Promoters
    Employees who have responded positively or agreed.
  • Detractors
    Employees who have reacted negatively or disagreed.
  • Passives
    Employees who have stayed neutral with their responses.

What are the disadvantages of extrinsic rewards? 

The disadvantages of extrinsic rewards are:

  • They can be unreliable and unpredictable. 
  • They can lead to cheating and unethical behaviour.
  • They don't motivate people to be creative or innovative.
  • They can create an unhealthy focus on money and things that are materialistic over other intrinsic motivations like personal growth and achievement.
  • They focus on the result instead of the process.
  • They can create a short-term culture that doesn't promote growth or innovation.

What are the examples of extrinsic rewards? 

The common examples of extrinsic rewards for employees in the workplace are:

  • Pay
  • Bonuses
  • Digital gift cards
  • Health insurance
  • Sales commissions
  • Retirement benefits
  • Travel reimbursement
  • Praise and recognition
  • Incentives and bonuses
  • Pay hike and promotions
  • Performance-based rewards

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