An organizational reward system is a system that deals with selecting the various types of rewards that the employees will receive. In other words, it is responsible for coming up with a compensation and benefits philosophy in an organization. The rewards are essential in motivating the employees and attracting the most talented personnel to work for the organization. The rewards are those that are legally needed. This includes, social security, compensation of unemployments, and state disability insurance. Other benefits are retirement and pension funds, annuity plans, 401(k) plans, among other benefits. Other benefits include compensation for vacations, holidays, among others.
The rewards can either be intrinsic or extrinsic. The intrinsic rewards are those that come from within an employee. That is self-motivation to attain a specific objective. For example, a person may be motivated by being involved in job activities. One gets satisfaction through performing the job task and feels that they have accomplished. Extrinsic rewards, on the other hand, are those that come from the organization. Extrinsic rewards are tangible in nature. Examples of rewards coming from the organization to motivate its employees to perform well are salary increments, promotion to a higher level, and fringe benefits. According to Byars & Rue (2016), the extrinsic and intrinsic rewards are closely related in that as the employee gets extrinsic rewards, they feel that they have accomplished because it is an indicator that they are performing well.
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In my opinion, I prefer intrinsic rewards to extrinsic ones. Although extrinsic rewards motivate the employees, the employees do not engage in organizational activities out of inward interest. For this reason, a little change in extrinsic motivation will heavily ruin organizational performance. Intrinsically rewarded employees are easier to maintain because all they need is a good work environment, and their performance is guaranteed. Legaut (2016) notes that the intrinsic reward is important because all the person needs is an environment that supports their autonomy. Thus, it is even cheaper to work with employees who are intrinsically rewarded than those that are purely extrinsically-rewarded.
References
Byars, L., & Rue, L. (2011). Human Resource Management tenth edition (tenth edition). New York: McGraw-Hill Irwin.
Legault, L. (2016). Intrinsic and Extrinsic Motivation. Encyclopedia of Personality and Individual Differences. 1-4. Doi:10..1007/978-3-319-28099-8_1139-1
