By

Catherine Ngo

Content writer, presenter and podcaster

With the pressures of living costs, and remote and hybrid working, what other factors influence employee motivation, job satisfaction, and overall performance? This article dives into the motivation behind reward and recognition and how leaders can use this to increase productivity and engagement.

Motivation can be intrinsic and extrinsic.

Motivation is a multi-faceted concept that can be categorised into two primary forms: intrinsic and extrinsic motivation. Intrinsic motivation comes from an individual’s internal desire to participate in an activity purely for enjoyment. An example of this in the work context could be joining team volunteering activities or corporate ‘fun runs’. Extrinsic motivation refers to performing tasks with external rewards, such as bonuses, promotions, or recognition from superiors. 

While extrinsic rewards may provide short-term boosts to productivity, intrinsic motivation often leads to sustained dedication and greater purpose in work. 

Practical tips: A well-designed remuneration and reward system should aim to strike a balance between the two types of motivation, leveraging both extrinsic rewards and fostering intrinsic motivation by designing meaningful and engaging work experiences. Take an individualised approach and use one-on-ones as opportunities to explore this at a deeper level.

Financial rewards are still powerful

Financial incentives are still the central aspect of reward and remuneration in most workplaces. Competitive salaries, bonuses, and commissions are always powerful tools for attracting and retaining top talent. The psychology of financial rewards is closely linked to Abraham Maslow’s hierarchy of needs, where financial security represents a fundamental physiological requirement.

It’s important to recognise that other non-monetary factors become more influential in motivating employees once basic financial needs are met. This phenomenon is known as the “hedonic treadmill,” where the satisfaction derived from increased income is often short term and individuals quickly adapt to higher earnings.

Practical tips: With the rising costs of living, think about collaborating with other businesses to offer special discounts and benefits. For example, discounted or subsidised gym memberships and health insurance. A little goes a long way to stretch the dollar.

A simple thank you goes a long way

When was the last time you really showed appreciation for great work? Beyond monetary rewards, recognition and appreciation play a pivotal role in shaping employee satisfaction and loyalty. We, humans, crave acknowledgment and validation for our efforts, directly impacting their self-esteem and job satisfaction. 

A simple “thank you” or public acknowledgment of outstanding work in a group chat can really make someone’s day and boost morale and motivation.

Recognition fosters a positive work culture, encouraging a sense of camaraderie and cooperation among colleagues. Organisations that prioritise a culture of appreciation often see higher employee engagement, reduced turnover rates, and enhanced productivity.

Practical tips: Make showing recognition and appreciation a habit. Weave this into your team meetings as an agenda item. If fun is what you like, have recognition themes such as the “compliment wars” to see who can come up with the most outrageous yet genuine compliments. Don’t be afraid to be creative.

Rethink career growth and development.

Does your business offer specialised qualifications, training or mentorship? Offering professional development programs, mentorship initiatives, and clear pathways for advancement can foster a sense of purpose in employees. They are a drawcard for talent in this competitive world and will help you retain your top talent. 

Practical tips: The psychology of reward and remuneration involves much more than just financial compensation and recognition – and they also don’t have to cost a lot. Think about how you can refresh your career growth and development programs to include things like reverse mentoring, secondments, job rotations, internal TED talks and so much more.

Finding meaning in work

The ‘downtime’ during the pandemic allowed many to think about fulfilling careers that align with their values, passions, and purpose. 

As an employer, providing meaningful work where employees can see the impact of their contributions provides a powerful intrinsic motivator. Employees who find meaning in their roles often exhibit higher levels of job satisfaction, increased loyalty to the organisation, and a willingness to go the extra mile to achieve shared goals.

Practical tips: Are employees clear about how their role contributes to the business vision and strategy? It is essential to regularly revisit and reinforce the vision to keep it fresh in employees’ minds. Additionally, employees should know what is expected of them and how their performance impacts the success of the business. Provide role clarity by clearly defining responsibilities, goals, and deliverables. 

Over to you

Understanding the psychology of reward and remuneration at work is essential for organisations striving to cultivate a motivated and engaged workforce. By embracing a holistic approach to employee motivation, which balances financial rewards, recognition, career growth opportunities, and meaningful work experiences, businesses can foster a work environment where employees thrive and drive the business toward greater success. 

An effectively designed reward and remuneration system can act as a catalyst for increased productivity, job satisfaction, and overall business performance, creating a win-win situation for both employees and employers alike.

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Catherine Ngo

Content writer, presenter and podcaster

Catherine is passionate about unravelling the latest news and insights to help HR managers, business owners, and employers.