Are Financial Rewards A Suitable Management Practice of Employee Intrinsic Motivation?

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Are Financial Rewards A Suitable Management Practice of Employee Intrinsic Motivation?

Introduction

Balassanian argued that intrinsic motivation is the initiation, passion, and willingness to do something, and it comes from the inside of a person rather than from external rewards like salary or grades. Vllerand (1997) relates intrinsic motivation with satisfaction and pleasure that resulted in accomplishing a task.

Thompson & Bono (1993) demonstrated empowerment, autonomy, job significance and social integration as intrinsic motivators. Additionally, Daley (1997) relates intrinsic motivators with the recognition and evaluation of the supervisor.

The Frederick Herzberg two-factors theory; in which he identifies the two factors of motivation that are intrinsic and extrinsic, which leads to job satisfaction. He stated that, with the passage of time the factors of motivation will change, but the factor of "respect as a person" will not change and remains the main motivator. He also differentiated between the factors of motivation (job enrichment, acknowledgment, responsibility), and factors of hygiene (pay, benefits, job grade, and job security). Furthermore, describes that if these factors are present don not increase the job satisfaction but if absent results in dissatisfaction.

Intrinsic motivation of an employee will not decrease if an employee will get frequent feedback in the form of appreciation rather than reinforced by financial rewards. This argument is supported by numerous studies that states, intrinsic motivation is not destabilized by financial rewards, whereas, positive feedback increases intrinsic motivation. On the other hand the relationship between financial rewards and intrinsic motivation is studied in the non-sales environment, and covers only the theory of self-determination (Deci, Koestner & Ryan, 2001).

The theory of self-determination determines the effect of financial rewards on the employee's intrinsic motivation. In a few words, the theory of self determination argued that the feeling of independent, self-directed, and capability resulted in the intrinsic motivation to an individual. The positive feedback in the form of verbal appreciation of financial reward, the employee will receive it as his autonomy or capability, thereby the employee's moral and intrinsic motivation increases. While, the financial rewards like pay incentive or bonus can be the source of confirming the employee's competence.

Cognitive Evaluation theory was developed by Deci in 1971, and described the two subsystems of motivation, that are extrinsic and intrinsic motivation. He argued that intrinsically motivated individual is a person who performs his duty or job to get pleasure, satisfaction, and for the rewards that are intrinsic in nature like recognition. This theory identifies two features that can influence intrinsic motivation of an individual. One factor is information, and other is control. The perception of an individual is the key point in this theory, for instance the reward in the form of money or any other benefit is perceived by an individual as the factor of controlling results in decreasing intrinsic motivation.

Several researches (Cameron & Pierce, 1994; Rummel & Feinberg, 1988; Tang & Hall, 1995; Wiersema, 1992) identify the influence of financial ...