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Extrinsic rewards
are separate from (or external to) the job itself, and dependent on the decisions 
of others (that is, also external to the control of the workers themselves). Pay, benefits, non-cash 
incentives and working conditions (Herzberg's hygiene factors) are examples. 
(b) 
Intrinsic rewards 
are those which arise from the performance of the work itself (Herzberg's 
motivator factors). They are therefore psychological rather than material and relate to the concept 
of job satisfaction. Intrinsic rewards include the satisfaction that comes from completing a piece 
of work, the status that certain jobs convey, and the feeling of achievement that comes from 
doing a difficult job well. 
 EXAM FOCUS POINT 
Candidates often perform poorly in questions relating to the distinction between intrinsic and extrinsic 
rewards. Remember that ‘enjoyment of the job’ is an intrinsic reward, while securing a bonus or 
achieving promotion are driven by factors external to the job itself.
 EXAM FOCUS POINT 
McGregor's Theory X and Theory Y are relevant to the 'role of management' topic as well as motivation: 
you might like to bear it in mind as you study leadership styles.
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PART D: LEADING AND MANAGING INDIVIDUALS AND TEAMS 
 
386
 
5.2 A reward system 
It is suggested that a reward system should do six things. 
(a) 
Encourage people to 
fill job vacancies 
and not leave 
(b) Increase 
the 
predictability of employees' behaviour
, so that employees can be depended on to 
carry out their duties consistently and to a reasonable standard 
(c) Increase 
willingness to accept change 
and flexibility (changes in work practices are often 'bought' 
from trade unions with higher pay) 
(d) Foster 
and