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There are two types of rewards, extrinsic and intrinsic. Both are used at different times to achieve different objectives. They are not mutually exclusive, this is not an either/or situation and the best approach is to use a combination of both.

Let’s take a look at intrinsic and extrinsic rewards; how they work and when to use them.

It’s important to know when to use which one

  • Extrinsic motivation establishes behaviour quickly
  • Extrinsic rewards are usually tangible rewards like a gift card
  • Focus shifts from intrinsic motivation to the extrinsic reward
  • Extrinsic rewards can diminish intrinsic motivation (Incentive Paradox)
  • If extrinsic rewards are withdrawn, intrinsic motivation usually doesn’t return

Know your audience

People respond differently to extrinsic and intrinsic rewards so it is important to know your target recipients

  • Intrinsic rewards are usually intangible and make us feel good
  • Some employees prefer private praise (which makes them feel good) over extrinsic rewards that everyone can see (and maybe covet)
  • Be sensitive to employee needs


Intrinsic and extrinsic rewards infographic v5

To understand more about extrinsic versus intrinsic motivation, consider the following motivational theories:

  • The Over justification Effect
  • Cognitive Evaluation Theory
  • The Incentive Paradox
  • And many others

You can read about the differences between extrinsic and intrinsic motivation, read our blog; Understand extrinsic and intrinsic motivation like a boss.