Designing a Reward System

Perhaps the most challenging aspect for management within an organization is to effectively motivate employees.   When an employee is initially hired they are excited about a new opportunity, especially if the salary and benefit package is promising, and there is a possibility for advancement.   However, they are also motivated by their desire to succeed, make a difference, and earn respect.   The challenge for management begins when the excitement wears off.   They must find a way to motivate their employees, while ensuring their basic needs are met, competitive benefits are offered, benefits are distributed equally, and their employees are treated as individuals.
Many people assume that in order to motivate employees the most important factors would be a competitive salary, and opportunities for advancement.   These are both extrinsic motivators, which can be a successful way to motivate staff but it is also superficial.   The reality is employees often perform better when intrinsic motivation is used within an organization.
In 1993, Montana and Charnov used the results of previous studies involving motivation to identify twenty-five factors that motivate prospective employees (Kettner, 2002).   There were four groups that completed the questionnaire.   Out of the twenty-five factors listed, only nine were chosen as the top preferences for the four groups.   The nine factors are; respect, good pay, chance to turn out quality work, promotion, opportunity to do interesting work, feeling the job is important, praise from management, opportunity for self-development and improvement, and freedom on the job.
Of those nine factors three of them were extrinsic motivators; good pay, praise from management, and chance for promotion. Personally, I would argue that praise from management could be considered an intrinsic motivator as well as extrinsic because it allows the person receiving the praise to feel valued.
In order to design an effective reward system, an...