gender differential paper IJCRB

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JUNE 2011
INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS VOL 3, NO 2
1.3 Extrinsic versus Intrinsic Rewards
Based on the work of various researchers, rewards are divided into two main categories known
as intrinsic and extrinsic rewards. The intrinsic rewards exist in the job content and include
variety, challenge, and autonomy etc. Extrinsic rewards refer to the context of job such as pay
and fringe benefits, promotion or advancement opportunities within the organization, the social
climate, and physical working conditions. Brief and Aldag (1977) suggested that it is useful to
have a distinction between extrinsic and intrinsic rewards offered. However, Crino (1978)
highlighted that extrinsic and intrinsic rewards are not only different types of outcomes; these
two are separate ends of a same band. Contrary to this, Guzzo (1979) suggested that
differentiating extrinsic and intrinsic rewards is inadequate for understanding of different types
of rewards and incentive in organizations’ systems.
Porter and Lawler (1968) reported that there is an equivocal relationship between extrinsic and
intrinsic rewards with performance. However, there is a weak relationship between extrinsic
rewards and work performance because it is very difficult to maintain consistency and fairness in
rewarding work performance. One more reason is an inherent difficulty in performance
management system and evaluation to measure qualitative tasks. On the other hand, intrinsic
rewards can easily be linked to performance, as these rewards are associated with soul and spirit
of a person. Intrinsic rewards focus on achievement of something good that is urgent, immediate
and directly aligned with performance; such rewards are not bothered by situations and are not
externally controlled. Porter and Lawler (1968) further contended that the combined effect of
extrinsic and intrinsic rewards result in the satisfaction of employees and adds to their
performance positively.
On the other hand, Deci (1972a) advocated that both extrinsic and intrinsic rewards do not
improve motivation level rather extrinsic rewards when surpasses certain level, it overpowers the
impact of intrinsic rewards. Resultantly, there is a negative impact of extrinsic rewards on
intrinsic motivation at times when the work performance is linked with extrinsic rewards only.
1.4 Extrinsic Reward Structure and Policy
Although not much work has been done on linking the ‘awareness of extrinsic rewards structure
and policy’ with the performance, some researchers have found significance association among
rewards and incentives tied to organizational performance. A study by Bau and Dowling (2007)
found that there is a close relationship between the reward and incentive systems established
within an organization. They further suggested that organizations having large number of skilled
and qualified employees usually have better financial and non-financial reward practices while
the smaller organizations with fewer staff cannot manage to have structured extrinsic rewards
practices.
In order to achieve the goal and objectives of an organization, extrinsic monetary pay is
considered to be an integral part of the rewards awarded (Heneman and Judge 2000; Milkovitch
and Newman 2004). According to Gardner et al. (2004) for work performance, an extrinsic
reward in the shape of monetary pay is often administered. Monetary pay is also used for
retention of workforce (Trevor et al. 1997). Contrary to this, another point o view suggests that
employees perceive monetary pay administration in negative terms, which shows that pay is not
considered to be a positive motivator for effective performance and retention of employee
(Currall et al. 2005; Tekleab et al. 2005; Trevor et al. 1997).
In addition, it is argued that salary raise and benefits have strong impact upon creating a sense of
commitment and gratitude because is the employees feel that they are being fairly treated.
Therefore, there is an indirect link between different facets of job attitudes with pay and benefits.
As Williams et al. (2002) stated that overall job satisfaction has a positive relationship with
benefit level and system. Dulebohn and Martocchio (1998) commented that knowledge and
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