Reward is pay provided by an employer to the employees. It consists of packages of pay, benefits,services etc. Broadly, rewards can be divided into following types:
1. Intrinsic Rewards And Extrinsic Rewards
Intrinsic rewards:
Intrinsic rewards are the satisfactions that an individual obtains from the job itself. It means, they are the factors of esteem and self actualization needs of the employees. These satisfactions are self initiated rewards and are fulfilled internally by the employees. These rewards consists of having a pride on work, having a feeling of accomplishment, or being a part of team etc.
Extrinsic Rewards
Extrinsic rewards are the benefits provided externally. These rewards are provided in term of money and fringe benefits. These rewards are necessary to fulfill physiological and safety needs of the employees. Such rewards are the results of management policies and procedures of the organization.
2. Financial Rewards And Non-financial Rewards
Financial Rewards
Financial rewards means those direct and indirect payments that enhance an employee's well being. Financial rewards make employee financially sound so that he/she can fulfill his/her material desire. Direct payment consists of salary,wages, commissions,incentives, bonus, allowances etc. Indirect payment include pensions, medical insurance, paid leaves, paid sick leaves, purchases, discounts etc.
Non-financial Rewards
Non-financial rewards are those employee benefits that do not enhance an employee's financial well-being However, such rewards provide more job satisfaction. Preferred lunch hours, preferred office furnishing, parking spaces, impressive job title, desired work assignments, business cards, own secretary etc. are some of its examples.
3. Performance Based Rewards And Membership Based Rewards
Performance Based Rewards
Performance based rewards are such benefits which are provided on the basis of an employee's job performance ability. The reward depends upon the performance of an individual in the actual work floor.These rewards are exemplified by the use of commissions, piece work pay plans, incentive systems, group bonuses or other forms of merit pay plans.
Membership Based Rewards
Membership based rewards are those rewards that are paid on the basis of being a member of an organization. It means, the basis of allocating rewards is employee's organizational membership. Hence, the reward goes to all employees irrespective of their performance.
