Definition
An intangible reward is a form of nonmonetary incentive provided to employees or team members to acknowledge and appreciate their performance and contributions. Unlike tangible rewards, such as bonuses or gifts, intangible rewards are often based on recognition, praise, and psychological fulfillment. These rewards do not always require public acknowledgment and can be personally delivered, making them unique and meaningful.
Examples
- Verbal Recognition: A manager commends an employee during a team meeting for their hard work.
- Personal Note: A handwritten note from a leader thanking an employee for their dedication and effort.
- Flexible Work Schedule: Allowing an employee to have a flexible work schedule as a reward for their excellent performance.
- Additional Responsibility: Assigning a challenging project to an employee as a trust-building and developmental reward.
- Professional Development Opportunities: Offering opportunities for further training and education as a form of recognition for an employee’s potential and contributions.
Frequently Asked Questions
What is the main difference between tangible and intangible rewards?
Tangible rewards are physical or monetary incentives given for performance, such as bonuses, gifts, or certificates. Intangible rewards, on the other hand, are nonphysical recognitions like verbal praise, increased responsibility, or professional growth opportunities.
How effective are intangible rewards in employee motivation?
Intangible rewards can be highly effective in motivation as they meet psychological needs such as feeling valued, respected, and appreciated. They also foster a sense of belonging and purpose within the organization.
Can intangible rewards replace monetary compensation?
While intangible rewards play a crucial role in motivation and job satisfaction, they should complement, rather than replace, fair monetary compensation. Employees still require fair pay for their efforts and contributions.
Why do leaders use intangible rewards?
Leaders use intangible rewards to build stronger relationships with team members, enhance morale, and promote a positive workplace culture. They are a cost-effective way to recognize performance.
Do intangible rewards vary across cultures?
Yes, the significance and type of intangible rewards can vary across cultures. What is appreciated and motivational in one culture may not be effective in another. It’s essential for managers to understand cultural differences and tailor rewards accordingly.
Psychic Income
Psychic income refers to the nonmonetary gain derived from a particular activity or situation, such as job satisfaction, pride in one’s work, and the enjoyment of the work environment. It plays a significant role in employee motivation and performance.
Online References
- Investopedia - Employee Recognition
- Society for Human Resource Management (SHRM) - Nonmonetary Rewards
Suggested Books for Further Studies
- “Drive: The Surprising Truth About What Motivates Us” by Daniel H. Pink
- “The Carrot Principle: How the Best Managers Use Recognition to Engage Their People, Retain Talent, and Accelerate Performance” by Adrian Gostick and Chester Elton
- “Intrinsic Motivation at Work: What Really Drives Employee Engagement” by Kenneth W. Thomas
- “The Five Languages of Appreciation in the Workplace” by Gary Chapman and Paul White
Fundamentals of Intangible Rewards: Management and Human Resources Basics Quiz
### Why are intangible rewards important for employee motivation?
- [x] They meet psychological needs and foster a positive work environment.
- [ ] They provide more significant financial benefits than tangible rewards.
- [ ] They are always publicly recognized.
- [ ] They are less effective than monetary compensation.
> **Explanation:** Intangible rewards are crucial for meeting employees' psychological needs, fostering a sense of belonging, feeling valued, and enhancing motivation and job satisfaction.
### What is an example of an intangible reward?
- [x] Verbal praise from management
- [ ] Year-end bonus
- [ ] A new laptop
- [ ] A gift card
> **Explanation:** Verbal praise from management is a classic example of an intangible reward that provides recognition without a monetary aspect.
### Can intangible rewards be as motivating as monetary rewards?
- [x] Yes, they can be equally or even more motivating.
- [ ] No, only monetary rewards have significant motivation impacts.
- [ ] They are less effective than monetary rewards.
- [ ] Intangible rewards do not affect motivation.
> **Explanation:** Intangible rewards can be equally or more motivating as they fulfill psychological needs and offer personal appreciation, which can significantly enhance motivation.
### What must managers consider when giving intangible rewards?
- [x] Cultural differences and personal preferences
- [ ] Only the financial cost
- [ ] Size of the organization
- [ ] Corporate policies
> **Explanation:** Managers need to consider cultural differences and personal preferences to ensure that the intangible rewards are meaningful and effective.
### What is a potential downside of relying solely on intangible rewards?
- [x] Employees may still require fair monetary compensation.
- [ ] Intangible rewards can be too expensive.
- [ ] Employees may not understand them.
- [ ] They are easier to track and manage.
> **Explanation:** While intangible rewards are valuable, employees also require fair monetary compensation to meet their financial needs and feel fully recognized for their work.
### How could giving someone a more challenging project be an intangible reward?
- [x] It shows trust and offers personal growth opportunities.
- [ ] It usually comes with a financial bonus.
- [ ] It reduces their workload.
- [ ] It is an encoded company policy.
> **Explanation:** Assigning a challenging project shows trust in the employee's abilities and provides an opportunity for personal and professional growth.
### What is the term for the nonmonetary gain derived from an activity, influential in motivation?
- [ ] Tangible reward
- [x] Psychic income
- [ ] Material compensation
- [ ] Performance bonus
> **Explanation:** Psychic income refers to the nonmonetary gains, such as job satisfaction and pride, derived from a particular activity or job, playing a crucial role in motivation.
### Why might intangible rewards be considered cost-effective?
- [x] They often do not require financial expenditure.
- [ ] They generate significant revenue.
- [x] They replace the need for salaries.
- [ ] They are more visible than other types of rewards.
> **Explanation:** Intangible rewards often do not require financial expenditure, making them a cost-effective way to recognize and motivate employees.
### In what situation might an employee value an intangible reward most?
- [x] When it meets their need for recognition and appreciation.
- [ ] When it significantly increases their monthly income.
- [ ] When it reduces their work hours.
- [ ] When it provides physical goods.
> **Explanation:** Employees particularly value intangible rewards when these meet their needs for recognition and appreciation, beyond financial compensation.
### How do professional development opportunities serve as intangible rewards?
- [x] They offer growth and learning, valued by employees.
- [ ] They immediately increase the salary.
- [ ] They provide a physical product to employees.
- [ ] They are mandatory for all employees.
> **Explanation:** Professional development opportunities serve as intangible rewards by offering employees the chance to grow, learn, and advance in their careers.
Thank you for delving into the realm of nonmonetary incentives with our comprehensive overview of intangible rewards and tackling our insightful quiz. Continue enhancing your knowledge on effective employee motivation!
