In this lesson, you’ll learn about reward power and its important concepts and then be provided an example to illustrate it. You’ll have an opportunity to reinforce your knowledge with a short quiz after the lesson.
Definition and Key Concepts
Reward power is simply the power of a manager to give some type of reward to an employee as a means to influence the employee to act.Rewards can be tangible or intangible.
The key distinction between a tangible reward and an intangible reward is that tangible rewards are physical things, while intangible rewards are not. Examples of tangible rewards include monetary awards, wage or salary increases, bonuses, plaques, certificates, and gifts.Intangible rewards can also be effective. Examples of intangible rewards include praise, positive feedback, recognition, more responsibility including a rise in status, and even a well-timed ‘thank-you.’ An obvious advantage to intangible rewards is that they can be as effective as tangible rewards and cost relatively nothing.Reward power does have some disadvantages.
Employees may be tempted to engage in unethical or illegal behavior to meet the criteria to earn the reward. For example, an unscrupulous salesman may engage in fraud to induce customers to purchase, in order to meet the production level required for a bonus. Reward power may also create competition between employees that is counter-productive, hurting teamwork and group productivity. Employees may also focus their attention away from their jobs and focus their attention on obtaining rewards, even at the cost of poor work quality.
For example, members of an assembly line may work sloppily in order to work more quickly to meet production goals for an award.
Let’s say you are a manager of a sales team at a life insurance company. Selling life insurance is hard and stressful work. Closing rates for sales are extremely low, prospects can be quite rude and abrasive, and salespeople are only compensated on commission.
If they don’t make sales, they don’t get paid.You have developed a system of tangible and intangible rewards to motivate your team. You have developed a bonus system based upon production. You also give out gift cards, plaques, and certificates when members of your team meet certain production milestones. Additionally, you provide intangible rewards including praising and recognizing an employee when a sale is made and thanking all team members for their efforts at the end of the day.
Reward power is the power of a manager to confer rewards on employees to influence their behavior. Rewards can be either tangible, like a monetary bonus, or intangible, like employee recognition.
While rewards can be an effective means of motivation, they do pose some disadvantages, such as causing unethical or illegal behavior to earn the reward, focusing attention away from work and on the reward, and creating an unproductive competitive environment.
When this lesson is finished, students should know how to do the following:
- Define reward power
- Explain the possible negatives of reward power
- Compare tangible and intangible rewards