. How does this explain why Warren Buffett is such a successful businessman?
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The concept of intrinsic rewards stems from the concept of total rewards that target staff motivation in an effort to boost productivity and also to minimize staff turnover. The elements of total rewards are Compensation, Benefits, Performance and recognition, work life, Development and career opportunities. Rewards that are extrinsically motivated are mostly tangible and are physically visible like cash incentives, gifts and other items of value. Rewards that are intrinsically motivated are nonmaterial and intangible like trust or respect. Compensation and benefits are mostly conceptualized as motivators that are extrinsic rewards while performance and recognition are motivated intrinsically. (Giancola, 2010) Intrinsic rewards major objective are to create happiness which increases productivity and performance. Happiness forms the basis of all rewards, when a person is satisfied and happy he can perform better than when he is not happy. Employers take advantage of this fact to create temporary happiness among employees so as to gain from their services.
Intrinsic rewards prescribed by the WorldatWork model could ordinarily serve as a motivating factor however the individual effects that each strategy is capable of achieving must also be considered. (Payne, Cook, Horner, Shaub and Boswell, 2011)
Rewards are benefits that are obtained after a service. Services are offered by employees who are generally compensated for the services offered. Rewards are mostly connected to employees. Employee individual motivation, benefits, bonuses and other short-term benefits are basically the financial rewards that affect the employee relationship engagement and happiness the most. Short term incentives and bonuses score high because they are directly connected to performance which is tied to employee satisfaction and happiness. Recognition on the other hand has very little effect on employee reward motivation. This is mainly because very few companies issue awards on recognition formally through formal programs. The work, its quality and environment, career development and other leadership rewards are intangible and which have profound effect on most employee happiness. Total rewards strategy allows resources to be focused on tailored activities that literally target performance in a prescribed timeline. When it’s implemented successfully its capable of achieving a sustainable and a competitive process where all employees are motivated towards achieving the company’s objectives by rewarding and making them happy. (Hiles, 2009)
This paper examines the effect of intrinsic rewards on individuals and if it leads to happiness particularly in their engagements as employees. Intrinsic rewards are generally the rewards received in form of trust and respect which leads to self actualization as described by Maslow in his hierarchal needs classification. Gerrig (2012) clarifies that positive reward is necessary in order to achieve self-actualization. Maslow in his classification placed happiness and personal fulfillment as the highest possible achievement an individual can attain in his pursuit of rewards which he categorizes in the highest hierarchy that he describes as self actualization. (Privette, 1983)
Intrinsic rewards leads to happiness
The eudemonistic theory as described by Aristotle’s works cannot be complete by itself without the additional hedonic enjoyment and motivation. (Waterman, Schwartz, & Conti, 2008) Eudemonia depends on factors that can make individuals to be happy and which may include feelings of being loved, respected and also trusted. These may include having good friends and also being virtuous.
Happiness as espoused by Stoics and Baltzly (2008) that its specification can all be understood adequately from the concept of human psychology and value. Stoic asserts that wealth and physical beauty are not important in life. Moral virtue is the most critical component of eudemonia. Stoics believed in strong ethics and virtues like justice, honesty, self discipline, courage and simplicity are also the basic ingredients to a happy life. The theories of Stoic were also supported by Immanuel Kant who believed that goodwill is necessary to achieve happiness but differed with stoic on material wealth as being non important in pursuit of happiness. His theory allowed pursuit of limited wealth that can guarantee happiness as necessary. (McMahon, 2004)
Psychologist Ryff (1989) highlighted the psychological eudemonia well being of an individual as being a) Autonomy, b) Personal growth c) Self acceptance d) Purpose in life e) Environment mastery f) Positive relations with others. These factors can only be achieved through personal self sacrifice, discipline and ultimately self fulfillment.
The theory of selflessness or altruism is also a factor towards the achievement of happiness. Altruism combines practices and other related principles that relate to happiness and self fulfillment. Therefore it rewards intrinsically the behaviors that lead to long term happiness and self worth. (Payne, Cook, Horner, Shaub and Boswell, 2011)
Some benefits are particularly effective for a short term period of time because of their financial nature as they affect the performance of employees directly. Bonuses that are paid in form of money motivate the employees to work hard an increase their productivity. Total rewards encompasses all the programs an employer utilizes to supplement the employees compensation which also includes group insurance (includes medical or retirement) Others may be customized reward strategy where the management allows the employees to be greatly motivated by allowing them to choose a preferable benefit reward plan, the employees nurture a feeling of belonging and a sense of teamwork develops which result in more productivity.(Payne, Cook, Horner, Shaub and Boswell, 2011) The option of customized rewards provides an opportunity for experienced employees to negotiate their own benefit reward packages and which can play a key role in retaining professional employees. All these factors lead to short term fulfillments and the happiness created were eventually for the employers as the monetary compensation would soon be over and the happiness that came with it also evaporates. Employers make the employees happy at a price that is economical to them and at a rate that they can be able to achieve maximum benefit from the employee. The monetary compensation is only temporary and for a particular purpose. (Ryan and Leaf, 2010)
To conclude, rewarding intrinsically results in happiness as it’s a form of motivation and encouragement. Its foundation targets true happiness and not monetary gain. Intrinsic rewards do not take the form of financial rewards as it seeks to fulfill the general psychological and physical needs of an individual where self actualization achieves happiness and personal fulfillment for a particular person and it also stimulate individuals from for the less privileged as a reward to encourage and cultivate the fruits of happiness. Intrinsic rewards leads to a long term feeling of self fulfillment and happiness. Stoics in his wisdom discovered that only virtues that can lead to self actualization as described by Maslow.
Baltzly, D. (2008) Stoicism, Stanford Encyclopedia of philosophy. Retrieved 2010 May.
Gerrig, R. J. (2012). Psychology and life. Harlow, England: Pearson.
C. D. Ryff. (1989). Happiness is everything, or is it? Explorations on the meaning of psychological well-being. Journal of Personality and Social Psychology, 57, 1069-1081.
McMahon, D. M. (2004) The History of Happiness: 400 B.C. – A.D. 1780, Daedalus journal, Spring 2004.
Payne, S.C. Cook, L.A., Horner, M.T., Shaub, M.K. and Boswell, W.R. (2011) The Relative Influence of Total Rewards Elements on Motivation and Retention. WorldatWork Journal Fourth Quarter.
Privette, G. (1983). Peak experience, peak performance, and flow: A comparative analysis of positive human experiences. Journal of Personality and Social Psychology, 45(6), 1361-1368.
Ryan, R. and Leaf, M. (2010) Beyond Compensation: How Employees Prioritize Total Rewards at various Life Stages. WorldatWork Journal Fourth Quarter.
Waterman, A. S., Schwartz, S. J., & Conti, R. (2008) The implications of two conceptions of happiness (hedonic enjoyment and eudemonia) for the understanding of intrinsic motivation. Journal of Happiness Studies, 9(1), 41-79.