Discuss the impact of extrinsic rewards on employee performance.

Extrinsic rewards significantly enhance employee performance by boosting motivation, increasing job satisfaction, and promoting productivity.

Extrinsic rewards are tangible incentives that employers provide to their employees, such as salary increments, bonuses, promotions, or recognition. These rewards play a crucial role in enhancing employee performance. Firstly, they serve as a motivational tool. When employees know that their hard work and dedication will be rewarded, they are more likely to put in extra effort to achieve their targets. This motivation not only improves individual performance but also contributes to the overall productivity of the organisation.

Moreover, extrinsic rewards can increase job satisfaction. Employees who feel valued and appreciated are more likely to be satisfied with their jobs. This satisfaction can lead to increased loyalty and lower turnover rates, which are beneficial for the long-term success of the organisation. For instance, an employee who receives a bonus for meeting a sales target may feel a sense of accomplishment and satisfaction, leading to a more positive attitude towards their job and the organisation.

Extrinsic rewards also promote a competitive environment within the workplace. When employees see their colleagues being rewarded for their performance, they may strive to improve their own performance to receive similar rewards. This healthy competition can lead to increased productivity and efficiency within the organisation.

However, it's important to note that while extrinsic rewards can significantly improve employee performance, they must be implemented effectively. The rewards should be fair and based on merit to avoid creating a sense of favouritism or resentment among employees. Additionally, while extrinsic rewards can motivate employees in the short term, they may not necessarily lead to long-term commitment or intrinsic motivation. Therefore, organisations should also focus on intrinsic rewards, such as providing opportunities for personal growth and development, to ensure sustained employee performance and engagement.

In conclusion, extrinsic rewards can have a significant impact on employee performance. They can boost motivation, increase job satisfaction, and promote productivity. However, they must be implemented effectively and complemented with intrinsic rewards to ensure long-term employee engagement and performance.