Impact of Intrinsic Rewards and Extrinsic Rewards on Employee Performance

Abstract

This study examines relationships between intrinsic rewards, extrinsic rewards, motivation, and employee performance among public-sector employees, particularly in culturally diverse public-sector organizational settings. Survey data from 154 respondents were analyzed using descriptive statistics, reliability testing, Pearson correlation, and multiple regression. The instrument demonstrated high internal consistency (Cronbach’s alpha = .931 across 29 items). Correlation results showed positive, significant associations among intrinsic rewards, extrinsic rewards, motivation, and performance (all p < .001). In regression analysis, intrinsic rewards significantly predicted performance (B = .285, β = .264, p = .007), while extrinsic rewards also showed a significant positive association (B = .434, β = .460, p < .001). Together, the predictors explained 47.3% of the variance in performance (R² = .473; adjusted R² = .466), and the overall model was significant, F(2, 151) = 67.766, p < .001. Extrinsic rewards had the larger standardized coefficient. These findings suggest that psychological and material rewards are relevant to employee performance. The study recommends balanced, flexible reward systems that reflect employees’ diverse preferences and backgrounds, involve employees in reward design, and regularly evaluate effectiveness