Awards in Firms

Money is not always successful in sustaining and raising employee motivation. When money is perceived to be controlling, financial incentives may backfire and undermine motivation. High-powered incentives can also lead to strategic behaviour and gaming. Many firms are aware of the limitations of monetary incentives. They use non-financial rewards in an effort to sustain and raise employee motivation. Awards are a special kind of non-financial yet extrinsic incentive, whose value resides primarily in the recognition conveyed among peers and in the public. Awards are used in firms to raise employees’ motivation, to foster retention, and to establish role models. They are a valuable component of organizations’ human resource strategy. Outside the boundaries of the firm awards are used to set standards, to establish norms, and to support innovation. Awards may have unintended motivational effects, particularly on non-recipients. Awards may create and foster competitive advantage.