INFLUENCE OF INTRINSIC AND EXTRINSIC REWARDS ON EMPLOYEE PERFORMANCE: THE BANKING SECTOR OF PAKISTAN

The study aims to investigate different factors determining intrinsic and extrinsic rewards in the light of Herzberg’s two factor theory and their impact on banking employees’ job satisfaction and job performance and endeavors to influence overall performance of the commercial banks of Pakistan. The thrust is to be able to generalize for all employees belonging to this sector, at least in Pakistan which is the setting of the study. Data was collected through short form of the Minnesota Satisfaction Questionnaire (MSQ) survey for measuring the level of satisfaction with intrinsic and extrinsic rewards, given to 200 bank employees in Pakistan, provides the basis for analysis and a total of 165 employees completed the questionnaire. Software that has been used for data analysis is SPSS v. 16.0.Both descriptive and inferential statistics were used to analyze the data. The statistical tools were aligned with the objectives of the research. For this purpose, the means and standard deviations of intrinsic rewards were computed and substantively interpreted. Pearson r was used to determine if there is a significant, positive association between each reward type and employee performance. Overall satisfaction of banking employees was assessed as satisfactory in while their self-rated performance was likewise rated as satisfactory. This shows respondents agree that intrinsic and extrinsic rewards increase overall job satisfaction and performance of employees. The following intrinsic rewards were found significantly and positively correlated with self-reported employees’ performance for the year: Security, Ability Utilization, Social Service, Variety, Moral Values, Activity, and Authority. On the other hand, the following extrinsic rewards were found to be significantly and positively correlated with employees’ performance: Recognition, Supervision-Human Relations, Advancement, and Co-workers.It is suggested that equal implementation of HR policies regarding rewarding employees for enhancing their level of satisfaction at work should be ensured. The study will prove to be a milestone for the researchers, policy makers and students to properly understand the concepts of intrinsic and extrinsic reward system, employee job satisfaction, and their relationship effect on overall organization performance. Moreover the study also help the managers of government and non-government organizations the importance of effective implementation of appraisal policies regarding human resource. Previous research on employee job satisfaction in terms of rewards has focused mainly on advanced countries. This study not only focused on job satisfaction but also employees’ overall performance in terms of two types of rewards i.e., intrinsic and extrinsic rewards. Thus, this study contributes to the literature by investigating this topic in an Asian context and offering implications to managers working in the banking industries of developing countries.