Reward Schemes for Motivation: Strengths, Issues, Design

Reward schemes, employee of the month, Maslow’s hierarchy of needs, Herzberg’s Two-Factor theory, motivation business management
A work team. Reward schemes, such as “Employee of the Month,” may directly and indirectly motivate workers, according to Maslow’s Hierarchy of Needs and Herzberg’s Two-Factor theory. (Photo by Dylan Gillis; Public Domain)

Reward schemes are implemented for the purpose of motivating employees to improve their performance and contribute more to the business organization’s financial performance. Reward schemes like “Employee of the Month” are a factor that managers and leaders consider when developing strategies for motivating human resources.

Reward schemes are not always effective. Managers may experience challenges or obstacles to motivating employees through these schemes. These obstacles include rejection by workers when they perceive that the scheme is insufficient or inappropriate. Managers need to examine how reward schemes address issues, needs, and expectations in the business organization.

The application of reward schemes can be examined through the motivational theories of Maslow and Herzberg. Considering these theories, properly designed reward schemes can effectively motivate employees. In designing these schemes, managers can use both Maslow’s Hierarchy of Needs and Herzberg’s Two-Factor theory to optimize successful design and implementation.

Reward Schemes in the Lens of Maslow’s Hierarchy of Needs

Based on Maslow’s Hierarchy of Needs, the motivation of an individual worker depends on the ability of the business organization to address the worker’s needs corresponding to the different levels of the hierarchy. Each hierarchical level is a set of needs that share a common nature. For example, the most basic level is a set of physiological needs. In the workplace, these needs are addressed partly through salaries or wages that employees get for the work they do in the business organization.

Maslow’s Hierarchy of Needs highlights the satisfaction of the highest level of the hierarchy as the ultimate goal. This level involves the need for self-actualization. In using Maslow’s hierarchy, managers should focus on helping employees achieve self-actualization as a way of creating the highest level of motivation to drive the employees’ performance further.

The effectiveness of a reward scheme depends on how it fulfills the various needs of employees based on Maslow’s theory. For example, an effective reward program should go beyond the physiological needs of workers. Rewards are an addition to the basic worker compensation. The reward scheme should address the esteem needs of workers via management’s recognition of the workers’ abilities and achievements. In this way, the reward scheme can effectively motivate by improving workers’ esteem.

Herzberg’s Two-Factor Theory and Reward Schemes

In the Two-Factor theory, Herzberg classifies factors into motivators and hygiene factors. Motivators contribute to workers’ satisfaction and are based on the intrinsic characteristics of job and activities. For example, appropriate responsibilities and expectations are motivators for workers to perform better. On the other hand, hygiene factors are necessary conditions whose lack or inadequacy could lead to dissatisfaction and demotivation. For instance, appropriate salaries or wages, occupational safety, and other basic workplace characteristics are necessary to prevent dissatisfaction among workers.

Herzberg’s theory indicates that hygiene factors do not necessarily contribute to workers’ motivation. However, managers must include these factors as considerations in the design of reward schemes to prevent dissatisfaction. Even when motivators are present, the lack of hygiene factors can reduce employee satisfaction.

Based on the Two-Factor (or Dual-Factor) theory, the effectiveness of reward schemes depend on how these schemes add to existing policies and programs that address motivators and hygiene factors in the business organization. Focus on just the motivators may lead to net positive motivation among workers. However, narrowly focusing on motivators without regard for hygiene factors could lead to sub-optimal motivation.

Reward schemes should consider motivators as well as hygiene factors. For example, managers should account for employee recognition programs, training and development programs, and career advancement. Also, hygiene factors like job security, occupational health and safety, and health insurance must be considered in the overarching human resource strategy and in designing reward schemes.


Based on Maslow’s Hierarchy of Needs, the strengths of a reward scheme include potential direct satisfaction of employees’ needs. For instance, the reward program may be designed to target a specific level of needs, such as employees’ esteem needs. Another strength is the possible buildup of satisfaction. This buildup happens because of the nature of Maslow’s hierarchy – when existing programs already satisfy a specific level of needs, additional programs or enhancements thereof can potentially satisfy the next higher level of needs.

Thus, it is possible to have a stack of reward schemes that aim to satisfy all of the needs in Maslow’s Hierarchy of Needs. For example, with the above strengths, a properly designed reward scheme, such as “Employee of the Month,” can satisfy esteem needs, while another reward program, such as group vacations, can satisfy belongingness and love needs. In terms of organizational behavior theory, these kinds of satisfaction create a workplace situation where workers are motivated to perform more productively.

On the other hand, Herzberg’s Two-Factor theory gives a different perspective of the strength of the same reward schemes. For instance, the main strength is the scheme’s effect as a hygiene factor that prevents dissatisfaction. The assumption is that employees want to be recognized for their achievements and performance. Reward schemes in this context are a hygiene factor because they are extrinsic to the workers’ jobs, and are externally applied by management to try to influence workers’ perspectives and satisfaction.


In terms of Maslow’s Hierarchy of Needs, a reward scheme’s effect is mainly in satisfying esteem needs. The scheme may have limited or weak effect in satisfying other needs, such as the love and belongingness needs of workers. An “Employee of the Month” reward can make the employee feel recognized as an important member of the business organization. However, the main weight of reward programs is in the satisfaction of esteem needs based on Maslow’s hierarchy. These programs or schemes do not address the highest level of the hierarchy – the self-actualization or self-fulfillment needs. This weakness determined through Maslow’s theory is a challenge to managers in optimizing human resource motivation. While reward schemes address esteem needs, additional programs are needed to bring employees toward self-actualization.

On the other hand, reward schemes can help increase employees’ motivation, according to Herzberg’s Two-Factor theory, as long as both hygiene factors and motivators are addressed. Considering that these schemes are an extrinsic or hygiene factor, they do not directly motivate workers. Reward schemes may indirectly add to an employee’s motivation, but this effect depends on how the employee perceives the reward. However, this perception may be difficult to ascertain. Thus, based on Herzberg’s Two-Factor theory, a challenge in using a reward scheme is that its effectiveness depends on how the business organization’s management influences workers to have a positive intrinsic perception or feeling about the reward.

Designing and Implementing Successful Reward Schemes

To maximize the benefits of implementing a reward scheme in a business organization, managers should align the reward scheme and the actual needs of workers. This alignment is necessary to increase the probability of motivation. Alignment and suitability with the organizational situation determines the success of the reward scheme.

Managers must evaluate workers’ needs and expectations before developing any reward scheme. This action ensures that the reward scheme accounts for the actual conditions and nuances of the workplace. The resulting alignment helps identify obstacles and increase the likelihood of the reward scheme’s ability to overcome such obstacles in motivating employees.

Managers should avoid emphasizing reward schemes as ways of addressing workers’ physiological or financial needs. Instead, reward schemes should be viewed as recognition for achievements. Recognition of achievements can address esteem needs and motivate employees, according to Maslow’s Hierarchy of Needs. Also, according to Herzberg’s Two-Factor theory, recognition is a hygiene factor that helps facilitate motivation.

In addition, managers should implement reward schemes on a continuous or regular basis so that workers are continually motivated. Continuous motivation helps minimize or prevent gaps in employee performance. Continuous or regular implementation of reward schemes can lead to continual worker performance improvement through motivation.

The design and implementation of reward schemes should communicate that these schemes are part of the company’s efforts to recognize employees’ value in the organization. Instead of establishing reward schemes as financial tactics to improve the company’s bottom line, internal communications should illustrate that the company is genuinely interested in workers’ value and performance. This kind of communication helps motivate workers extrinsically and, indirectly, intrinsically.


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