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Reward power in the workplace and how to motivate employees

November 23, 2021 - 17 min read


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What is reward power?

Why is reward power important?

Reward power advantages

Reward power disadvantages

How do you use reward power effectively?

Empowerment and rewards

Tangible and intangible rewards

Use reward power to improve performance

Why do you get up every morning to go to work?

What are the driving forces behind your actions in the workplace?

According to the incentive theory of motivation, people are motivated by a drive for incentives. Our behaviors are driven by a desire for external rewards.

Reward power is an important type of power that leaders can use to keep their team engaged and happy at work. But like any form of power, it must be used wisely.

If your role at work gives you the power to reward your team, you have reward power. Reward power helps you influence employees to act.

Let’s explore the ins and outs of reward power and how to implement this type of power in the workplace.

What is reward power?

Reward power is the formal power given to a work leader to give out rewards to other employees.

It is a position power, which means the source of power is based on a leader's position with a company. 

An example of reward power is a manager or supervisor who incentivizes higher performance from employees. They could do this by offering rewards to team members who meet a certain sales quota.

Another way of explaining the reward power definition is a person with recognized authority in their work environment. This person has full and formal power to give or remove privileges to employees based on their behavior and work performance.

Reward power is not personal power or personal influence. It is an official power afforded to managers, project managers, or team leaders who have formal authority. They do not hand out rewards for any reason other than work-related productivity.

Other types of formal power include legitimate power and coercive power. The informal kinds of power include expert power, referent power, and informational power.


Reward power is typically given to employees that manage or oversee the work of a team below them. Only someone who possesses a keen and accurate understanding of a team’s performance can offer them rewards for their work.

In order to avoid favoritism or resentment amongst employees, the use of rewards should be strictly work-related.

Why is reward power important?

In the workplace, motivation is a constant matter of importance for leaders, no matter their leadership style. Employees require it to do their job with enthusiasm and efficiency.

This is where reward power can prove useful. Instead of applying additional pressure on employees to be more productive, offering them a desirable reward in exchange for meeting certain goals can encourage them to apply that pressure onto themselves.

When employees are forced into taking on extra work, it can result in burnout or poor mental health.

Reward power allows employees who have the energy available to push the company forward. And at the same time, they’re rightly compensated for their efforts.

Reward power advantages

So, what is reward power meant to achieve? There are many great advantages to implementing a reward system within the workplace.

Not only does it naturally incentivize employees to push for higher performance. It can also result in several other perks that the whole office benefits from.

1. Creates healthy competition

When there is a prize for employees to win based on high performance, it can encourage a healthy sense of competition.

Watching how the top performers tackle their work can also raise the overall skill set of the team as individuals push to improve.

2. Increases employee retention

Employees usually don’t want to have to find a new job. The job search process can be emotionally exhausting and job search depression is real. But if a work environment lacks challenges or career growth opportunities, they may seek employment elsewhere.


Managers can use reward power to incentivize not just high performance but also employee retention. An employee may have more desire to stay when they realize there are opportunities to develop along their career path.

3. Motivates and encourages employees

Winning a desirable reward is enough for most people to become motivated.

Setting up a rewards program in your work environment will stimulate motivation for winning the reward. It will also encourage employees to be more productive in all areas of their work.

Reward power disadvantages

Just like everything in life, reward power has some negative effects. 

With power comes responsibility. These disadvantages could happen if that responsibility is not used wisely.

1. It can cost the organization money

It takes a creative leader to come up with a reward that is both desirable enough to win and inexpensive enough for the company to afford to spend money on it.

The value of the reward needs to be high enough to incentivize action. But buying something that costs too much can do the organization more harm than good.

2. If a reward is based on performance, other employees may become demotivated

Another disadvantage of a reward system is that some employees may be led to believe they have poor performance at work. Those who lack faith in their performance abilities may become disheartened.

While the reward will be enough for confident employees to take a shot, those who do not believe they could win can feel less motivated to participate.

3. Rewards can lose power over time

If employees are constantly being targeted with reward programs, the power of incentives may get lost over time.

Those with reward power need to pace their reward pitches to employees or else risk them losing interest.

How do you use reward power effectively?

Just like with any type of power, there are right and wrong ways to use it. So, what is reward power meant to look like for the best results to follow?

Let’s find out.

1. Use rewards that interest your employees

You can’t incentivize people to take action if you’re not offering a reward they actually want.

Doing research into what employees value most can help sift out unpopular reward ideas. Plus, it will shed light on what they would truly be willing to work for.

2. Be fair

The time, energy, and performance of a team is invaluable to any business. Investing in their hard work is worth the cost.


Being fair in your choice of reward shows employees you value their time and want to honor the hard work they put in for the company.

3. Use a mix of tangible and intangible rewards

Tangible rewards such as a cash prize or gifts are always welcome. But intangible rewards such as company recognition also have their place. A blend of both makes an excellent choice.

Employees are individuals with different personal values. Offering a variety of rewards ensures that you spark everyone's interests.

4. Give both personal and team rewards

Both individual and team rewards have their benefits. Choosing when to deploy each can give your employees a well-rounded sense of accomplishment and satisfaction.


Personal rewards encourage personal motivation, and team rewards promote collaboration and camaraderie.

5. Ensure employees know why they are being rewarded

If you want employees to stay motivated, they need to know exactly what they did to deserve a reward.

Make sure you are clear about the criteria that landed them the reward. This way, employees can use it as a template for how to be rewarded again and again in the future.

Empowerment and rewards

There is something innately empowering about working hard to accomplish something.

Offering rewards to high-performing employees empowers them in their line of work to go on to pursue great things. People appreciate being recognized for their efforts. Reward power allows employees to experience that recognition.

Empowerment in the workplace is important for employee engagement because it reinforces a sense of both professional and personal value. It is a way of using a bottom-up approach in management.

Tangible and intangible rewards

Let’s discuss the different forms of reward power — tangible rewards and intangible rewards. A combination of both is ideal for making a connection with each member of your team.


Tangible rewards focus on material goods or things that people can practically apply to their lives. Studies suggest that they are the most popular form of reward amongst employees.


Common tangible rewards include:


Intangible rewards are rewards that do not necessarily have physical substance. But they still hold a lot of value or potential for someone’s life.

Some intangible rewards are:

  • Praise
  • More responsibility through authority delegation 
  • Company-wide recognition
  • More autonomy or flexibility about how work is completed

Use reward power to improve performance

When reward power is used for good, it can result in success for employees. It can also help managers build influence.

Almost every reward power example starts by looking at what employees want from their superiors. Then using it to incentivize healthy performance and productivity.

BetterUp is dedicated to inclusive leadership and a growth-centered approach to business. Request a custom demo today to find out more.

improve influence - coaching for individuals

Published November 23, 2021

Erin Eatough, PhD

Sr. Insights Manager

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