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Extrinsic & Intrinsic Rewards

Even though bonuses or anniversary recognition bonuses are certainly an important factor, it is also important for employees to take pride in what they do and to feel satisfied at work.

Which reward category has the biggest impact on work engagement?

Globally, more and more Generation Y is entering the international workforce and as we are gearing towards having all generations working under one global roof, reward strategy emerges as one of the biggest challenge in engaging and retaining employees. Not to neglect the Millennials and Generation Z who is next in the line joining the workforce bandwagon and the trend says they are heading in the direction of ‘Gig Economy’. Now the burning question is, are we ready for the massive global transformation?

Strategic reward focuses on long term approach on how reward policies and practices support its business sustainability as well as talent retention and engagement. A total reward encompasses of all aspects of reward both extrinsic and intrinsic which forms part of the reward strategy. The concept of ‘total’ reward or Total Direct Compensation (TDC) covers all aspects of reward that employees look forward, both tangible and intangible.

Having a good reward system helps to make employees happy, engaged, eager to stay and move up their career within the organization. As far as reward is concerned, there are two types namely, extrinsic and intrinsic. Extrinsic reward are tangible rewards on monetary basis that employee receives whereas Intrinsic award seem to be non-monetary that boost and tend to give employees a greater or equivalent personal satisfaction.

Extrinsic Reward

One typical example of short-term bonus rewards also widely known as Short Term Incentives (STI) includes performance bonus. An example of ongoing or Long Term Incentives (LTI) such as a gratuity pay out that encourages employee to stay engaged and longer with the organization. In my personal opinion, one of the best practices within the LTI is an additional performance bonus pay out every 3 years or 5 years to recognize number of employee services. Several organizations also practice in acknowledging and celebrates employees Length of Service (LoS) or typically known as anniversaries, LoS of 5 years, 10 years, 15 years and 20 years and above.

I personally believe LTI has a much stronger attraction that intensely glues employees to the organization. The ultimate idea of LTI is the longer employee stay with the organization, the more they enjoy in terms of privileges and rewards. Yet another challenge is how organizations can immensely adopt the idea of intrinsic reward and injecting this into the value system and corporate culture.

Top performer recognition serves as a good motivation striving for higher and better both at personal and business achievements.  Peer recognition encourages each employee’s effort and camaraderie’s and creating a sense of belonging to the organization. On top of this, rewarding the team for noteworthy collaboration and achievement is essential to empower engagement and promote team spirit and cohesiveness in the organization. Not to forget, going beyond normal day to day duty is becoming more critical a reward for “Go Beyond Your Duty’ encourages multitasking and innovation at work.

Intrinsic Reward

This comes from within the employee. Intrinsically motivated employees work for their own satisfaction and strives for the best for them and their company. With regular communication with employees, a manager can better understand and learn about the employee’s motivations factors and reward him or her accordingly.

A classic example of an intrinsic reward is to provide opportunity an employee to take new task and perform duties outside of their normal responsibilities. This clearly allow them to feel as though they have completed a strong need within the company and help the company. The moment employee embarks on new task and challenges this also is a great platform to prove to the peers and management on their capability and talents.

Some of intrinsic rewards are positive and praising words by managers and management, a feeling of sense of achievements by employees leading towards sense of belongings to the organization, having work freedom and able to take decisions and most importantly taking a great pride and honor out of their achievements and job well done.

Intrinsic rewards are becoming more prevalent in today’s workforce where employees are expecting innovative and find own ways of accomplishing task and meeting KPIs. I firmly believe a combination of both intrinsic and extrinsic rewards depending the demographic profile of the workforce and organizational culture, value system and expectation of employees to be met. As the way we do business and employees expectation are ever changing trends, striking a balance or one having a bigger weightage than the other is debatable depending on the reward model that the organization choose to practice.

In Omantel, we firmly believe that providing fun and conducive working environment as well as work life balance is essential. One of the efforts that we have implemented is the practice of work from home options for our employees. The ultimate objective of this is to improve employee satisfaction and increase employee empowerment and work flexibility leading towards better engagement. Besides this, it helps to improve employee retention (especially retaining parents who needs childcare support) and potential gain in productivity due to lesser commuting time.

Also as part of our compensation plan, we have various allowance targeted at different roles such as risk allowances, exceptional allowances, shift allowances, technical allowances, technical support allowances, field allowances, call centre allowances and overtime allowances. All these allowances in Omantel aims to compensate and ensure employees’ higher engagement, satisfaction and happiness at workplace.

How does digitization benefit the compensation plan management?

With organizations taking global data driven approach and decision making, buzzwords like Industry 4.0, Big Data and Gig-Economy have emerged as an industry trends. Digital world is bringing the cross-border business closer and companies who fails to adopt digitization may have to find the exit door in their business.

We at Omantel, being at the forefront of technology and top telecommunication provider in the country has embarked on digitization in order to be on par with international standards and practices. For instance, we have embarked on I am Omantel portal which has a full-fledged information pertaining to employee including compensation plan.

Another digitization in Omantel is Total Reward Statement (TRS), this is an automated statement or report on employee compensation which includes all monetary benefits that employees are entitled. The features sit on Oracle platform and accessible to employees through employee self-service. TRS system provides a comprehensive employee compensation plan via a single sign on(SSO).

We have digitalized most of our compensation practices in Omantel such as employee’s complaints process, retention, compensation administration and so on, and still we have other plan to digitize such as integrated the market data (job evaluation) with internal data, link the financial result with incentive pay in order to:

  • Save Time
  • Improves Consistency & Accuracy
  • Keeps it up to date
  • Simplifies by Integrating with 3rd Party Administrators (Hay , Mercer consultants ,….)

Technology has tremendously influenced the human resource industry involving every aspect of HR be it operations or talent management. With the exponential increase in the number of organizations adopting HR Shared Service (HRSS) concept I do not see any exception on the compensation plan management.  It is highly evident that, having a quick and reliable record management of the organization compensation plan is essential in ensuring data management especially on data accuracy and accessibility. Digitizing it takes things to next level in terms of efficiencies and quick and reliable decision making for managers and the business as a whole.  This is purely underpinned by a well streamlined compensation system, technology and processes.

Some of the key advantages of this streamlined approach to HR functions they are more skewed towards global compensation programs. This effort elevates compensation programs to reciprocally support each other, time and cost savvy and most importantly increase the respond time to stakeholders. Organizations using such approach also experience less negative impact to their business.

With the robust move towards the HRSS model globally, so does the integration and adoption of global compensation plan. Taking into account the complexity and diversity of the compensation globally, digitizing it helps cross-border and globally connected business to be more successful at international arena. Such a digitized model helps to deliver values to both employees and employers in managing their HR and compensation.

Cost Efficient – This reduces the exorbitant cost of space, printing and documentation tasks.  It also automatically helps to track employees when they become qualified for benefits enrolments.

Productivity Increase – The automated system allows HR employees to focus more on the work efficiency and strategic planning hence seeing a reduction in operational task.

High Accessibility – A well-established system allows HR employees to manage and retrieve centralized data and access to accurate data within seconds and availability of data 24×7 at from various location

Enhanced data protection and security – Easy to track, provide access to users and manage confidential information efficiently and easy to preserve for the future assuming it comes with security and firewall protection.

Several advantages of the digitization include but not limited to having a centralized data be it at country, region or global level, setting industry rewards plan benchmark, comprehensively manage the overall compensation package for individuals aligned with organizational compensation plans and budget.

Choosing to digitize compensation plan can improve & streamline all approaches and compensation methodologies or programs, making it easier than ever to manage claims. And having a strong workers’ compensation plan can put our employees’ minds at ease. the management plan can be improved in several meaningful ways by simply choosing to go digital.

Total Rewards vs. Compensations and Benefits: what is the formula to organizational success?

‘Reward is benefits provided by the employers, usually money, promotion or benefits and satisfaction derived from the job itself such as pride in one’s work, a feeling of accomplishment or being part of a team’ by DeCenzo and Robbins

Total rewards play a significant role in organization’s success especially in engaging and retaining talents. Organizations try to do everything that makes employee happy, including rewards as they see talent loss as a huge impact to the business.

This is very essential to organizations’’ success, each of the category has positive impact to the business performance. Reward has the biggest impact on the both sides, employees and employers.  The recognition and incentives that the company fairly rewards and recognizes them for their contributions to the company’s success includes both cash and non-cash incentives. Also, incentives category assists the company in finding, keeping and motivating the productivity, talented employees in pursuit of company long term objectives.

The importance level of the compensation and benefits highly depends on the company culture and current market practices, these days as we see that benefits plays the most significant role to increase the employees’ engagement in achieving the business goals. It is provided to employees in exchange for their time, efforts and results. It offers and aligns a value proposition that creates significance for both the company and employees, an effective compensation and benefits strategy results in engaged and productive employees who in turn, create desired business performance and results, this is the formula to organizational success

To be successful in this century, HR has to start taking advantage of integrating technologies such as analytics, big data and the Internet of Things (IOT) for all the functions especially on compensation and benefits and rewards system to understand the predictive analysis of HR functions such as predicting why employees which potential future employees might be ready to leave their current employers.

Last but not least, the success formula for both total rewards and compensations and benefits is to ensure that organization strive for best to reward and compensate employees for their performance and part of the organization culture in attracting, enhancing company branding, selection, development, engaging and retaining best talents.


Dr. Ghalib Al Hosni is Experienced Chief People Officer at Omantel demonstrated ability to provide valuable support in the development and implementation of HR strategies that help in achieving business results and goals. The achievement of these business results are accomplished through excellent skills in problem solving, multi-tasking and communications, while effectively balancing the needs of both the individual and the organization. Committed to delivering high quality, responsive services to all facets of the business. My advanced doctoral degree has provided me with hands-on project and multiple teamwork experiences that have honed my strengths in problem solving skills for critical issues, troubleshooting, business analysis, and project leadership.

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