Reward Power Definition: What Is It Exactly?
Reward power is the ability of a leader to influence team behaviour by offering tangible or intangible rewards. This might include bonuses, promotions, praise, or extra days off. It’s considered a type of formal or positional power, meaning it comes from a person’s role or title within an organisation —; not just personal charisma or expertise.
When leaders have the authority to assign perks or privileges, they hold reward power.
Reward Power Examples in the Workplace
Real-world examples make the concept clear:
- A sales manager offers a weekend getaway voucher to the top-performing salesperson each quarter.
- A project leader promises a team dinner for completing a sprint ahead of schedule.
- A CEO launches a “Star Employee” program with public recognition and a $500 gift card each month.
Each of these scenarios uses rewards to reinforce desirable behaviour —; boosting motivation and performance.
Why Reward Power Matters in Leadership
Leaders are always looking for ways to inspire their teams without micromanaging. Reward power offers a positive, proactive approach to drive performance. Here’s why it works:
- It’s motivational —; employees are naturally inclined to work toward desirable outcomes.
- It encourages self-regulation —; people push themselves to succeed, rather than being pushed.
- It creates a results-oriented culture where effort is visibly recognised and rewarded.
Done well, reward power becomes less about carrots and more about strategic recognition.
Tangible vs. Intangible Rewards: What’s More Effective?
Great leaders understand that not all rewards are created equal —; or valued equally.
Tangible Rewards
These are material perks employees can use or experience, such as:
- Bonuses or pay rises
- Extra annual leave
Gift vouchers - Access to training or coaching
- Team lunches or events
Tangible rewards tend to be highly motivating, especially when they align with employee values or goals.
Intangible Rewards
These are non-material incentives that still carry weight:
- Public recognition (e.g. in meetings or internal newsletters)
- Praise from leadership
- Increased autonomy or responsibility
- Flexible working arrangements
Intangible rewards are often more sustainable and emotionally impactful in the long run.
The best leaders use a mix of both —; tailored to their team’s needs.
Advantages of Reward Power
So, what is reward power meant to achieve in the long term? Here are the top benefits:
1. Boosts Motivation and Morale
The promise of a reward —; even something simple like a shout-out in a team meeting —; can uplift morale and get people moving in the right direction.
2. Promotes Healthy Competition
A well-structured incentive program encourages healthy peer-to-peer competition and learning, without creating toxic rivalry.
3. Improves Retention
People who feel recognised and appreciated are less likely to job-hop. Reward power helps you retain top talent by showing that their effort matters.
4. Increases Productivity
When employees are energised by clear goals and visible rewards, productivity naturally follows. And productivity fuels growth.
Challenges and Limitations of Reward Power
Of course, reward power isn’t perfect. Here’s where it can fall short —; and how to avoid missteps.
- It Can Get Expensive: Too many high-cost rewards can stretch the budget. Creativity is key —; not every incentive needs a dollar sign.
- It May Create Disengagement: If only high performers are rewarded, others may feel left out or disheartened. Leaders must strike a balance.
- Rewards Can Lose Impact: If rewards are overused, they may become expected —; and lose motivational power. Make them meaningful and well-timed.
Reward Power vs. Other Types of Power
To understand reward power fully, it helps to compare it to other common leadership powers:
|
Power Type |
How It Works |
|
Reward Power |
Uses incentives to motivate and influence |
|
Relies on fear of punishment or consequences |
|
|
Comes from formal authority or title |
|
|
Built on personal charm or likability |
|
|
Based on knowledge, skills, or experience |
Unlike coercive or authoritarian leadership, reward power relies on positivity and engagement, making it especially effective in collaborative or creative workplaces.
How to Use Reward Power Effectively as a Leader
Here’s how to turn reward power into a reliable tool —; not a gimmick.
- Know What Motivates Your Team: What drives your people? Money? Recognition? Growth? Ask, observe, and tailor rewards accordingly.
- Be Fair and Transparent: Set clear criteria for rewards. Ambiguity leads to confusion or resentment.
- Mix It Up: Alternate between tangible and intangible rewards to appeal to different preferences.
- Recognise Both Individuals and Teams: Team rewards foster collaboration, while individual recognition drives personal accountability.
- Communicate the “Why”: Let people know exactly why they’re being rewarded. It builds trust and reinforces the right behaviours.
Use Reward Power to Drive Results
Reward power is more than dangling carrots —; it’s about crafting a workplace where effort is noticed, success is shared, and people feel empowered to do their best. When used wisely, it fuels engagement, boosts retention, and helps leaders build a team that genuinely wants to win.
