An extrinsic reward is a tangible and visible reward given to an individual or an employee for accomplishing something. They usually have monetary values such as a raise, bonus, reward or public recognition.
They are usually presented by the immediate manager of the individual who made them decide. These awards are typically financial, such as a salary increase or a cash award for good performance or a gift certificate for going beyond the call of duty.
These awards motivate and inspire employees because monetary or equivalent rewards are important to most people. Even if someone is not intrinsically motivated, they work on a project instead of extrinsic rewards. For example, a salesperson may not be interested in the product he's selling, but will make an additional effort to complete his sales goals when he realizes that he will receive a cash bonus for completing sales goals.
Extrinsic rewards include decisions such as assigning a difficult job, participation in important decisions, better ranking in the business world. It differs from intrinsic rewards, which are generally qualitative.
In general, extrinsic rewards are also used for behavioral conditioning. Typically, there will be something pretending to be an event followed by an external reward that reinforces it. For example, if a business wants its employees to have a higher level of commitment, it may offer a cash reward to the most engaged employee during the year.
Extrinsic rewards work well in the short term to motivate behavior. However, more caution should be exercised before applying it in the long term.