Final answer:
Nonfinancial compensation refers to rewards that are not monetary but enhance job satisfaction, like personal growth and recognition. Extrinsic motivation involves external rewards, like money, which can sometimes diminish intrinsic motivation, an effect seen in the over justification phenomenon. Work content and autonomy are key predictors of job satisfaction.
Step-by-step explanation:
Rewards and incentives given to employees that are not financial, including intrinsic rewards received from the job itself or the work environment, are called nonfinancial compensation. These can include various forms of recognition, opportunities for personal growth, the ability to contribute to decision-making processes and other factors that enhance an employee's job satisfaction and personal fulfillment. For example, when a businessman comforts himself with the idea that hard work is its reward, he is cognitively appreciating a form of nonfinancial compensation.
In contrast, Carl mowing his neighbor's yard for $20 is an example of extrinsic motivation, as he is motivated by the financial reward. The over justification effect is a phenomenon where intrinsic motivation is diminished once extrinsic motivation is given, potentially leading to a reliance on external rewards. This happened to Odessa, who loved baking for fun until she began getting paid to do it as part of her job, leading to her no longer desiring to bake in her free time. Moreover, when considering job satisfaction overall, factors like autonomy and work content tend to be more predictive of satisfaction than financial rewards, underlining the importance of nonfinancial aspects of a job.