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Frey (1997), whilst essentially concerned with the crowding-out effect extrinsic incentives may have on intrinsic work motivation, suggests that when employees’ income rises above subsistence level,they seek meaning in work; that is to say, intrinsic motivation becomes more important. Since employees in the organisation that is the subject of this study are not dissatisfied with their pay, it may be inferred that they consider their pay to be above subsistence level; and therefore that intrinsic motivation is likely to be more important to them.According to Ryan and Deci (2000), the term, “extrinsic motivation” is the attainment of a separable outcome from the performance of an activity; whereas “intrinsic motivation” is the performance of an activity for the inherent satisfaction of the activity itself. and Mitra (1998) argue that money is an important motivator, although the NFP literature indicates that intrinsic rewards are important to staff in NFP sector organisations and that classical agency theory is inadequate to explain the motivation of employees in this sector. Extrinsic rewards, such as monetary bonuses, are incentives provided by others and are external to the recipient. Herzberg (2003) argues that money is a “hygiene factor”, and cannot be a source of motivation. However, if the hygiene factor (in this case, pay) is perceived to be inadequate then the employee will be dissatisfied. Intrinsic rewards are personal, “internal” responses, such as satisfaction or pride in an accomplishment.Vol. 4, No. 3 International Journal of Business and Management8According to Ryan and Deci (2000) fun and challenge are of greater significance to an intrinsically-motivated person than external pressures and rewards.The debate about the influence of extrinsic and intrinsic rewards on motivation appears to be cast in dichotomous terms.

The fact that an individual is working in a NFP organisation is indicative of a set of values in which extrinsic rewards are not the first consideration (Weisbrod, 1983; Preston, 1989; Roomkin and Weisbrod, 1999).

Employee motivation cannot be examined in isolation from its organisational context since it is the activities undertaken within an organisation that are being considered; and in particular it is human motivation that encourages the individual to remain with the organisation (Berry, Broadbent and Otley, 1995; Schepers et. al., 2005). In this study the context is particularly relevant as it defines the activities and rewards (Jobome, 2006).

The relationship between the Federal Government and the organisation is defined contractually and reflects the introduction of business ideology into the NFP sector. These changes were seen as potentially disruptive requiring the organisation to adopt a more business-like approach in an attempt to maintain performance. The Federal Government has decided to fund open employment agencies on the basis of the number of clients they find employment for rather than by a set grant (block funding) paid irrespective of the number of clients who had been found employment. This change had been mooted for a number of years and management decided to improve Employment unit staff performance by offering a bonus if they were able to increase the number of clients placed in employment.

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