Employee motivation is an extremely important factor in achieving a company's competitive advantage. Nowadays, when the competition in the market is stronger, motivated employees with their commitment, ideas and innovations can significantly contribute to increasing competitiveness. The question is how to motivate employees? Through this work, the reader is introduced to the definition as well as the basic theories and factors of motivation, with the aim of understanding people's reaction to certain motivation strategies. The second part of the paper emphasizes rewarding as the most commonly used way of motivation, which can greatly affect employee satisfaction, quality of work, and success in achieving organizational goals. Within the chapter, there are two basic approaches to rewarding: rewarding through material compensations, and rewarding through intangible compensations. Money motivates employees to a certain level, the level when all financial needs are met. Then employees have needs of a different nature, a higher level. Intangible compensations, based on these needs, are a relatively new form of reward, whose growing importance and significance are recognized by companies and, unlike before, form an indispensable part of the motivation strategy. The third part, almost the very end of the paper, brings an example of the system of motivation and rewarding of employees on the example of the Armed Forces of the Republic of Croatia (OSRH). The Armed Forces of the Republic of Croatia motivation system is largely based on material compensations. Whose conditions and methods of allocation are prescribed by law, and a series of ordinances, regulations, and decisions.