Resumen
Abstract: Since the beginning of the 80s of the last century, many changes in the contemporary business environment have contributed that the economy of Serbia have problems regarding business improvement and motivating employees. Business improvement, employees motivation and knowledge generating is certainly a major problem in most of transition countries. Facing new circumstances, business systems require flexible behavior, regard to changes in business environmental conditions. Knowledge and team work are main and key drivers of business productivity growth in all business areas, and because of that motivation and rewarding of employees are condition and assumption of productivity growth in private and public business sector. In this paper, authors research and analyze the system of motivating and rewarding employees in local government, which evolve under specific political, security and economic conditions Key words: contemporary business conditions, motivation system, rewarding employees, motivators, team work.