December 7, 2018

Understanding Intrinsic and Extrinsic Employee Motivation


In order to truly engage our workforces, we need to first figure out exactly what makes our employees tick. This is where the subjects of intrinsic and extrinsic motivation come into play.

Understanding intrinsic and extrinsic motivation is key to performance management. If you spend all your time trying to incentivize great performance through external motivators when an employee’s motivation really lies within, you’ll not only waste time and money, but you’ll also lose the interest of your top performers.

Finding out what motivates employees is no easy feat. In fact, it can be a huge hurdle. Once you figure it out, however, you can seriously boost productivity levels and improve your bottom line. According to one source, unhappy employees cost the US up to $550 billion in lost productivity each year. Addressing this issue by deploying the right motivators can really turn things around for your organization. In fact, happy employees are 12 percent more productive.

Which brings us back to intrinsic and extrinsic motivators: Keeping employees happy, motivated, and productive requires that we first understand the effects different types of motivators can have on staff members.

What Is Extrinsic Motivation?

Extrinsic motivation is easy to understand. In fact, companies have been trying to motivate their employees extrinsically for a long time.

Extrinsic motivation is motivation that comes from the external world. Extrinsic motivators tend to be financial or tangible. They generally come in the form of an increased salary, a bonus, a company car, or a promotion. These rewards, as you can tell, are external to the work itself. It is also worth noting that the form of an extrinsic reward is usually determined by someone else, such as the employee’s manager.

Essentially, those who are extrinsically motivated do things primarily to receive a reward. According to this logic, an employees doesn’t perform well because they enjoy a certain sense of satisfaction or they want to help the business thrive. Rather, they perform well in order to earn material compensation for their efforts.

Recently, it has been shown that extrinsic rewards are not as motivational as we once believed them to be. In fact, extrinsic motivators can even be counterproductive when it comes to employee creativity!

What Is Intrinsic Motivation?

Intrinsic motivators come from within; they are more psychological in nature than extrinsic motivators. Intrinsic motivations are typically tied to some deep sense of personal satisfaction, which can be tremendously beneficial for employees to tap into. In fact, some experts go so far as to say that intrinsic motivation is the only type of motivation that leads to serious success. When employees are intrinsically motivated, these experts argue, they are more likely to perform well and get promoted.

Intrinsic motivation can come from a number of sources, including the desire to please a manager, to improve a particular skill, or to further the company’s mission. Intrinsic motivation is the reason why personal development objectives are so important to successful performance management.

Examples of Intrinsic Rewards

To fully motivate your employees, you need to lean on intrinsic motivators. The following are examples of intrinsic motivators that should be incorporated into every organization’s performance management system.

1. The Pursuit of Knowledge

Human beings have a general thirst for knowledge. We’re always seeking to learn more. This is particularly true of successful people. Top performers and leaders tend to have strong desires for knowledge and self-improvement. These appetites should be supported in the world of work if we really want to keep high flyers engaged.

Companies can encourage the pursuit of knowledge by providing ongoing training opportunities and helping employees create and follow personal development plans.

2. A Sense of Meaningfulness

Employees want jobs they actually care about, and they want to know their efforts make a real difference to their teams, managers, and companies. The best way for companies to give employees a sense of their own importance is to keep the lines of communication open. Managers should take time to explain thoroughly to employees both the company’s mission and how each individual’s efforts contribute to the company’s overall success. This will help employees feel like valued parts of a team, significantly contributing to their sense of accomplishment.

3. Autonomy

It has become increasingly clear that employee autonomy is paramount to engagement. In fact, extrinsic motivators like increased pay often pale in comparison to intrinsic motivators like improved flexibility and autonomy.

Employees who are incentivized by autonomy seek more responsibility, increased trust, and freedom to perform work their own way. Companies and managers can accommodate this by simply releasing the reins and cutting back on micromanaging. This doesn’t mean letting go of control altogether. In fact, regular one-on-one meetings are always required to check in on employee performance. However, giving employees the freedom to pick their own hours or approach work from a different angle could pay off in the long run.

Stuart Hearn is CEO of Clear Review.

Read more in Employee Motivation

Stuart Hearn has 20 years of experience in the HR sector. He cofounded plusHR, a leading UK HR consultancy, and previously worked as international HR director for Sony Music Publishing. Stuart is currently CEO of Clear Review, an innovative performance management software system.