Intrinsic vs. Extrinsic Motivation to Create High Performance

A cartoon businessman chases money on the end of a fishing pole

Cash incentives have long been used in the workplace to motivate employees to work harder, faster and better for a high performance culture. It was believed that incentives would raise the level of employee performance and help build a culture of high and talented achievers. But are incentives truly effective? Do they work?

Bonuses are a form of extrinsic motivation. And experts say to be wary of using them. They are most effective when the tasks they reward are based on performance quantity, not performance quality. For tasks that are simple, repetitive, have a specific outcome, and require drive and focus rather than careful thought, extrinsic motivators can work.

Research shows that for more complex tasks, it is intrinsic motivation that leads to higher performance. When the job itself is enjoyable and interesting, employees work harder and with greater focus and commitment without the need for extrinsic motivators. In fact, cash for this kind of work can be de-motivating. The work becomes dependent on the prize and when the award disappears, so can the commitment. The kind of work that demands performance quality stands on its own as a motivator. When an employee expends more thought, uses more judgment, and becomes personally invested in the outcome of the task, intrinsic motivators provide the drive to succeed.

Basically, incentives can work to build a high performance culture if they are matched to the situation and the task. For employees whose work is quantitative, incentives can be effective because the work in and of itself is less satisfying. If you tie incentives to a specific performance or outcome of quantity-focused tasks, they will encourage better, faster work. But even for these tasks, rewards are best used for discretionary effort, not work that is expected.
As for more complex tasks that are enjoyable on their own, choose your incentives carefully. If you offer them, they should not be linked to a specific performance or they may undermine the natural intrinsic motivation.

Bottom Line
Incentives can motivate employees if they are carefully matched to the task at hand.

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