Intrinsic vs Extrinsic Motivation to Create High Performance

Intrinsic vs Extrinsic Motivation A cartoon businessman chases money on the end of a fishing pole

How to Use Intrinsic vs Extrinsic Motivation to Create High Performance
Most leaders want to inspire their teams to perform at their peak.  Most employees want to feel motivated to do their best work.  Unfortunately motivating the behavior and activity of others is a complicated endeavor; not all leaders know the difference between intrinsic vs extrinsic motivation to create high performance.

The Definition of Extrinsic Motivation
In general, extrinsic motivation refers to influences from outside of the individual that drive them to do something.  Extrinsic motivation at the workplace typically refers to behavior that is directly influenced by and driven by external and tangible rewards such as:

  • Pay
  • Bonuses
  • Commissions
  • Profit-sharing
  • Fringe benefits
  • Improved working conditions
  • Promotions
  • Praise

The Definition of Intrinsic Motivation
While extrinsic motivation is tangible and arises from outside of an individual, intrinsic motivation is intangible and comes from the inside of an individual.   This is the major difference between intrinsic vs extrinsic motivation.  Intrinsic motivation can be as simple as the delight and contentment an employee feels after successfully completing a worthwhile task.

Daniel Pink recently wrote a book, Drive, outlining three types of intrinsic motivation:

  • Autonomy – the desire to direct our own lives
  • Mastery – the desire to continually improve at something that matters
  • Purpose – the desire to do things in service of something larger than ourselves

Is Extrinsic Motivation Effective?
Extrinsic cash incentives have long been used in the workplace to motivate employees to work harder, faster and better. It was believed that these extrinsic incentives would raise the level of employee engagement and performance while helping to build a culture of high and talented achievers.

But are incentives truly effective? Do they work?

  • Pay, Bonuses, Commissions and Profit-Sharing – Experts say to be wary of using monetary incentives to increase employee engagement. A meta-analysis in the Journal of Vocational Behavior found that there is less than 2% overlap between pay and job satisfaction levels.  We believe extrinsic monetary rewards are most effective when the tasks they reward have a specific cause-and-effect outcome and require drive and focus.
  • Praise – Most research on praise asserts a 5:1 ratio of positive to negative praise and interactions motivates and occurs on high performing teams.  Our Best Places to Work data tells us that employees who receive positive recognition are more productive.  So authentic, warranted and proportional praise appears to be an effective performance motivator in the right circumstances.

Is Intrinsic Motivation Effective?
Research shows that for more complex tasks, intrinsic motivation helps to drive 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 demotivating; the work becomes dependent on the prize and when the award disappears along with 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 a complex task, intrinsic motivators can and should provide the drive to succeed.

The Bottom Line
Incentives can be an important component of a healthy and high performance culture if they are carefully matched to your strategy, your unique workplace culture, specific situation and the task itself.   Most rewards are best used for discretionary effort, not work that is expected.  As for more complex tasks that are enjoyable on their own, be careful not to undermine the natural intrinsic motivation.

To learn more about helping your employees to perform at their peak, download Top 5 High Performance Culture Warning Signs that You Should Not Ignore

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