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Intrinsic and Extrinsic Rewards

One day I was speaking with a business owner struggling to motivate her employees. She asked if offering some sort of performance bonus would help improve employee engagement and productivity. I told her that offering a bonus was certainly a possible element of a larger solution but that many studies have demonstrated that money is not always the most effective way of inspiring improved employee engagement. She nodded knowingly and said something interesting. “I’ve heard that and it makes sense to me, but I don’t know how to motivate any other way so I just keep coming back to money.”

I suspect that many of us are in the same position. Money is the easy default setting, not only from a business standpoint but from a societal culture perspective as well. It’s easy to quantify and compare, so it’s easy for us to gauge our position in the marketplace. It’s also a pretty straightforward unit of measure—X dollars for Y output.

Non-monetary-based motivation and reward mechanisms, on the other hand, are much more difficult to design, implement, sustain, and measure. For example, studies have shown that employee engagement increases when jobs are designed to be interesting and meaningful. Well now how to we quantify and measure “interesting” and “meaningful?” What if the job is not by its nature alone very interesting or meaningful, at least on its surface? How do you keep a job interesting and meaningful over time? These are not easy questions to answer for any employer. So really it’s no wonder that we run back to money each time we want to motivate our employees.

The problem is that at some point money ceases to motivate and, in some cases, even becomes a demotivator. It all comes down to a balance between intrinsic and extrinsic motivation. Intrinsic motivation is what drives us to do things just for the love it the activity. We’re not paid; in fact we often pay others for the privilege of participating in the activity. How much have you earned fly-fishing, restoring cars, playing an instrument, competing in triathlons, volunteering for social causes, or cooking gourmet meals? Probably not a cent, and yet you’ve invested immeasurable time, money and passion in developing and exercising these competencies. Extrinsic motivation, by comparison, is when we rely on external motivators to drive us to action. This includes money, benefits, position, and so on. You know the saying “you couldn’t pay me to do that?” That’s essentially saying that there’s no amount of external reward that would conjure up the least bit of passion for the activity. For some of us the work we do has struck just the right balance of external rewards to keep us in place. Consider the question of if you won the lottery today, would you show up to work the next day? With the need for money removed, it would be hard for many of us to provide enough intrinsic reward for our employees to keep them on the job.

And that’s what a non-monetary-based motivation and reward model is all about; tapping into and employee’s intrinsic motivation. When an employee cares about the work just for the work’s sake then you’ve opened up a whole new possibility of employee engagement.

 

References

Gagné, M., & Forest, J. (2008). The study of compensation systems through the lens of self-determination theory: Reconciling 35 years of debate. Canadian Psychology, 49(3), 225-232. doi: 10.1037/a0012757

Vansteenkiste, M., Neyrinck, B., Niemiec, C. P., Soenens, B., De Witte, H., & Van Den Broeck, A. (2007). On the relations among work value orientations, psychological need satisfaction and job outcomes: A self-determination theory approach. Journal of Occupational & Organizational Psychology, (80)2, 251-277. doi: 10.1348/096317906X111024

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