Intrinsic motivated activities are defined as ones for which there is no apparent reward except the activity itself. People with intrinsic motivation engage in activities for their own sake and not for getting rewarded extrinsically . Though it is not always possible to distinguish between intrinsic and extrinsic motivation. When a person goes for a run for pleasure, he does it for the physical training or the peer group recognition and therefore also with extrinsic motivation. It can be said that intrinsic and extrinsic motivation go hand in hand. The way how to differentiate the two is whether a goal being pursued just to achieve another, where the first goal loses inherent value.  One of the key principles for effective leadership of a project manager is to motivate his stakeholders. Successful project managers have the ability to create an environment where people are satisfied by successfully fulfilling important tasks instead of earning rewards. 
The following article describes intrinsic motivation in the context of project management, how it can be created and why intrinsic motivated people within the project management are key strategic resources when it comes to competitiveness 
First form of intrinsic motivation
In the first form of intrinsic motivation, the activity itself is a source of satisfaction . An example for that is when key stakeholders want to be part of a certain project team because they derive pleasure from fulfilling their deliverables for this project. Fulfilling the assigned tasks and the project goals are equally important to intrinsic motivated stakeholders.
Second form of intrinsic motivation
Another example of people with intrinsic motivation is the matter of meeting standards for their own sake. Employees can extract great productivity from being member of a highly organized and fair project team (team spirit). When project leaders fail to meet standards of material and procedural fairness, the productivity of stakeholders will fall. 
Third form of intrinsic motivation
The third form of intrinsic motivation comes nonetheless from achieving a goal which one has set to oneself. An intrinsically motivated member of a project team is going to want to deliver his tasks successfully even though it might not be enjoyable. A comparison to sports would be a mountain climber who set his goal to climb a mountain, nevertheless how painful it might get. The goal of reaching the mountain peak will keep the climber motivated along his journey because the pain will be worth it once reaching the top of the mountain. 
Fostering intrinsic motivation within project management
The ultimate goal of a project leader is to create a project environment with intrinsically motivated people only. The process of creating this form of motivation can be a very difficult job since a project leader has to deal with many different and complex personalities. There is no formula for creating intrinsic motivation for your stakeholders. Key to arising intrinsic motivation within a project team is the combination of a project leaders’ self-determination, competence, fairness and transparent way of working. For a project leader it is difficult to satisfy everyone individually with his way of managing and leading. Over time some persons are going to need more attention in order to foster new intrinsic motivation. It is easier to destroy the stakeholders working spirit than to encourage it. An intelligent way to foster new intrinsic motivation if needed are extrinsic ad-hoc rewards. Project leaders can use the instrument of short-term extrinsic rewards in order to lift up the team spirit again. Setting up new unknown goals to motivate the stakeholders to fulfil deliverables on time can be key to keeping the moral high. An example for that can be a project team after-work activity on the projects’ costs if certain expected deliverables are met on time. The project leader is willing to pay a price for its team to be extrinsically motivated to fulfil their deliverables. But the reward is much bigger than a high probability of on-time deliverables. A team gathering can lift up the team spirit and make stakeholders realize that being part of the team is bigger than the pain in fulfilling tasks on time.
The Crowding-Out Effect
As explained above intrinsic motivation can be fostered by offering extrinsic rewards in some cases. But project leaders walk a thin line between fostering intrinsic motivation and lowering the overall motivation. The crowding-out effect or motivation crowding theory explains the phenomena of undermining intrinsic motivation due to providing extrinsic incentives for certain kinds of behaviour – such as promising monetary rewards for accomplishing deliverables. Lowered motivation mostly results in an overall decrease in the performance of a project .
Example of Crowding-Out Effect
The motivation crowding theory can best be illustrated by the following old Jewish fable:
An elderly Jewish man who had opened a tailor shop on Main Street was harassed by a group of rowdies in order to get rid of him. The angry mob came to his shop every day to shout at him and make him feel uncomfortable. At one day he started to reward the people harassing him by giving each and every one of them a dime. Delighted, they shouted their insults and started to move on. On the next day the mob showed up at the same time to shout, expecting a dime for their actions. But the elderly tailor man said he could only reward them with a nickel this time and proceeded to hand a nickel to each of the men. They seemed disappointed, but they took the nickel, did their jeering and left. The day after they arrived again but the tailor now only had a penny for them and held out his hand. That action led to the angry mob being disappointed and proclaiming that they would certainly no spend their time jeering at him for a penny. So they didn’t and left the scene. The tailor never encountered any harassment from that point. 
Crowding-Out Effect within Project Management
To bring the example shared above in a project management context it can be ascertained that the crowding-out effect creates a relationship between extrinsic and intrinsic motivation. With that being said, activities being carried out for its own sake (intrinsic) can be undermined or even corrupted by external (extrinsic) intervention.  In a project environment with many different stakeholders, a successful project leader is able to foster intrinsic motivation and get people to accomplish their tasks without having extrinsic rewards. Introducing an extrinsic reward system at some point of the project can serve to increase the stakeholders’ motivation. Nevertheless, introducing a bonus system may also backfire in some situations. Team members begin to feel that the project leader attributes their good work not to their personal commitment but to the fact that their performance is being monitored. That results in stakeholders being more interested in the extrinsic reward system than in performing well for their own and the projects’ sake. The following two figures explain the mechanics of these two phenomena.
Figure 1 illustrates how a project stakeholder puts in effort A1 into delivering his or her tasks. Provided that there is no crowding-out effect, a bonus with the value of B will increase the stakeholder’s effort from A1 to A2 with S being the motivation curve. This effect is called the price effect.  The bonus could be anything from a team event to a monetary reward, nevertheless it has to be an extrinsic reward. This figure shows the optimal outcome for a project leader when applying an extrinsic reward to foster the motivation in order to increase the performance and effort of a project stakeholder. It is the project leaders’ challenge to place the bonuses strategically at the right times. If not, stakeholders begin to lose interest as a result of the bonus scheme and the associated control. The extrinsic rewards become more important than the self-fulfilment of a team member. In other words, the stakeholders’ intrinsic motivation has diminished, as shown in figure 2.
The motivation curve for efforts shifts from S to S’. As a result, the effort falls to A3. In this case, the price effect from A1 to A2 is outweighed by the crowding-out effect from A2 to A3. But not in all cases the crowding-out effect has the same effect on the effort. Figure 3 illustrates that the intensity of the crowding-out effect plays a huge role on the motivation. A weak crowding-out effect shifts the motivation from S to S’’. The applied bonus increases the effort from A1 to A4. However, it is still doubtful whether an applied reward system results in higher project productivity of the stakeholders and a better project performance. In this particular scenario though, greater effort more likely have the effect of highly motivated stakeholders and therefore on-time and on-quality deliverables. 
To summarize the above mentioned, the crowding-out effect can be seen to counteract the price effect. For a project manager leading a team of many different-thinking stakeholders it is very difficult to forecast whether the price or the crowding-out effect will predominate if an extrinsic reward is introduced. The personality of each stakeholder plays a big role on the outcome. But before introducing a bonus system, it is essential for the project leader to have created intrinsic motivation beforehand, otherwise there would be nothing to undermine. In the case of straightforward activities where intrinsic motivation is often rare, there will be no recognizable crowding-out effect.
The typical study of crowding out asks subjects to complete some task either for payment or no payment. Researchers then look to self-reported measures of motivation for completing the task, willingness to complete additional rounds of the task for no additional compensation, or both. Removing the payment incentive, compared to those who were never paid at all, typically lowers overall interest in and willingness to complete the task. This process is known as "crowding out" since whatever motivation for the task that previously existed—as estimated by the control condition that was not offered compensation for the task—has been crowded out by motivation merely based on the payment. 
When it comes to fostering intrinsic motivation within project management project leaders get confronted with many difficult decisions and limitations. As stated above, in most cases project leaders need to find a way to create intrinsic motivation in order for the project to be successful. However, under certain circumstances, extrinsic motivation is also indispensable. Motivation should always meet the objectives of the project. The aim is to engender intrinsic motivation per se which ensures a coordinated stakeholder effort in keeping with the projects’ goals and deliverables. But the concept of intrinsic motivation can be limited by stakeholders who are used to working for extrinsic rewards only. It is very difficult to motivate a stakeholder intrinsically, when his goal is to deliver tasks just to be rewarded with extrinsically. If the project leader tells this stakeholder that he needs to achieve his deliverables without any extrinsic rewards, the stakeholder might not be as efficient and goal-driven as he used to be in previous projects.
Another limitation is the fact that not everyone can share an immediate passion for a certain project. These kinds of stakeholders are struggling to get started with their tasks and can quickly loose interest in the topic. Or even worse, they might not want to be part of the project team at all.
Furthermore, the so called “overjustification effect” is another limit when it comes to intrinsic motivation.  An example for that is a stakeholder in aircraft wing engineering project who enjoys optimizing aircraft wing production processes in order to achieve a higher wing quality. He gets motivated intrinsically by the challenge to find ways to optimize current processes. If that engineer gets asked to be part of a project team in a wing optimization project, he is going to have to deliver results at certain deadlines. The engineers’ motivation could be limited by the fact that he is given instructions to fulfil is enjoyable tasks. That would lead to limiting his creativity and his full potential can’t be exploited. Motivating project stakeholders in the right way is a key instrument for every stakeholder in order to be successful. Experience, structure, transparency and empathy are things that a good project leader needs to own. Structure, experience and transparency can be gained over time, but empathy is an emotion that every good project leader needs to own.
The annotated bibliography describes the most relevant references used in this article. These references can be used for a deeper understanding in the subject of Intrinsic Motivation within project management.
1. E. L. Deci, Intrinsic Motivation, New York: Springer US, 1975. This book offers an insight into the topic intrinsic motivation in general. It is based on psychological facts and theories detected by Edward L. Deci. Though the book does not give insights into intrinsic motivation in the project management aspect, many striking parallels can be found between Edward L. Decis’ examples in the book and motivation within project management.
2. Bruno S. Frey, Margit Osterloh, Successful Management by Motivation: Balancing Intrinsic and Extrinsic Incentives, Springer-Verlag Berlin Heidelberg, 2002. This literature gives in-depth insights into project management styles by motivation. The reader is able to understand why intrinsic and extrinsic incentives are key to successfully leading companies, projects, programs or portfolios. It explains the importance of intrinsic motivation as a function of management and why extrinsic motivation is nevertheless indispensable.
3. Project Management Institute, A guide to the Project Management Body of Knowledge (PMBOK guide) (6th edition), 2017. This book is a fundamental resource for effective project management in any industry. It explains how over the years, business has changed considerably, but projects remain critical drivers of business success. The guide includes The Standard for Project Management. The standard is the foundation upon which the vast body of knowledge builds, and the guide serves to capture and summarize that knowledge. It also explains solutions for project delivery professionals across the entire spectrum of approaches — from predictive to adaptive.
4. E. Deci, R. Flaste, Why We Do What We Do: The Dynamics of personal Autonomy, New York, 1996. This book is about human motivation and is organized around the important distinction between whether a behavior is autonomous or controlled. The aims of this book are to examine the relation between autonomy and responsibility and to reflect on the issue of promoting responsibility in the project management world.
- ↑ 1.0 1.1 E. L. Deci,(1975), New York, "Intrinsic Motivation".
- ↑ 2.00 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09 2.10 Bruno S. Frey, Margit Osterloh,(2002), Springer-Verlag Berlin Heidelberg, "Successful Management by Motivation: Balancing Intrinsic and Extrinsic Incentives".
- ↑ Project Management Institute,(2017), Project Management Institute, Inc. (PMI), "Project Management: A guide to Project Management Body of Knowledge".
- ↑ Bruno S. Frey, Margit Osterloh,(2002), Springer-Verlag Berlin Heidelberg, "Successful Management by Motivation: Balancing Intrinsic and Extrinsic Incentives".
- ↑ E. Deci and R. Flaste,(1996), New York, "Why We Do What We Do. The Dynamics of personal Autonomy".
- ↑ Psychology Iresearchnet (2021). Overjustification Effect [online]. Available: http://psychology.iresearchnet.com/social-psychology/control/overjustification-effect/ (Accessed: 02/21/2021).