Extrinsic Motivation in the Workplace

Abstract

This article explores the concept of extrinsic motivation that are used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. In order to better understand extrinsic motivation, the article also debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. Following this, the article covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. These types are analyzed, and examples are provided to show how a company’s performance can be optimized. The article concludes that companies should be careful when making use of extrinsic motivation as this might impact the intrinsic motivation of the employees. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also tries to fulfil the employee’s psychological needs in order to maintain the intrinsic motivation of theirs.

Introduction

Extrinsic motivation is an impactful tool that companies use in order to increase the productivity and performance of the employees. In contrary to intrinsic motivation, extrinsic motivation is driven by external factors, which could either be a punishment or reward. The rewards can be tangible which could be in the form of bonusses or intangible which could be things such as recognition. The rewards or punishments are intended to motivate individuals to perform and drive them towards a satisfactory result, incentivizing them to increase their level of engagement. However, an organization has to be careful as extrinsic motivation will increase short-term motivation, but at the same time possibly decrease the intrinsic motivation over time.

Extrinsic Motivation

In order to understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist, began studying reinforcement theory. The reinforcement theory builds upon the assumption that an individual’s behavior can be shaped through the consequences of its actions. This means that behaviors or actions that are followed by a positive consequence, are more likely to occur again, whereas behaviors followed by a negative consequence are less likely to happen again. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors, reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. The intangible rewards are non-physical and refers to emotions and psychology. Examples of this would be recognition, sense of accomplishment or praise. The tangible rewards are physical and refers to items or objects. Examples of this would be salary, bonusses or gifts. If one wants to decrease the likelihood of a certain action repeating itself, the other category of extrinsic motivation can be applied, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or a loss of privileges.

Application

Self-determination theory

When applying extrinsic motivation, one must also pay attention to how it affects the individual’s intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT, an individual has three different psychological needs to be intrinsically motivated: autonomy, competence and relatedness. If one of these basic needs are not met, people may experience a reduction in their intrinsic motivation as it can result in frustration, loss of interest or being disengaged in their work. If a person lacks autonomy in their work, it could be caused by things such as having little to no control over their tasks, the decisions made or their schedule. This could be caused by being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful. An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, this could be due to lack of training or them being unfamiliar with it. This can cause the employee to doubt his abilities and feel like they are underqualified for the task which can lead to frustration and feeling insecure. An example of lack of relatedness could be if an employee feels disconnected from their coworkers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”. When looking at different forms of extrinsic motivation, SDT specifies four different forms that are seen on figure 1 . These include external regulation, introjection, identification, and integration. There is an x-axis which shows the degree of self-determination. This means that the further the type of motivation is to the left, the more extrinsically motivated it is and the further it is to the right the more internalized and self-determined the motivation is.

External Regulation

Looking at external regulation, it is seen that it is located the furthest to left of the four. This mean that it is the one with the lowest degree of self-determination. External regulation is also the one which is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual chase a reward or avoid a negative consequence. An example of a reward could be that a 3rd grader is doing his homework because his parents told him that he will get a couple of dollars if he completes it. Here, the kid is extrinsically motivated to do his homework, as he wants to use the money. This could also be used as an example for a negative consequence. If the parents told the 3rd grader that he could not use his PlayStation for a week, if he did not hand in an assignment, it would motivate the child to do the assignment because he does not want to lose his PlayStation for a week.

Introjected regulation

This type of extrinsic motivation makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside in form of emotions and feelings. An example of this could be a person is asked by his mom to spend time with an elder relative on a Friday evening because the elder relative enjoys his company. Even though the person does not necessarily need to spend time there, the person does it anyways because they know they would feel guilty for not doing so. Here, the pressure to spend time with the elder relative is external, coming from the mother. However, it is also internalized as the sense of guilt is now present. This shows that external pressure can be internalized and drive a certain behavior.

Identified regulation

This type of motivation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, they must do to obtain the goal, they start identifying themselves with the behavior resulting in self-determination. An example of this could be a salesperson who is motivated to exceed his given sales quota for every month as he knows it will result in a bonus. He knows this bonus is important to afford a much-needed vacation with his family which makes him work hard, even though he might not find his job very enjoyable. Here, the outcome and the personal value attached to it, motivates the salesman.

Integrated regulation

This type of motivation is the furthest to the right on the x-axis on figure x, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulations, the individual’s behavior has not only been regulated, but the individual has also integrated the behavior and thrives in it. An example could be that a person always has enjoyed playing the piano but started taking lessons in order to please their parents. Through countless lessons and time, they have, however, started to enjoy the music they play and also to feel success when performing well. The result of this is that playing the piano then has become an integral part of the person’s identity and they will continue to play the piano, even when the external pressure from the parents is not there. This means that the pressure is now from internal factors instead of external ones as they have grown to enjoy it.

Limitations

Overjustification effect

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, the overjustification effect must be considered. The overjustification effect refers to a reduction in intrinsic motivation due to external rewards thus representing a potential negative consequence. In 1971 , Edward Deci documented this effect through experiments . The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving anything. Once this happens, it will become more difficult for the person to perform the given activity without being externally motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivator. In the long run, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to a decreased intrinsic motivation for the task in the future.

Timing of reward

An organization can attempt to minimize the overjustification effect in several ways. First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, it is offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of being the primary goal for the task.

Purpose of reward

Another thing an organization must pay attention to is the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork instead of the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

Purpose of reward

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees, it will make them feel appreciated and not just like a small cog in a large wheel.

Risk of creating a bribing mentality

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward which could be a bonus, whenever they complete the given task. However, after some time the employee might start to expect a reward every time, they complete a task. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and at the same time is aligned with the values of the employees. Extrinsic motivation should first of all be used when the productivity of an employee needs to be increased or when an employee is not naturally motivated for the task. Another way to apply it is to make a repetitive and uninteresting task more engaging for the employee, by offering them a reward for completing the task. Overall, one should not solely depend on extrinsic motivation as the employee will also need the rewards to become bigger with time. Extrinsic motivation should be combined with intrinsic motivation for the best outcome.