View source for Extrinsic motivatoin: How to balance motivation?

==Abstract==


Motivation is an important tool, when managing projects, teams, and companies. Since motivation is intangible and rather complex, the direct effect of different motivational behaviour is difficult to derive from varying management styles.
Motivation can be categorized in intrinsic and extrinsic motivation. Intrinsic motivation relates to satisfying a personal need. An individual acts out of personal reasons, which can be enjoyment for example. Extrinsic motivation on the other hand is rooted in behaviour, that is enabled by external sources, such as pressure or reward. 
The outcome of both types of motivations differs quite a lot depending on the environment. Due to several studies, intrinsic motivation is to be seen as the more successful one in the long run. 

Whereas extrinsic motivation is limited applicable and can have negative side effects when it is used in the wrong way. One motivation type does not occur without the other one, and people´s motivation is defined by a mixture of both, rather than just one. Therefore, both types of motivation need to be combined when enhancing motivation by management, to derive the best results.
<ref name="ref1"> Ryan, R. and Deci, E., 2020. Intrinsic and extrinsic motivation from a self-determination theory perspective: Definitions, theory, practices, and future directions. Contemporary Educational Psychology, 61, p.101860. </ref>
<ref name="ref2"> Sansone, C. and Tang, Y., 2021. Intrinsic and extrinsic motivation and self-determination theory. Motivation Science, 7(2) </ref>.

Promoting motivational behaviour to a certain amount result in a particular outcome. The challenge lies in achieving a sustainable positive outcome with the possibly best mix of motivation. In this article the topic of extrinsic motivation will be analysed, to derive how to enforce and use extrinsic motivation on the managerial level to achieve a positive outcome.
<ref name= "ref3"> Narasimhan, K., 2002. Successful Management by Motivation: Balancing Intrinsic and Extrinsic Incentives20022Edited by Bruno S. Frey and Margit Osterloh. Successful Management by Motivation: Balancing Intrinsic and Extrinsic Incentives. Springer‐Verlag, 2002. 299 pp., ISBN: ISBN 3‐540‐42401‐6 £33.00 (hardback). The TQM Magazine, 14(2) </ref>.

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==Background==


Extrinsic motivation is mainly enabled by external resources. In other words, a person is motivated to do a task due to external reasons such as pressure or obligation rather than by self-determination. This can be a salary raise, or punishment for instance. Extrinsic motivation can be a performance-related pay, which is applied by many companies. Since, a trend arises, of individual shaped rewards, this theory finds again more recent importance. When dealing with this topic, there must be said, that the examination of extrinsic motivation is limited, due to other factors, that play a role in motivation. For example, employees align more value in identifying their personal interests with the company’s vision and mission, rather than being motivated by monetary arguments or status. As mentioned before, it is inevitable to draw a comparison to intrinsic motivation, when examining the model of extrinsic motivation. Intrinsic motivation is the heterogenous counterpart of extrinsic motivation. 
<ref name="ref4"> Project Management Institute, Inc. (PMI),(2021). Pennsylvania. A Guide to the Project Management Body of Knowledge </ref>

Also, intrinsic behaviour must be explained to differentiate both from each other. Intrinsic motivation is related to fulfilling a personal need or goal. In comparison to extrinsic behaviour no external influence is used. 
The way of motivating has changes on a management level. To get a wholistic picture of the model different aspects, such as psychology or economic, must be considered. The development of the world market, identified by globalisation and changing in employee behaviour, also due to current global pandemic has led to many changes in the environment in which people want to work.
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As a side effect of globalisation and digitalisation data and knowledge management gained significant importance. Both can be gathered more easily and must be shared in a company internally to be of best use. As a result, a trust-based approach for a company culture is more important. The employees should be motivated on their own to exchange knowledge internally and not due to external pressure solely. <ref name= "ref5"> T. Biemann, 2020. Motivation und Mitarbeiterleistung: PQ State of the Art. Haufe </ref>
Extrinsic motivation is in most cases the basis to fulfil another ensuing need. The salary, that is acquired at the end of the month, a great amount will be invested to satisfy another need. Therefore, extrinsic motivation origins from the need to satisfy indirectly another need, that is not related to work or the task that an employee is dealing with. As a result, the preceding effect becomes less important since the value is put on fulfilling another need. 
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Several sources state the coexistence of extrinsic and intrinsic motivation to be direct compromise between those two. Both types of motivation need to be followed to meet the defined goals best. It is undeniable, that the right motivation is leading to great success for a company. Highly motivated employees achieve better results. Thus, special focus will be put to clearify how to motivate employees to deliver good sustainable work. 

===Project Management===
Project management can be described as the planning, controlling and designation of a project, which includes the motivation of all the individuals, that are involved in the project. Further, while planning, the adherent set expectations and goals must be met. 
A new formed team consists of individuals, who are widely varying in skills, interests, and experience. This temporary work environment is defined by a multi-disciplinary team, where several experts of different subjects are working together. What unites the team is the common shared goal of the project. To achieve this goal, it is crucial that the team works together although their differing perceptions. As a result, there are different drivers for motivation for each involved person, that must be considered to achieve an overall good performance and thus accomplishing the goal.<ref name=ref4></ref> As Frey sates in his study of motivation, management by motivation can be described as: "Management by motivation means selecting the most appropriate combination of intrinsic and extrinsic motivation.” <ref name=ref3></ref>

===The Power of creativity===
Motivation is linked to creativity when it comes to tasks, that rely on the creation of new ideas and solutions. A working environment, that enforces creativity is more likely to simultaneously motivate its employees in their individual way of working. Therefore, the power of creativity is a desired state for a team or project manager. Especially in fast developing areas and departments, where new ideas are of most importance to reach the goal and tasks are of high complexity. 
While considering, that each person is stimulated uniquely, the potential for creativity has to be enabled with rather divers actions since it is a psychological barrier that will be overcome individually. 
Due to a statistic of Berth and Kienbam <ref name="ref6">Berth R., Kienbaum J., 1993. The Return of Innovation 1993. An Evaluation of 116 enterprises and business units. Aufbruch zur Überlegenheit</ref> only 24% of new ideas come up in a working environment. As a result, the creation of a creative supporting climate in the working environment is of most importance. For instance, ideas which are not suitable on first sight should still be further examined, since they could turn out useful. 
<ref name="ref7"> Züst, R. and Troxler, P., 2006. No more muddling through. Dordrecht: Springer</ref>

So, it is of great magnitude to establish a working environment, that enables the creation of new ideas. A general understanding of the importance of creativity should be rooted in each person. Time, that is invested in investigating these ideas is not wasted. In the next step, new solutions will be derived quickly and developed with less effort. It might seem, that creative methods are not sufficient to establish new potential solutions. So, it is of more use to further examine these ideas with the help of analogies, to systematically categorize the usefulness, instead of withdrawing them too early. <ref name= ref7> </ref>

==Categorisation of Extrinsic Motivation==
[[File:Taxonomy of Motivation.jpg‎|frame|right|250x230px| Taxonomy of Motivation <ref name="ref10"> own figure, Niklas Johannes Thiele (2022)</ref>, based on <ref name=ref1></ref>]]

People following extrinsic motivation can be roughly decategorized in either person who look to improve their status and people who seek to maximize the salary. <ref name=ref3></ref> However further categorisation needs to be done. Forthcoming, the self-determination theory needs to be explained before further subcategorizing extrinsic motivation. Self-determination theory concerns the motivation and at the same time the adherent personality of people, that refers to the motivation of people´s actions. When applying this theory to extrinsic motivation, there are four subtypes of extrinsic motivation that emerge. Each of the four subcategories is in the frame between amotivation, and intrinsic motivation, while the level of internalization rises from on to the next.

External regulation is behaviour, that is strongly depending on external rewards, such as monetary rewards or punishment. Typical characteristics are strict observation and lack of autonomy.
Introjection defines an extrinsic behaviour, that is moved to a low part by internalized rewards, but still highly remains depending on external inputs. As a tendency, people categorized in this type are rather internal-controlled.
For the type of identification, a person, as the title says, identifies actively with the task that is being given. The reason can be multiple, and motivation is rather extrinsic, than intrinsic based. The working style is related to a controlled way, while autonomy is starting to rise to a greater extend. <ref name=ref1></ref>

Integration is the most autonomous version of extrinsic behaviour. Characteristics are strong identification with the activity and high level of volition. <ref name=ref4></ref>
Summing up the subcategorization of extrinsic motivation, every person will most likely be represented by more than just one category. It is most likely that multiple origins of motivation define a person. Thus, it is not possible to simply examine one of the main motivation theories, without addressing the counterplay part.

==Motivation Models==

Motivation Models describe in which way people perform better when they are motivated in the right way. The motivation can be tailored for each individual and therefore several reasons for motivation must be considered, when managing a team of varying individuals.  
One famous model from Frederick Herzberg describes the motivational factors in working life. The “Hygiene and Motivational Factors” states, that different motivational factors called conditions results in higher job satisfaction and thus in bigger success. On the other side lack of motivational factors results in dissatisfaction and thus in lower individual performance. 
On one side there are the motivational factors, that must deal with the content of the work or task. Examples are personal realisation, cooperate improvement or other achievements.
The complementary part is the hygiene factor, which can be described as the corporate framework. The physical environment, as well as the salary, company´s vision and general policies are included in the hygiene factors. Similar to denying motivational factors, neglecting this factor leads to dissatisfaction, and as a consequence performance is lowered. Yet, it must be mentioned that it is not a sufficient factor for success. Solely focussing on one factor does not necessarily lead to more satisfaction.
<ref name="ref8">Pink, D., 2009. Intrinsic motivation. London: Business Plus</ref>
  
Coming back to the interaction of intrinsic and extrinsic motivation. As Daniel Pink examined <ref name=ref8> </ref>, extrinsic motivation is mostly the initiator for performance, but loses significance over time. In detail, a salary is motivating to a certain extent before intrinsic factors start to overtake in importance. As a result, intrinsic motivation is the longer lasting motivation with a sustainable effect.  <ref name=ref4></ref>

===Theories/ Different Scenarios===
With the help of Douglas McGregor model, a great spectrum of employees can be categorized. Based on three different theories, representing different types of motivational factors, matching management styles can be derived. The theories can be aligned on a scale that is like the subcategories of extrinsic motivation. An imaginary axis with rising self-determination and level of internalization can be drawn. The basis for the model is subjective observation of the situation as well as the team since motivation is a psychological depending factor. <ref name=ref4></ref>

====Theory X====

Theory X represents the spectrum of individuals, that are highly driven by monetary reasons. As a result, motivation to achieve further goals than necessary are relatively low. 
A management style for this theory should follow a top-down approach, where the power remains at the top level and decisions are made by the top level without too much inclusion of the lower levels in the process of decision making. This theory is typically applied in operational and low-complexity intense tasks, like production lines.

====Theory Y====

The Y side of McGregor´s theory contains individuals, that are motivated intrinsically. Rather free from external factors, the corresponding group is doing a task for the satisfaction that is aligned, instead of external pressure or consequences. 
For this category a management style is proposed, that creates a good relationship to the employee with a customized relationship to the individual. A coach-like relationship enables this group to perform best. Examples can be found in environments, that are strongly defined by creativity and knowledge.

====Theory Z====

The last theory submerged later after the first two were established. With rising level of self-determination, the employees in this category are motivated by self-realization, agreement with the tasks and purpose driven factors. It is of great importance that the delivered values are aligning with the values of the individuals. 
The emerging management style should enable purpose to the tasks and motivate by creating an environment, in which the employee´s sake is in the main focus, as well as the social live. <ref name=ref4></ref>

==Managerial perspective==

The right motivation is of great importance for general leadership skills. To apply the right leadership style, it is not only necessary to identify the working- and team environment, but also to know the traits and actions which are aligned with leadership. Especially, since motivation is complex and relies on subjective observations. Maintaining the motivation as well as the commitment to the project high is an ongoing task of the team manager. 
Intrinsic motivation as an internal motivator on the one side and extrinsic motivation as a rewarding motivation on the other side forms a complete concept. Although it is unlikely, that people are motivated by just one of the two, everyone has a dominant motivator. It is the task of the project manager to identify this for everyone in the team. 
Managers, as well as companies need to use extrinsic behaviour to a certain amount. Salaries, as extrinsic motivation, are part of the working environment. This results in satisfaction of needs, such as status too. By creating an environment, where people can identify themselves to, more motivation to be part of this environment can be created. This is defined by the corporate identity and the working environment in each department. 
In practice a team leader has to take a reactive approach to enable the best performance. If a team can be identified as challenge motivated, then flexible goals are of high efficiency. For a team, that is motivated by the feeling of belonging, the creation of a dynamic working group enables high motivation. In a scenario of a team member, that seeks autonomy and thus an identification or integration type of extrinsic motivation, then an individually shaped working environment is of great use, that enables the member to organize most things on their own. Individually shaped motivation is the key to success in project management. <ref name=ref4></ref> 
<ref name="ref9"> 10.	Rickards, T., 1992. On Kaufmann's Review of Creativity and Problem‐Solving at Work. Creativity Research Journal, 5(4), pp.442-443.</ref>

To derive a tool for the managerial level, the right type of motivation needs to be examined in the first step. Also, the employees and the goals must be examined. On this basis, the correct management style, in correlation to team-motivational type can be applied. The challenge of using motivation is to find the fitting mix of extrinsic and intrinsic motivation for the current scenario. 
In the next step it is upon the employees, to be motivated and to maintain this motivation and share it with colleagues. 
When applying only extrinsic incentives, in any form of monetary motivation related to a performance of an employee, this can have negative effects on some people. For instance, if a person would have done the task anyway, and derives monetary driven motivation, then the intrinsic motivation can be undermined by this action. This is described as the crowding-out effect. The reason for this is, that the feeling of overseeing your own motivation is strongly reduced, when suddenly another person marks all your doings, as performance related actions. As a side effect, the moral and feeling of determining one-self is suffering. One of the few upsides is, that extrinsic behaviour can, in comparison to intrinsic behaviour, be more easily forced onto someone. 
Extrinsic motivation will form the way employees work. The goals can be quantified, so non-tangible effects are more likely to be neglected. Further, control will be another upcoming problem, since extrinsic motivation has a clearly defined result, that must be achieved in the end. <ref name=ref1></ref>

It has to be considered that decision have an effect on the whole department, so individuals’ preferences of motivation are neglected in some way. So, it could be worth to examine the type of motivation and task in advance before forming teams, to have the same motivational type of people in one team for the best result. The appropriate motivation should be considered in a preceding step for the process of hiring new staff. It could be worth to evaluate which type of employee would fit in a specific position when recruiting new employees. 
In the end, if companies want to use a correct extrinsic motivation approach, then the company must evaluate, if the obstacles, arising from undermining intrinsic motivation is worth it in comparison to the positive effect of the sanctions. 
<ref name=ref1></ref> <ref name=ref3></ref>

==Challenges of study==

When applying extrinsic behaviour, there are a few practical limitations, that need to be considered. Each employee reacts uniquely to a different type of motivation and the individuality of the situation makes it hard to make generalized frameworks. 
To measure the success of extrinsic motivation, there needs to be a clearly specified objective in the end. Tasks or problems, that are hard to define are less likely to be solved using extrinsic motivation. Further, when applying extrinsic motivation to such a situation then creativity can be limited as a side effect.
When coping activities and tasks, that demand creative thinking, then extrinsic motivations is strongly limited. It slows down the learning process and due to result oriented motivation creative thinking is suppressed. As a result, innovation and individual development are neglected. 

One risk of solely monetary motivation arises when the performance deviates from the monetary equivalent. In this case it cannot be assured, that the situation will be abused, and the higher payment will be taken, without adequate performance that would justify the salary raise.
The model of motivation is limited for teams. When a team is given extrinsic motivation, it is hard to identify the individual’s contribution and therefore justify the rewards according to performance. 
<ref name=ref3></ref>

==Annotated bibliography==

1. Project Management Institute Inc. (PMI) (2021), A Guide to the Project Management Body of Knowledge (PMBOK ® Guide) – 7th Edition and The Standard for Project Management, Project Management Institute, Inc. (PMI), Pennsylvania.

The book introduces the topic of motivation in holistic way, so intrinsic as well as extrinsic motivation is well discussed. The reading provides a general guide for projects from the managerial perspective, including decision actions and how to apply models. This book can be used to get a good overview on the topic of motivation.

2. Züst, R. and Troxler, P., 2006. No more muddling through. Dordrecht: Springer

Züst and Troxler focuse strongly on the essential methods, that are used and referred to, when creating a challenging system. Further, it gives practical application examples and shows how to efficiently embed the theory. The book can be used to get a rough overview on problem solving theory for various situations. It examines extrinsic and intrinsic motivation to a small extend.

3. Amabile, T., 1993. Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review, 3(3), pp.185-201.

Although being a not too recent bibliography, Amabile describes the whole concept of intrinsic and extrinsic motivation in the workplace in a broad way. This source can be used as an introduction in the topic, since basic elements of the theories of motivation have not changed significantly over time.

==References==

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