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 effects of different motivational behaviour is difficult to derive. Motivation can be categorized in intrinsic and extrinsic motivation. Intrinsic motivation relates to satisfying a personal need, where 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. In general, 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. Still both types of motivation need to be combined to derive the best results. .

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. The goal for this article is to analyse the topic of extrinsic motivation, to derive how to enforce and use extrinsic motivation on the managerial level to achieve a good outcome. .

Background

Extrinsic motivation is a tool to raise the motivation by the use of external resources. This can be a salary raise, or punishment for instance. In this context special focus will be put on how to motivate employees to deliver good sustainable work. Extrinsic motivation is a performance-related pay, which is executed by many companies. Since, a trend arises, of individual shaped rewards, this theory finds again more recent importance. 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. Also, intrinsic behaviour has to 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 room of application for extrinsic motivation is more clearly, when dealing with a target, that can be easily defined and measured. In case of an intangible result, intrinsic motivation is a better approach. "Management by motivation means selecting the most appropriate combination of intrinsic and extrinsic motivation.” (Frey)

When dealing with this topic, there has to be said, that the application of extrinsic motivation is limited, due to other more important 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. The way of motivating has changes on a management level. To get a wholistic picture of the tool, aspects, such as psychology or economics 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. (Bruno S. Frey· Margit Osterloh (Editors) Successful Management by Motivation Balancing Intrinsic and Extrinsic Incentives 2002) Another side effect of globalisation and digitalisation is the importance of data and knowledge. 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 extrinsic reasons.

It is undeniable, that the right motivation is leading to great success for a company. Highly motivated employees achieve better results. 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 in order to meet goals the best. Extrinsic motivation is almost always a tool to fulfil another preceding need. From the salary, that you get at the end of the month, you will most likely invest a great amount, to satisfy another need. Therefore, extrinsic motivation comes 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.

Field of application

On the managerial perspective, the theory of motivation can be described as a tool. The challenge of using the tool 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 being in charge of your own motivation is strongly reduced, when suddenly another person marks all your actions, 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 are always quantifiable, 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 has to be achieved in the end. As mentioned before intangible resources such as knowledge are less likely to be shared by employees who follow an extrinsic motivation approach.

The appropriate motivation should be considered in a preceding step, HR should evaluate which type of employee would fit in a specific position when recruiting new employees. Questions should be asked like: Is the position high in demand for extrinsic or intrinsic motivation and is the person fitting in that mixture of motivation? The challenge for each manager is to find out, weather their employees are more motivated by salaries (extrinsic motivation) or if the employees react better to internal factors, which can be identification with common vision and values (intrinsic motivation)? After clarifying that, a mixture of both has to be aligned in the motivation strategy, where the right proportion of participation, demands and individual-working has to be found and added. 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.

Challenges of study

When applying extrinsic behaviour, there are a few practical limitations, that need to be considered. Each employee reacts different to 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 by the use of 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. Another risk of monetary motivation arises, when the performance deviates from the monetary equivalent. In this case it can not be assured, that the situation will be abused, and the higher payment will be taken, without adequate performance that would justify the salary raise. When a team is given extrinsic motivation, it is hard to identify the individual’s contribution and therefore justify the rewards according to performance. Finally, the theory does not find so much application in present business. Very few recent sources deal with this topic. It seems a little outdated to research about, or it might be due to difficulties to catch the effect of motivational changes.

Motivation mix

Apply the correct mix of motivaiton

A broad framework on how to apply the right mix of motivation for each scenario, considering the preceding limitations.

Annotated bibliography

1. Sansone, C. and Tang, Y., 2021. Intrinsic and extrinsic motivation and self-determination theory. Motivation Science, 7(2)

2. 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).

3. Kuvaas, B., Buch, R., Weibel, A., Dysvik, A. and Nerstad, C., 2017. Do intrinsic and extrinsic motivation relate differently to employee outcomes?. Journal of Economic Psychology, 61, pp.244-258.