Motivation: Extrinsic and Intrinsic

Leaders gain their followers’ allegiance by adopting two different but complementary approaches associated with extrinsic and intrinsic motivation.

On the one hand, they can offer salary, perk benefits, incentives and promotion prospects, leading people to rationalize and assess benefits and costs (rational commitment). On the other, they resort to a sense of duty and engagement with the organization’s mission (normative commitment and affective commitment) that contribute to enhancing the meaning of work.

Good management navigates between these two forms of compensation: the monetary, to feed the body, and the non-monetary, to feed the soul. Leaders seek loyalty, generate enthusiasm, provide a vision and drive and induce employees to work hard. But to accomplish these objectives, often they employ financial rewards linked to productivity records and follow rigorous formal procedures for selection and promotion. This way of behaving relies on extrinsic motivation but may prevent reaching the inner drives of people’s motivations.

Extrinsic Motivation

Motivation is extrinsic when triggered by a stimulus external to the individual. It may be a prize or a punishment (commonly referred to as the carrot and the stick). Extrinsic motivation compels people to perform a job in exchange for something desirable (money, power, recognition or other benefits) or to avoid something unpleasant that imposes a pain or a cost, like unemployment. Monetary compensation induces behavior. In these cases, people’s initiative and engagement are not the focus of attention. Money alone doesn’t buy the passion, enthusiasm and intelligence of people.

Yet motivation increases with financial rewards. Fulfilling financial and economic needs is an indispensable aspect of wellbeing and human survival. Satisfaction at work comes from monetary rewards and prospects of a job that allow people to advance personal growth. Both are relevant forms of extrinsic motivation but have limits. Eventually, after a certain income level, money is no longer significant as a motivating factor (Chamorro-Premuzic, 2013).

When people are moved mainly by extrinsic motivation and expect to receive monetary rewards in exchange for completing tasks, there is risk involved. Their performance may be lower than that of people who expect nothing in return. According to Kohn (1993), “Monetary payment is not a motivator.” It may ensure temporary submission without producing a long-lasting change in terms of attitudes and behaviors. In a knowledge-intensive environment where specializations and higher intellectual sophistication are needed, individuals who work exclusively to pursue financial rewards are out of touch.

Rewards and punishments are not substantially different from each other, because in both cases, the behavior results from rudimentary forms of manipulation and operational conditioning. “Rewards are like punishment” and “deteriorate relations”, because competition for awards or recognition has a high potential to obstruct cooperation among coworkers (Kohn, 1993). Also, relationships between supervisors and followers can collapse under the weight of monetary incentives, since employees may feel tempted to hide problems from their superiors to forge an image of success to show to those who control the incentives.

Also, “rewards discourage risk-taking” (Kohn, 1993) as those who work for the reward try to minimize the uncertainties associated with exploring new possibilities and, as a result, attempt to avoid facing unknown situations.

Finally, “rewards undermine interest” (Kohn, 1993). It means that no incentive can match the power of intrinsic motivation. When the job focuses only on what the person can earn, or the financial reward obtained, the conclusion is that the employee finds the work so unattractive that only a monetary payment can compensate it.

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