Extrinsic Motivation in The Workplace: All You Need To Know in 2024

Extrinsic motivation in the workplace is a powerful tool for driving employee motivation and achieving organizational goals.

While motivation comes from within, driven by personal satisfaction and passion, you do not always have the control to foster intrinsic motivation in every employee. This is where extrinsic motivation steps in, providing external incentives like bonuses, promotions, and recognition to inspire action and commitment.

By strategically implementing extrinsic motivators, employers can create an environment that not only enhances productivity but also aligns employee efforts with the company's objectives.

In this article, we explore the various forms of extrinsic motivation, their benefits, and how to balance them with intrinsic motivators for a more engaged and motivated workforce.

What is Extrinsic Motivation?

Extrinsic motivation is when an individual's actions are driven by external factors rather than internal satisfaction. In a workplace setting, this could involve performing tasks to receive rewards like -

• salary,
• bonuses,
• promotions, or
• to avoid negative consequences such as disciplinary actions.

The focus is on the external outcome rather than the enjoyment or interest in the task itself. This type of motivation is essential in shaping workplace behavior and can significantly influence employee engagement and productivity.

What is Extrinsic Motivation Psychology?

The psychology behind extrinsic motivation involves understanding how external incentives can influence behavior. It is rooted in behavioral theories such as -

• Operant conditioning, where rewards and punishments shape actions
• Incentive theory of motivation, where people are motivated by a drive for incentives and reinforcement

In the workplace, extrinsic motivation can be crucial in setting performance standards and encouraging employees to achieve specific goals.

Let’s have a look at the different types of extrinsic motivation in the workplace.

Types of Extrinsic Motivation

Extrinsic motivation can be categorized based on the nature of the rewards. Understanding these types helps in effectively designing motivational strategies in the workplace.

According to a study by daVinci Payments, 79% of employees indicated that receiving more recognition and rewards would increase their loyalty to their employers.

A. Based on Reward

1. Tangible Rewards

Tangible rewards are physical or monetary incentives that employees can see and touch. These include:

• Financial Incentives such as salary increases, bonuses, commissions, and profit-sharing plans can be considered tangible rewards. These rewards directly impact an employee's financial well-being.

• Non-cash benefits like health insurance, retirement plans, and paid time off are another form of tangible rewards as they enhance the overall compensation package.

• Physical items like gift cards, merchandise, vacations, or other goods awarded as recognition for achieving specific goals or milestones can also be categorized as tangible rewards.

2. Intangible Rewards

Intangible rewards are non-physical and often psychological, impacting an employee's sense of value and belonging. These include:

• Recognition, such as being named "Employee of the Month," receiving praise during meetings, or through internal communication channels, are intangible rewards. A study by Deloitte reveals that 85% of professionals desire to hear "thank you" regularly in their day-to-day interactions.

Source: Vantage Rewards

• Advancements in job titles, leadership roles, or increased responsibilities are also intangible rewards. These are strong motivators, offering a sense of achievement and career progression.

Recommended Resource: 50 Rewards And Recognition Ideas To Boost Employee Recognition

B. Based on Behavior Modification

Behavior modification in the workplace involves using different strategies to influence and change employee behavior. The incentive theory of motivation can be applied here. This theory suggests that external rewards and punishments can cause an employee to behave in a certain way.

Using the incentive theory of motivation, we can categorize extrinsic motivation into three main types: positive reinforcement, negative reinforcement, and punishment.

1. Positive Reinforcement

Positive reinforcement or positive incentive involves rewarding desired behavior to increase the likelihood of it recurring. For example, an organization might provide bonuses, promotions, or public recognition to employees who exceed performance targets. These rewards not only acknowledge the employees' achievements but also motivate others to strive for similar recognition.

Example: A sales team receives cash bonuses and a "Top Salesperson of the Month" title for achieving the highest sales, encouraging continuous effort to meet and exceed targets.

2. Negative Reinforcement

Negative reinforcement or negative incentives involve the possibility of undesirable consequences if certain behaviors are not followed. These incentives discourage undesirable actions by highlighting the potential negative outcomes.

Formal warnings or reprimands, financial penalties or deductions from pay, etc., are used to discourage undesirable employee behaviors.

Example: An employee who consistently fails to comply with the standard company policies might receive a financial penalty.

3. Punishment

Punishment is used to remove undesirable behaviors by introducing negative consequences. While this method can be effective, it must be used carefully to avoid creating a negative work environment.

Example: An employee who repeatedly delivers poor performance or fails to meet ethical standards might face consequences such as demotion or even termination. These actions aim to deter unwanted behavior and ensure compliance with company standards.

4 Major Benefits of Extrinsic Motivation in the Workplace

Extrinsic motivation can have a profound impact on workplace dynamics, leading to several key benefits for both employees and the organization.

1. Increased Productivity

When employees are motivated by external rewards, they are often driven to work harder and more efficiently. This can lead to higher levels of productivity as employees strive to meet or exceed the targets set by their employers.

For example, sales teams may be more motivated to achieve their quotas when they know they will receive a commission or bonus for their efforts.

2. Improved Performance

Extrinsic motivation can significantly enhance overall employee performance. By offering tangible rewards or recognition, companies can encourage employees to improve their skills, take on more challenging tasks, and maintain high performance standards.

This is especially effective when performance metrics are clearly defined, and employees understand the link between their efforts and the rewards they receive.

3. Enhanced Employee Satisfaction

Extrinsic rewards can also contribute to higher levels of employee satisfaction. When employees feel that their hard work and contributions are recognized and rewarded, they are more likely to feel valued and appreciated.

This recognition can lead to a more positive work environment, reduced turnover, and greater job satisfaction.

For instance, providing recognition programs, such as "Employee of the Month," can boost morale and show employees that their efforts are noticed.

4. Stronger Employee Engagement

Engagement is crucial for maintaining a motivated and committed workforce. Extrinsic motivation can play a significant role in enhancing employee engagement by providing clear goals and rewards for achieving them.

Engaged employees are more likely to be invested in their work, participate in company initiatives, and contribute to a positive workplace culture.

For example, performance-based incentives can encourage employees to take ownership of their roles and align their efforts with the company's objectives.

Examples of Extrinsic Motivation in the Workplace

Extrinsic motivation can be applied in various forms to encourage and sustain employee engagement and performance. Here are some key examples:

1. Financial Incentives

These include direct monetary rewards like salary, bonuses, commissions, and profit-sharing plans. They provide immediate and clear incentives for achieving specific performance targets or company goals.

2. Benefits

Health insurance, retirement plans, and paid time off are non-cash benefits that contribute to overall compensation. These benefits enhance employees' financial security and well-being, making them feel valued and secure in their roles.

3. Prizes and Awards

Offering tangible rewards such as gift cards, merchandise, or vacations can be highly motivating. These are often used to recognize exceptional performance or achievements, providing a visible and memorable acknowledgment of success.

4. Recognition

Public praise, awards ceremonies, or being named "Employee of the Month" are powerful motivators. Recognition satisfies employees' psychological need for appreciation and respect, boosting morale and encouraging continued effort.

5. Status and Promotion

Advancements in job titles or leadership positions can be significant motivators. These rewards acknowledge past achievements and provide opportunities for career growth, which can be a strong incentive for employees to excel.

6. Avoidance of Negative Consequences

In some cases, motivation comes from the desire to avoid negative outcomes, such as demotion, termination, or disciplinary actions. This type of motivation encourages compliance with company policies and performance standards.

7. Performance-based Pay

Linking compensation directly to specific goals or metrics, such as sales targets or project completions, incentivizes employees to focus on achieving measurable outcomes.

8. Employee of the Month Programs

Recognizing outstanding contributions with titles or special acknowledgments fosters a culture of appreciation and friendly competition among employees.

9. Company-sponsored Events

Social gatherings, team-building activities, and company outings provide opportunities for employees to relax and bond, fostering a positive work culture and reinforcing a sense of belonging.

10. Flexible Work Arrangements

Offering options like remote work or flexible hours can serve as a significant motivational factor. These arrangements help employees manage work-life balance, reducing stress and increasing job satisfaction.

Is Extrinsic Motivation Bad?

So far, we have talked about the importance and psychology behind extrinsic motivation, its types and benefits. But is there a negative impact of using extrinsic motivation in the workplace?

While extrinsic motivation can be effective in driving behavior, it has potential downsides that organizations should be aware of. Let’s see what they are.

Can Decrease Intrinsic Motivation

Overreliance on extrinsic rewards can diminish intrinsic motivation, where individuals perform tasks out of genuine interest or personal satisfaction. When employees focus too much on external rewards, they may lose sight of the inherent enjoyment or fulfillment the work provides, leading to decreased passion and creativity.

Focus on Rewards, Not the Task

Extrinsic motivation can shift the focus from the quality of the work to merely achieving the reward. This can result in employees prioritizing short-term gains over long-term development, leading to a decline in work quality or ethical standards. For example, employees may cut corners or engage in unethical behavior to achieve targets and secure rewards.

May Not Be Sustainable

Extrinsic motivation often requires continuous reinforcement. Without ongoing rewards, employees might lose motivation quickly. Additionally, the effectiveness of extrinsic rewards can diminish over time, requiring increasingly larger incentives to achieve the same level of motivation. This can become costly and unsustainable for organizations in the long run.

The Extrinsic vs. Intrinsic Debate

The debate between extrinsic and intrinsic motivation centers around which form is more effective in promoting long-term engagement and satisfaction. Extrinsic motivation involves external rewards or punishments, while intrinsic motivation arises from internal satisfaction or enjoyment.

Balancing Extrinsic and Intrinsic Motivation in the Workplace

Balancing extrinsic and intrinsic motivation is crucial for fostering a well-rounded and motivated workforce. While extrinsic rewards like bonuses and recognition can drive immediate performance, intrinsic motivation leads to deeper engagement and long-term commitment.

Employers can cultivate this balance by:

• Linking extrinsic rewards to employees' personal values and career goals can enhance intrinsic motivation. For example, offering professional development opportunities can satisfy both extrinsic and intrinsic needs.

• Ensuring that employees understand the significance of their roles and how their work contributes to the organization's goals can enhance intrinsic motivation. This helps employees find personal satisfaction in their tasks.

• Encouraging Autonomy or allowing employees to have a say in their tasks and decision-making processes can increase their sense of ownership and intrinsic motivation. Autonomy fosters a sense of responsibility and personal investment in the work.

• Fostering a positive workplace culture can enhance both extrinsic and intrinsic motivation. Recognition programs, transparent communication, and opportunities for growth contribute to a more motivated and engaged workforce.

In the End

Extrinsic motivation plays a vital role in shaping workplace behavior and achieving organizational goals. While it offers significant benefits like increased productivity, enhanced performance, and stronger employee engagement, balancing it with intrinsic motivation is essential to ensure long-term satisfaction and commitment.

By aligning external rewards with personal values and fostering a positive work environment, employers can create a motivated and dedicated workforce.
Ultimately, the strategic use of extrinsic motivation can lead to a thriving, productive workplace that supports both individual and organizational success.

FAQs

1. What is an extrinsic reward?

It is a reward (tangible/intangible) that helps in motivating an individual to do a particular task.

2. What is an example of an extrinsic reward?

Praise, Fame, Good grades, Salary, Bonus, Gifts, etc.

3. What is the difference between extrinsic and intrinsic motivation?

Extrinsic motivation is induced by an external reward, while intrinsic motivation is inherent in an individual. They perform the task not for the reward but for inner satisfaction. It makes them feel internally rewarding.

4. Who can give Extrinsic rewards?

Anyone can give extrinsic rewards. It can be peers, managers, parents, friends, juniors.

5. Are extrinsic rewards mandatory in an organization?

No, extrinsic rewards are not mandatory. But when offered, it sure does help improve the efficiency and productivity to a great deal.

This article was co-authored by Nilotpal M Saharia and Namrata Borgohain, who work as marketers and specializes in content marketing, international marketing, and HR journaling at Vantage Circle. For any queries reach out to editor@vantagecircle.com.