In the current global economy with its prevailing competitive environment, firms frequently determine that their employees are their overall most useful resource (Brickley et al., 2002). Firms’ organisational structure is heavily dependent on the workforce, which influences the organization through their engagement, attitudes and motivation (Bruzelius & Skärvad, 2004). The future of corporations depends on its employees, and the importance of human resources has been brought to centre stage, more than ever before (Bhattecharya & Mukherjee, 2009).
Whiteley (2002) describes higher motivation increases employee performance. However, getting employees to outperform during all conditions is one of the most difficult challenges managers are facing (Nohria, Groysberg & Lee, 2008). Accordingly, Bruzelius and Skärvad (2004) argued that to get employees motivated to work more efficiently and to support the company’s values and goals, they need to get compensated through rewards. Therefore, a reward structure should encourage skilled employees to stay within the organization as well as commit to the organization to increase productivity. (Brickley et al., 2002).
As of today, it is widely recognized that employees’ motivation and engagement depend on the perceived feeling of being fairly rewarded for one’s skills, knowledge and contribution (Whiteley, 2002). Accordingly, employees in the 21st century are searching for something more beyond just monetary rewards (Bhattacharya and Mukherjee, 2009). Further, Bhattacharya and Mukherjee (2009) described that it is not possible to retain employees only by paying high wages and offering attractive benefits.
It can explore traditional theories concerning rewards and emphasize the importance of extrinsic rewards. Further, during the last decades, the dominance of extrinsic reward theories has been complemented with theories stressing the importance of intrinsic rewards (Weinstein, N et al., 2011).
The two types of motivation, intrinsic and extrinsic motivation are an area that requires in-depth understanding as the motivational factors differ from one person to the other (Lei, 2010). Thus, effectively motivating employees requires an understanding of the different types of motivation. Accordingly, such an understanding will enable employers to better categorize team members and apply the appropriate factors to motivate different employees.
Intrinsic Motivators
Intrinsic motivation means the individual's motivational stimuli coming from within (Legault, L et al., 2007). Accordingly, an individual has the desire to perform a specific task, because its results are in accordance with his belief system or fulfil a desire and therefore importance is attached to it. Therefore, intrinsic motivation is the act of doing something without expecting any obvious external rewards but expecting internal rewards.
Extrinsic Motivators
Extrinsic motivation means that the individual's motivational stimuli are coming from outside (Deci, E. L et al., 2008). In other words, employees’ desires to perform a task are controlled by an external source. According to Deci (2008), the most well-known and the most debated motivational factor is money. Therefore, extrinsic motivational factors are money related benefits such as bonuses or commission, pay, life and health insurance, employee discount scheme and pension plan.
According to video 1.0 extrinsic motivation is doing something to get a reward from the external environment such as pay, awards and grades. Further, as stated in video 1.0 intrinsic motivation is doing something because employees enjoy doing it, not because of some sort of reward.
Video 1.0: Intrinsic and Extrinsic Motivation
Source: Learn My Test, 2019
Application of intrinsic and extrinsic motivational factors in different industries
I work for a leading company in the IT industry and it is clear that employees perform exceptionally well as they receive a competitive remuneration. Pay is important, but it is not the most important factor for motivating employees at this leading IT organization. There are some other important motivational factors that could motivate employee performance levels.
The organization ensures both intrinsic and extrinsic rewards take place to improve employees' performances. Thus, the organization offers opportunities for employee growth and career development such as foreign training, product training and relevant IT professional exams. Further, flexible time schedules enhance employee motivation. Additionally, the organization organizes the year-end award ceremony and annual get-together to maintain the work-life balance of the employees.
In the banking sector, it is required to promote its employees’ performance level by the use of different rewards. Specifically, hygiene factors such as the level of supervision and the physical work environment need to be acceptable and enjoyable by the employees or otherwise changed so that employees become more acceptable (Babakus et al., 2003).
In the manufacturing industry, regular expressions of appreciation by managers and product quality based promotions are used more than other intrinsic reward practices. Similarly, extrinsic rewards such as pay for overtime hours work and quantity-based performance appraisal practices are more widely used than other extrinsic reward practices (Bamberger et al., 2009).
The rightly motivated employees can take the organization to the next level. The competition has been increasing every day and along with that is increasing the need to attract and retain good employees (Abbah and Maryam 2014). This is only possible if intrinsic and extrinsic reward systems are systematically established and maintained within the organizations (Ahmadi and Alireza, 2007). Therefore, the only way to ensure the employees are retained and are able to perform their best is to ensure that they are motivated.
A lot of research has been done on various extrinsic and intrinsic motivational factors that affect the performance of the employees (Ran, B.2009). Therefore, it can be concluded that extrinsic and intrinsic motivational factors influence the performance of the employees.
Reference
Abbah, Maryam T. (2014). Employee Motivation: The Key to Effective Organizational Management in Nigeria. IOSR Journal of Business and Management, 16(4), pp 01-08.
Ahmadi K., and Alireza K. (2007).
Stress and Job Satisfaction among Air Force Military Pilots. Journal of Social Sciences, 3(3),
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Babakus, E., Yavas, U., Karatepe, S.M. & Avci, T. (2003). The effect of management commitment to service quality on employees’ affective and performance outcomes. journal of Academy of Marketing Science, 31(3Bruzelius), pp. 272–286.
Bhattacharya, S., Mukherjee, P. (2009). Rewards as a Key to Employee Engagement: A Comparative Study on I.T. Professionals, ASBM Journal of Management, II (1).
Brickley, J. A., Smith, C. W., Zimmerman, J. L., Willett, J. (2002). Designing Organizations to Create Value, McGraw-Hill Companies, New York.
Bamberger, P.A., & Levi, R. (2009). Team-Interdependent Team Members, Journal of Managerial Psychology, 24 (4), 300-327.
Bruzelius, L-H., Skärvad, P-H. (2004). Integrerad Organisationslära, Studentlitteratur, Lund
Deci, E. L., & Ryan, R. M. (2008). Self-determination theory: A macrotheory on human motivation, development, and health. Canadian Psychology, 49, 182–185.
Lei, S.A. (2010). 'Intrinsic and extrinsic motivation: evaluating benefits and drawbacks from college instructors' perspectives', Journal of Instructional Psychology, 37(2), 153.
Legault, L., Green-Demers, I., Grant, P., & Chung, J. (2007). On the self-regulation of implicit and explicit prejudice: A self-determination theory perspective. Personality and Social Psychology Bulletin, 33(5), 732–749.
Nohria, N., Groysberg, B., and Lee, L-E. (2008) Employee Motivation, A powerful New Model, Harvard Business Review, Vol. 86 (7-8), pp. 78-84.
Ran, B. (2009). Motivation. In C. Wankel (Ed.), Encyclopedia of business in today‟s Research in Personality, 42(4), 1109-1115.
Weinstein, N., Deci, E. L., & Ryan, R. M. (2011). Motivational determinants of integrating positive and negative past identities. Journal of Personality and Social Psychology, 100(3), 527–544.
Whiteley, P. (2002). Motivation, Chichester, U.K., Capstone Publishing.
Agree with your points. According to Weerasinghe (2006), job security, social needs ,recognition and supervisor characteristics strongly impact on employee motivation in private sector service organizations. In srilanka work place like a banking, its necessary that the employee motivation to handle a high work load.
ReplyDeleteDefinitely Dineth. Further, a flourishing firm always pays attention to make its workers more satisfied and enhanced their performance through rewarding them and reward system has been found as a strategy used by many organizations to
Deleteboost up employee performance and satisfaction (William, 2003).
Agreed with your points. Research report by (Ali and Ahmed, 2009), Describes that rewards and recognition directly affect the performance of employees. Organizations should implement promotion, increment of salaries, bonus and appreciation method to retain high performance employees.
ReplyDeleteHi Amila. Employee satisfaction is thought to be one of the primary requirements of a well-run company and considered an imperative by all corporate managements. Locke (1976) defined job satisfaction as “a pleasurable or positive emotional state, resulting from the appraisal of one’s job experiences (Avci, T. 2003).
DeleteHi Dileep, Further to your statement, Rewards and recognition are vital for organisations to acknowledge the employees for their performances using intrinsic and extrinsic ways (Cascio, 2006). In organisations, intrinsic rewards are considered work content, recognition, and job satisfaction, while extrinsic rewards are payments, promotions, and working conditions. In academics, reward and recognition and employee engagement are popular research areas where the scholars like Brown and Reilly (2013) research to examine the effects of rewards on employee engagement. It is noted that employee engagement is positively influenced by the reward strategies implemented in companies.
ReplyDeleteHi Nirmika, Appreciate adding information to my Blog. According to Nelson & Spitzer (2002), one of the best ways for managers to determine the top
Deletehygiene and motivating factors that boost work performance among employees would be through a trial and error method. In other words, if a factor implemented does not work, then the manager can simply look for another method instead (Waseemullah, 2010).
Hi Dileep. Adding to your points, as work motivation is mostly categorized into two types, as intrinsic and extrinsic motivation showing that different incentives have a distinct impact on employee motivation. Whereas intrinsic motivation is concerned with rewards as the activity itself, the source of extrinsic motivation are external controlling variables as explicit rewards (e.g. money, threat) (Herzberg, 2003; Cameron & Pierce, 2002). The specific focus on extrinsic motivation may distract attention from the task which has been termed as hidden cost of rewards (Osterloh et al., 2002)
ReplyDeleteHi Gihan, definitely yes, rewards were defined to include all types of benefits, from cash payments to working conditions. Organizations offer intrinsic and extrinsic rewards to members for the purpose of improving human resources outcomes (Mahaney, 2006). The reward system should be aligned to motivate employee performance that is consistent with the firm’s strategy, attract and retain people with the knowledge.
DeleteHey Dileepa, you have very well explained it. Adding to that The HR Team should clearly define how employees can earn their rewards. When employees have a comprehensive understanding of what is expected of them, they will be more capable and focused in achieving performance standards.
ReplyDeleteThanks for your comment Ijaz. Further, transactional rewards are tangible rewards and refer to any form of financial compensation (e.g., increase in base pay, bonus, monetary awards, and external training with certifications). Regarding transactional rewards, (Condly et al. 2003).
DeleteWell written Dileep. Relational incentives, in contrast to transactional rewards, are intangible. As a result, relationship incentives extend beyond monetary considerations. They include appreciation, acknowledgement, and performance assessment. Thank-you notes, hall of fame announcements, and magazine announcements are just a few examples. Such awards necessitate interpersonal skills and rely on managerial and collegial behaviour to create valued relationships. As a result of the personal component, it is suggested that relational rewards are more difficult for competitors to copy than transactional benefits. (Armstrong, 2012)
ReplyDeleteHi Janakan. Thanks for adding more points to my blog. Unlike transactional rewards, relational rewards are intangible. Thus, relational rewards go beyond financial considerations. They include praise, recognition, and performance feedback (Armstrong, 2012).
DeleteHi Dileep, Further intrinsic rewards increase feelings of self-esteem and accomplishment (Honig-Haftel and Martin 1993). Also according to Mottaz (1985) Intrinsic rewards are derived from the content of the task itself and include such factors as interesting and challenging work, self-direction and responsibility, variety, creativity, opportunities to use one’s skills and abilities, and sufficient feedback regarding the effectiveness of one’s efforts.
ReplyDeleteHi Ganitha. Thank you for your feedback. Intrinsic motivation is characterized by a strong valuation of personal investment and engagement Several meta-analyses have shown that the effect between intrinsic motivation and creative performance is significantly positive. The dynamic componential model of creativity and innovation in organizations also underlines this strong relationship theoretically (Ryan and Deci, 2017).
DeleteHello, Dileep. According to Kutza (2000), extrinsic incentives are still widely employed in many organizations for a variety of initiatives and performance, despite the fact that their impacts on employee involvement in areas such as personal well-being are often fleeting.
ReplyDeleteHi Isuru. Thanks for your comment. further, in earlier times, research on extrinsic motivation often supported a negative impact on intrinsic motivation and performance, commonly referred to as the crowding-out effect (Deci et al., 1999). Such crowding-out effects are becoming less dominant as extrinsic motivators receive more nuanced analyses.
DeleteAgreed with your comment Dileepa. Outstanding performers should never be paid less than their normal reward, regardless of organizational performance, and they should get substantially larger awards than do other managers (Garry Dessler, 1999).
ReplyDeleteHi Upeksha, Thank you for your concern about my blog. Motivation and performance are sometimes used interchangeably. This is a consequence of motivation explaining what employees do, and how hard and far they are willing to go to do something, and therefore it is commonly confused with an employee’s job performance (George, 2012).
DeleteThank you for your comment. when remote employees are working Communication is one of the most significant factors to keep teams motivated to work better. They shouldn’t feel isolated and lonely in their efforts to perform their duties. employees can interact with team subordinates via e-mail correspondence, chatting, or audio/video calls. (Deci, 2017).
ReplyDeleteGreat article, Organizations offer intrinsic and extrinsic rewards to members for
ReplyDeletethe purpose of improving human resources outcomes (Mahaney and Lederer 2006)
Definitely Surangi. Further. When employees feel like their employer values them as professionals and individuals, they are more likely to repay this investment through top performances, excellent work, and genuine engagement that will advance the culture and organization (Bamberger et al., 2009).
DeleteYes Dileep. As Intrinsic motivators blooms within and this was more effects on psychological facts such as achieving the personal satisfaction was positively effect on employee development as well for the organizational development (Benabou and Tirole, 2003). Rewards, recognitions will also help to motivate the employees as defines the extrinsic factors where this also made a positive impact on the organizational development (Legault, 2020).
ReplyDeleteThank you for your comment on my blog post. Intrinsic rewards are psychological rewards that employees get from doing meaningful work and performing it well. Can be created by allowing employees to do more self-managing and adding value to their work by innovating, problem-solving, and improvising (Armstrong, 2012).
DeleteAgreed with you Dileep , in country like Sri Lanka we do need Motivational tool to enhance the performance employee as there's such mechanism to self motivation in most of the organizations. Intrinsic motivation can be described as motivation by work it self,it is not created by external incentives,it provides employees reasonable freedom to act. Extrinsic motivation occurs when do rewards such as incentives,increased monthly salaries, promotion , disciplinary action, withholding pays or criticism(Armstrong,2014)
ReplyDeleteHi Manoj, Agreed with your comment on my blog post while adding According to a study conducted by Ahmad et al. (2010) employees are highly likely to feel ‘rewarded’ and ‘motivated’ when they know that they are able to get fair pay with regards to the amount of work that they do. In the study, the researchers stated that employees are particularly concerned about discrimination with regard to fair play, and this may hamper their motivation levels to do their job well.
DeleteI agree with above post. Along with them, intrinsic factors such as; recognition, skill variety, trust, fairness of treatment, work life balance, meaningful work, empowerment and task significance plays a part in employee motivation (Caroline, 2014).
ReplyDelete