How do Intrinsic Motivation and Extrinsic Incentives affect Workplace Performance?

As much as we would like a simplified approach or an easy theory that explains motivation, in reality, it gets a bit more complicated. Where the research stands today is that intrinsic motivation and extrinsic motivation interact with one another. Both matter, each can influence the other, both influence performance and feelings.

In that spirit of conclusiveness let’s share the two core findings straightaway:
1. “Intrinsic motivation remains a moderate to strong predictor of performance regardless of whether incentives are present.”
2. Clear extrinsic motivations disincentivize teamwork and creativity

Key Takeaways on Workplace Motivation

In analyzing the study, we’ve pulled a few quotes that provide the basis for practical applications to help managers:
- "Extrinsic motivation, meaning the use of very clear incentives, “narrows cognitive focus, strongly encourages existing behaviors, and intensifies behavior toward a goal”
- “As incentives become larger … teamwork and creativity will be disincentivized, intrinsic motivation and its importance to performance will be crowded out, and unethical or counterproductive behaviors may become more likely”
- “Tasks that are straightforward, highly repetitive, and perhaps even less inherently enjoyable, should be more closely linked to extrinsic incentives. For example, linking pay to performance has been found to improve productivity on relatively straightforward tasks, such as tree planting…”

There pieces of info are great, but there are also other, more nuanced findings to consider:

- “Basing an entire salary on attaining objectives can lead to lower well-being and counterproductive behaviors.”

What was really interesting from the study is rather than finding that incentives are not effective, it was actually the opposite. Incentives are too effective!

- "Gender plays no discernible role to intrinsic motivation"
In other words, intrinsic motivation is gender neutral. The benefits intrinsic motivation brings to individuals and teams are the same for women and men.

- “Older respondents averaged not only higher levels of intrinsic motivation but also somewhat higher levels of performance compared to younger workers.”

In Conclusion
For now, the takeaway is that for “complex jobs that require judgement and intense personal investment” intrinsic motivation is best.
Whether it be an individual academic study or a meta-analysis of hundreds of studies the importance of intrinsic motivation to create meaningful work is clear.

Through intrinsic motivation we want to help managers predict what types of outcomes their systems will create for their teams. To solve the age old organizational problem of how to increase productivity and how to boost morale, think about motivation intrinsically.







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Understand what really motivates your team. Make unseen values visible.
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