One of the most cliché questions asked when trying to understand if someone likes their job is, “Would you still work if they didn’t pay you?” It is very much on-point to create such a scenario; taking money out of the equation is an accurate way to understand if someone has intrinsic motivation to work, or if they do it simply because they have to make a living. When the reward is something as fundamental as money, which we not just want but also need to maintain our lives, it becomes difficult to differentiate whether we are doing what we are doing because we like it or because we need to. Thus, both psychological and economic studies have been trying for decades to find the right answer to the question:
“What motivates us to work?”
Although it has been highly contested in the last decades that money is the most effective motivator for people to work, over 40 years of surveys conducted between 1946 and 1992 demonstrate that for an overwhelming amount of employees, ‘good wages’ have been the top motivator (Wiley, 1997). Moreover, contrary to popular belief, motivation didn’t evolve from extrinsic to intrinsic over time; it was found that when compared to the ones in 1946, workers in 1992 were even more extrinsically motivated.
Then came the new millennium, and the meaning we adhere to work has significantly changed over the course of time. Especially with the emergence of corporations and more complex jobs that require specific cognitive skills beyond manpower, work also became a beacon of social status; not just a simple means of making a living. Therefore, money became insufficient, and even detrimental, to serve as the sole motivator for people to work. It was then established that motivation is something that goes beyond money, and intrinsic motivation is key to ensure steady work performance.
What is the difference between the two types of motivation?
Psychological studies tell us that there are two types of motivation; intrinsic and extrinsic. Intrinsic motivation refers to an individual’s desire to perform a task for its own sake (Benabou & Tirole, 2003). In other words, the task itself is rewarding for the individual, and the desire to complete it comes from within. Extrinsic motivation, on the other hand, is commonly defined as a ‘contingent reward.’ The individual is motivated to perform a behavior or engage in an activity either to earn a reward or to avoid punishment. Though usually used interchangeably, money is not the only type of extrinsic motivation; a sense of achievement, the need to feel successful, the desire to have power and influence others, etc. are also extrinsic motivation types. In short, anything that is not related to the task itself can be classified as the latter.
But do they really make a difference?
Now you may ask whether the type of motivation actually makes a difference. Isn’t it enough that no matter what, one is motivated to complete the task? The answer is simply no. Daniel Pink calls these external incentives ‘if, then rewards’: If you do this, then you get that. He adds that there are inherent dangers to such incentive mechanisms, especially for long-term goals, for we cannot see the finish line yet. In other words, while such incentives are effective in providing enough motivation to complete short-term, algorithmic tasks, they also narrow our focus to ‘reaching the finish line.’ It becomes difficult for us to deepen our perspective and solve complex problems if a reward is tied to the outcome. Accordingly, many experimental studies prove that extrinsic incentives might not only dampen our intrinsic motivation but also damage our creativity skills (Amabile et al., 1986).
This goes in line with the famous example of the little girl taking violin classes (Deci & Flaste, 1995). The gifted child was eager to learn new, complex pieces only until she was introduced with ‘gold stars’; a symbolic reward for a certain amount of time and effort spent practicing the instrument. After being presented with the reward, the little girl’s goal shifted to receiving the reward instead of improving her skills by working on complex pieces. For that, she started to play only easy, well-earned pieces to get her gold star.
How incentive mechanisms kill our intrinsic motivation to work?
The theory that extrinsic incentives can kill our intrinsic motivation is called ‘motivation crowding theory’ in psychology and microeconomics. It actually goes against the very core of neoclassical economics, which is based on the idea that the more you pay someone, the more production you get. In that sense, it forms one of the most critical anomalies in economics, as it suggests the opposite of the most fundamental economic law, that raising monetary incentives increases supply (Frey & Jegen, 2000). Today, however, it is not possible to define work in such a simplistic way. As the working conditions changed dramatically within the last two years, it is now known that a hefty paycheck is not going to be enough to ensure employees don’t quit: The Microsoft Work Trend Index (2020) findings show that %41 of the global workforce is likely to consider leaving their current employer within the next year. The number is even higher (%54) for Gen Z (Forbes, 2021). Why, then, even the biggest companies with excellent benefits are sweating to motivate their employees to stay?
It is presumably because such external incentives are not just inadequate to ensure employee motivation; they are actually harmful. What psychology points out is that if the external incentive is perceived as ‘controlling’ by an individual, her self-determination and self-esteem get impaired. It creates a feeling of overjustification and unappreciation on the individual’s side, as the chance to display her own interest and desire to be involved gets taken away. Therefore, the incentive diminishes the value of the task in the individual’s eyes, especially if she feels like her competence and involvement by itself is not appreciated.
Should employers then take rewards out of the picture altogether?
The answer is, again, predictably no. When incentives are categorized as tangible and intangible, it is found that intangible ones can have a positive impact on intrinsic motivation. Deci and his co-workers (1999) find that while tangible rewards have a significant adverse effect on intrinsic motivation for interesting tasks, verbal rewards have a significant positive effect on intrinsic motivation.
Such rewards do not crowd out intrinsic motivation as they are more unexpected, and they create a sense of ‘support’ for the individual. The overall conclusion for the use of rewards in the real world is that they are able to control people’s behavior, which is presumably why they are so widely used and advocated. For that, it is neither possible nor necessary for employers to take them out of the picture altogether.
“The best use of money as a motivator is to pay people enough to take the issue of money off the table.”
To motivate employees, Pink coins that money should be used as a means to ensure fairness. When employees feel that they are being paid fairly, both inside their organization and compared to other organizations, the first obstacle to willingness and creativity is lifted. Money, however, creates a necessary but not sufficient baseline to ensure motivation. Pink suggests that there are three key aspects to employee motivation; purpose, mastery, and autonomy. If employees feel like their organization is making a contribution to a meaningful end that is in line with their personal goals, if they are given opportunities and feedback to make progress in this meaningful work, and if they have autonomy and control over what they do; their motivation and performance get significantly better.
“Autonomy — Our desire to be self-directed. It increases engagement over compliance. Mastery — The urge to get better skills. Purpose — The desire to do something that has meaning and is important. Businesses that only focus on profits without valuing purpose will end up with poor customer service and unhappy employees.” Drive: The Surprising Truth About What Motivates Us (2009)
What does this mean for leaders and organizational culture?
It is proven that the incentive mechanisms we have in today’s economic system are not enough to provide motivation and ensure employees’ well-being. The whole organization’s chance to survive gets affected if its employees’ willingness and performance are under question. We have enough evidence to show that individuals cannot be seen as rats following cheese in a maze; there is a complexity that lies behind their motivation to work. For that, new mechanisms need to be designed that provide intangible rewards to employees.
That complexity can be addressed if leaders are careful and considerate about the visibility of their employees’ work. Establishing new rituals and feedback mechanisms can help change the conversation. Taking the different dimensions of intrinsic motivation into account and adjusting your organizational culture accordingly might be the solution if you want your employees to take initiative and be creative in their work. It is crucial in the long run that employees see the outcome of their work getting recognition and that they feel they are of help to others while doing what they are doing.
When all these aspects come together, work will not feel like work, and the organization will become a ‘great place to be around’ not just for the employees but for everyone.
Amabile, T. M., Hennessey, B. A., & Grossman, B. S. (1986). Social influences on creativity: The effects of contracted-for reward. Journal of personality and social psychology, 50(1), 14.
Benabou, R., & Tirole, J. (2003). Intrinsic and extrinsic motivation. The review of economic studies, 70(3), 489–520.
Deci, E. L., & Flaste, R. (1995). Why we do what we do: The dynamics of personal autonomy. GP Putnam’s Sons.
Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological bulletin, 125(6), 627.
Frey, B. S., & Jegen, R. (2000). Motivation Crowding Theory: A Survey of Empirical Evidence, REVISED VERSION. Working paper series/Institute for Empirical Research in Economics, (49).
Pink, D. H. (2011). Drive: The surprising truth about what motivates us. Penguin.
Wiley, C. (1997). What motivates employees according to over 40 years of motivation surveys. International journal of manpower.