Extrinsic vs. Intrinsic Motivators

So now we’ve talked about the first two models of human motives or motivation at work. We talked about Maslow’s hierarchy of needs, and the implication for you around how do you leverage the needs and values that people have and create rewards that align with those to motivate performance. We talked about Hertzberg’s two-factor model of hygiene factors and motivating factors, and how to leverage the hygiene factors to make sure people are not dissatisfied at work. But then also how to leverage those motivating factors to ensure that people are motivated, engaged, and want to contribute to the team the organization and really go above and beyond. Now what I’d like to do is transition to this third model of human motivation.

And this really is DC and Ryan in the 1990s and 2000s, where they identified the fundamental and very important difference between extrinsic motivators and intrinsic motivators. And so let me give you a couple of examples. On the extrinsic motivator side. Money, for example, is a classic extrinsic reward. Badges, for example, when you get a badge or an award. For example, the gold star effect, we call it. And organizations clearly are using money to motivate people. But there are very high profile organizations that are also using badges for example to motivate people. Amazon is a great example.

Where on Amazon’s internal IT computer system on the employee profiles you can go on and see any employee in the company and for their performance on different projects, different work assignments, and so on. Their managers can actually, and their peers even, can divvy out or give people badges or the equivalent of gold stars. And when you go and you look at any individual’s profile within Amazon, you can actually see the badges and the gold stars, if you will, that they’ve collected. And employees in the organization take a lot of pride in the collection of these badges and gold stars. And so that’s a great example of an organization who’s using these badges and gold stars to actually motivate employees.

Now for that to work and not seem, childish, if you will, is the employees really have to buy into the system. And so a lot of organizations will actually have the employees create the badge or the gold star system. So they’re bought into it as opposed to the lead manager or the CEO or someone like that creating the system and dictating it down through the organization. That’s an example of a practice you probably want to come from the bottom up. Other examples of extrinsic, the titles you give individuals, the corner office, things that really represent status in that regard. Those are great examples of extrinsic motivators. That organizations around the world use to motivate performance.

But those are all things that are outside of us that the organization is doing to motivate our performance. Extrinsic, if you will. At the same time, there are what DC and Ryan have talked about, as intrinsic motives. And these really are the needs and values that we talked about, as part of Maslow’s hierarchy. For example, I might value autonomy, or another word for that would be control. I want to have control over the work I do, and being able to make my own decisions. And those sorts of things. Belongings, something Maslow talks specifically about, the need or the want to be part of a community, or something bigger than myself.

Other examples that we’ve looked at in our research, curiosity, love even, or the desire to learn and grow, mastery. Or, ultimately, something we’ve talked about already, and will continue to do so, is the value of meaning, meaning in work. Why is my work important? What’s the significance of it? These are all examples of intrinsic motives. Values and needs that I have that organizations or you as a manager, you as a team member, can actually leverage to motivate someone. And so what I wanna do is share with you some of the latest cutting edge research that we’ve been doing on the importance of extrinsic and intrinsic motives.

There are a lot of myths out there in terms of should we use extrinsic motives? Should we use intrinsic motives? How do they combine? And so I want to talk about some of the key questions that often come up in my consulting and my teaching and my research around the balance of this extrinsic versus intrinsic motivators and the source of motivation. One of the first questions that often comes up, I do a lot of work with organizations that have really large sales forces. And it’s often assumed that the salespeople in the organization, whether it be pharmaceutical schools or technology that the salespeople are really the only thing they care about is the money.

Their salary, their bonus at the end of the year. And certainly on average we find in our research that salespeople to care about money or the extrinsic rewards. On average, more than most. But, it’s not all they care about. Let me share with you this study where we looked at 94 life insurance salespeople. This is a mid-sized insurance company in the United States. And we looked at 94 of the sales representatives, who were selling life insurance.

We assessed their intrinsic and extrinsic motivation for performing, and those two intrinsic and extrinsic motivation combine to explain 49% of their sales performance on the job so the value of understanding someones intrinsic motivation and understanding what drives them in terms of their extrinsic motivation is hugely important for understanding drivers of performance. But the interesting thing from this study that was published in the Journal of Marketing was the importance of the intrinsic relative to the extrinsic. What you see here is that the intrinsic motivation was actually 44% greater in its impact on sales performance relative to the extrinsic motivation.

That’s a huge difference. And so when you think about salespeople, don’t simply assume that all they care about is the extrinsic motivating forces. Salary, recognition, status, etc. They do care about those aspects but they also on average care a lot about the intrinsic motives and interestingly if we’re predicting their actually sales performance, the intrinsic motives are actually much more important in determining whether or not someone sells this much, this much, or this much. And so you want to pay particular attention to what’s driving someone intrinsically when they’re in sales, not only extrinsically. Another question that I often get is can extrinsic rewards actually be de-motivating? And, the simple answer is yes.

You can actually undermine someone’s intrinsic motivation, their innate desire to contribute. Their need or their want to make a difference through their work. You can actually undermine those intrinsic motives by focusing exclusively or really emphasizing the extrinsic rewards. Here are the results from one of my favorite studies to illustrate this effect, Mirayama and colleagues, in the proceedings of the National Academy of Sciences back in 2010 published a study where they brought people into a laboratory. And they designed a simple task, but a really interesting and engaging task, using a stopwatch.

And what they did is they had a control group, where they asked people to do the task but they didn’t associate any formal extrinsic reward to the performance of that task. And then they had another condition where they randomly assigned people to these conditions, and that was the reward condition. And in this reward condition they explicitly tied to people’s performing the interesting and engaging task with a stopwatch to a reward, where based on your performance in the task you would receive financial compensation. And what was fascinating is they had multiple sessions, and in each of these sessions, there was a period where people could voluntarily play, or engage in the test.

So remember, this is an interesting task using a stopwatch. And they gave people an opportunity, essentially free time, to determine or to choose, rather, whether they want to engage in this task. And fascinating. The people who were in the control condition, where there was no reward, attached to their performance on the task, actually volunteered to perform or play the task many more times than the people who actually had a formal incentive, a formal reward, linked to their performance on the task. And so this is discretionary effort. You want someone in your team to go above and beyond their formal job duty. You want them to volunteer to go above and beyond.

The more you link a very explicit financial reward to the performance of that behavior, the less likely you’re actually going to get it. That is a revolutionary insight that really shapes how we might motivate people using extrinsic rewards and intrinsic rewards, and so one conclusion that I want you to draw from this, is that rewarding people for an intrinsically interesting task, a task that, either naturally or because the person is naturally attracted to that type of work. If the person is intrinsically motivated to perform that task, and you emphasize the extrinsic rewards associated with them performing that task, you’ll actually undermine the discretionary effort that you might be seeking. And that’s a really important insight.

Now, it’s not only that you’ll undermine their effort on the task but you’ll actually undermine their performance as well. So this is from that same study. And Murayama and colleagues actually looked at how well people performed this stopwatch task. And what you actually see here is that people in the reward condition, the first time in the first session when they engaged in a task, they actually perform better. So there’s a short term win to that financial incentive. But then look at session two. The performance drops dramatically relative to the control where there was no financial incentive. And so you wanna think about the use of these financial incentives.

Whether you need the short term benefit or whether you have a long term need. And one conclusion from these data is that you might get a short term benefit due to the reward. But you might actually undermine their performance and their effort as you go forward.

And one of the most fascinating aspects of this study, at least for me, was and colleagues didn’t stop with just assessing people’s performance or how much they engaged in the task. They actually used FMRI machines to take radiological scans of people’s brain activity as they performed these tasks. And what you see here are the actual images of people in these different conditions. So, what you see here is, look at the reward condition. So in session one where the reward condition is performing actually quite well. They’re not performing it as many times as the control condition, but when they do perform it they’re performing quite well.

Their brain waves are firing basically, but look at session two for the reward condition, essentially in session two, the brain activity just stops completely. And so you have people who aren’t engaged in the task, and they’re not performing well. And part of that explanation is, mentally, cognitively, they’re just not engaged in the task. They’re just not motivated to perform. And then you looks at the control condition and over time you still see the brain waves firing. They’re engaged and really committed to performing the task even though you’re not paying them.

And so, I found this study fascinating, not only because they were able to show the effect, but they’re actually able to get down to the brain activity that explains why. And that’s pretty fascinating work.

The one thing that I want you to take into account, however, is that the conclusion that you should be drawing from this is not to throw extrinsic rewards out completely. Can they be demotivating? Can they undermine intrinsic motivation? The data suggests yes. But what we also find, in one of the most comprehensive studies I’ve ever seen on intrinsic versus extrinsic motivation is the data here. The sample size here ranges from over 3,000 to over 117,000 people from around the world, and what

you see here is the correlation between intrinsic motivation and performance on the job under different uses of extrinsic rewards. So, on the far left, you see the relationship between intrinsic motivation and task performance when the individual has no extrinsic reward tied to performance. And the impact of intrinsic motivational performance is positive, but not all that strong. The direct intrinsic, or, sorry, direct extrinsic reward, this would be an example of giving someone a financial incentive tied directly to their performance on the task, basically has no added benefit. Above and beyond no extrinsic reward. But, what’s interesting is in this study when they actually provided what they called an indirect extrinsic reward.

And what they mean by indirect is the financial incentive or the bonus is not tied to your performance or the outcome of the task, but actually how much you engage in the task, essentially your effort, your engagement in the task itself. Or whether you complete the task. So not your actual performance, whether you perform well or not, but actually completion or the level of engagement in the task. That’s what they refer to as indirect, extrinsic rewards. Then what you see is when you combine the indirect extrinsic reward with intrinsic motivation you get a huge boost in terms of task performance.

And so the implication for you as a team member, as a manager, is how can you leverage individual’s intrinsic motivation. Really understand what they value, what they care about, and focus on those aspects. And then create indirect rewards. Not tied necessarily to their outcome, not pay for performance, but pay for engagement. Pay for engagement in the task, completion of the task. That, based on these data, is where we see the biggest positive impact on performance.