How do Intrinsic Motivation and Extrinsic Incentives affect Workplace Performance?

A meta-analysis conveys definitiveness in research.

In that spirit of conclusiveness let’s share the two core findings straightaway:

• “Intrinsic motivation remains a moderate to strong predictor of performance regardless of whether incentives are present.”

• Clear extrinsic motivations disincentivize teamwork and creativity

A meta-analysis helps develop the theory of intrinsic motivation as it gives a “population-level” view. This differs greatly from the limited sample individual papers use as the basis of their hypothesis in intrinsic motivation psychology.

How to apply the findings from this comprehensive study is, of course, what interests us in business. After all, Attuned was created to give managers tips and insights to further the goal of meaningful work.

Analysis is great but what you do with it is what matters.

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 behavior X, 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…”

We could have taken a much shorter version of this last quote, but we loved the mention of extrinsic motivation being appropriate for “tree planting”. The authors are clear, extrinsic motivation has a limited scope, and the types of work managers should think to use extrinsic motivation incentives as their primary motivational tool, are similarly limited. Just for work that is repetitive and straightforward.

But the world isn’t going in that direction; creativity and teamwork are the themes of our business generation. Many businesses struggle to improve their teamwork and creativity. If managers can ignore their urge to use incentives, and instead foster intrinsic motivation, they should expect higher levels of creativity and teamwork within their teams as a result.

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. The yin and yang of motivation.

On top of this, there are further layers of complexity such as how personality interacts with motivation styles. There is still much more research to be done on the links between the two types of motivation to reach a better understanding. Our geeky selves are excited for these subtleties to scientifically progress.

For now though, the takeaway is that for “complex jobs that require judgement and intense personal investment” intrinsic motivation is best. The authors summarize, “For example, teachers who are paid based on their students’ performance do not [do] better (Springer et al., 2011), and doctors who are paid based on patient outcomes do not have healthier patients. (Petersen, Woodard, Urech, Daw, & Sookanan, 2006)”

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.