Extrinsic and Intrinsic Rewards

Motivation is a broad term that encompasses many different types of motivators (also referred to as “rewards”). These motivators can be loosely grouped into two categories, Extrinsic and Intrinsic.

When most of us think about why we work, the extrinsic rewards are easy to identify.  We like our paychecks, we rely on the benefits our employer offers, and maybe we even get a nice commission or bonus check. At the surface, the extrinsic rewards answer the “whats” we get for working.

Benefits of Extrinsic rewards

They’re easy. Easy to implement, communicate, understand, and measure. It’s money and most businesses are pretty good at managing money.

They’re effective. Extrinsic rewards can be VERY effective. In the history of the world there is literally no activity, no matter how unpleasant or downright evil, that hasn’t been done for money. I once offered my younger brother a quarter if he could run from one side our enormous yard to the other in under 20 seconds. Following each attempt, no matter how fast he actually ran I said, “Almost! Next time you’ll get it!”. I think he ran 10 times before he stomped off in a fury. Best quarter I never spent.

Drawbacks of Extrinsic rewards

• Dependent upon Circumstances: The effectiveness of the rewards will be influenced by other factors such as health, relationships, expectations, household income, etc.  How many people would continue to do their current job if they won the lottery or got a nice fat inheritance from their long-lost uncle?
• Illusory: They give the illusion of control over the results as if human behavior can be reduced to an equation.  Is someone really motivated to do one more task for $50 or was it enough to get the regular paycheck?
• Temporary: Remove the reward, remove the motivation.
• Progressively less impactful: The more you offer, the less they work. The reality is, at some point the reward isn’t worth it anymore.  That number varies greatly based on a person’s circumstances (see Drawback 1).

Intrinsic rewards, on the other hand, are directly connected to the work and are generated internally by the person doing the work.  We all are motivated by more than just the money, but identifying intrinsic motivators is a little trickier. They are more personal, more ethereal and, some would argue, “fluffier”.  I would argue that intrinsic motivators more solid than extrinsic motivators once you understand them.

There are several different intrinsic motivators.  They include:

• Meaningfulness: My work matters.
• Accountability: People can rely upon me to get things done.
• Autonomy: I can decide the best way to do my job. 
• Mastery: I’m good at my job and getting better.
• Momentum: I’m going places.
• Contribution: My group needs me.

Intrinsic motivators are intangible, you can’t simply offer a person a 10% raise in meaningfulness. They are internally generated by the person doing the work itself and cannot be “implemented” by a third party. Contrary to the “economic” nature of extrinsic rewards, intrinsic rewards are entirely perceptual. Two individuals could perform the exact same jobs and feel vastly different levels of intrinsic motivation. Intrinsic motivators are “thy why” of motivation; “In a world of limitless choices, why am I doing this instead of something else?”

Benefits of Intrinsic rewards

• More significant: By that I mean you get better results.
• More enduring: The rewards continue without any additional “input” from management.
• Better morale: Intrinsic rewards make for very happy workers.

And if none of these reasons convince you to consider intrinsic motivators for your employees, let me appeal to an Extrinsic Management Motivator- They are FREE!

Drawbacks of Intrinsic rewards

They’re kinda “fluffy”. Meaningfulness? Are you kidding me? Show me the money! You’ve got to believe that these motivators genuinely exist and that they matter. If you don’t believe in them, you will not successfully capitalize upon them.

They’re NOT related to money. There is no plug and play here. It requires a different approach.

We will explore the ways that you can use both extrinsic and intrinsic rewards to motivate your teams.  There is even a way to capitalize on the “easy to implement” extrinsic rewards, to intrinsically motivate your employees.

Seth Preus is an advisor to Mivation, and the creator of both Racing Snail and Leaderboard Legends.  As a thought leader, he uses his 25 years of experience in sales, software development and business ownership to change the equation from “How can I get my team to perform?” to “How can I get my team to WANT to perform.”