Extrinsic Motivation Paper
Many studies over the past thirty plus years have tried to determine how extrinsic rewards affect intrinsic motivation. These studies have taken place in settings such as; in the classroom or in a work setting to gauge how the environment affects the outcomes (Porter & Lawler, 1968) (Deci, Koestner, & Ryan, 1999). For purposes of this paper, I will focus solely on a business setting. With that being said, nearly all of the Fortune 500 companies employ a pay-for-performance plan of some type. Meaning, that some part of the employee’s compensation plan is contingent on meeting or exceeding a performance objective. With so many companies using this compensation plan we will try to determine how it affects intrinsic motivation in the workplace.
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Intrinsic motivation is said to be determined by feeling of competence and personal control over performance (or personal causality or self-determination) (Lopez, 1981).
According to Deci and Ryan’s Cognitive Evaluation Theory (CET) perceived autonomy can be reduced by various means, including the requirement to achieve a performance objective. Additionally, a performance based reward will cause a greater detriment to self-determination which in turn leads to lower intrinsic motivation (Deci & Ryan, 1985). Contradicting most of Deci and Ryan’s conclusions (Eisenberger, Rhoades, & Cameron, 1999) performed multiple cognitive studies in both a lab and work setting noting that Rewards produced greater perceived self-determination and personal autonomy than non-reward. These findings are critical because greater self-determination and personal autonomy indicate positive intrinsic
motivation.
To further examine these findings, I performed a study on my own by creating a five-question quiz that uses mathematical and logical questions. (Note this is not an appropriate scientific study due to control group and setting) The first survey was administered with no promise of reward. The group was told to answer the questions at their leisure, and the results were that it took an average of 0:58 seconds and an average score of 86% was achieved. When administering the survey to a different group with the promise of a reward ($5 for fastest time and 100% accuracy) it took an average of 1.44 seconds and an average score of 90% was recorded. (Table 1) While it took recipients and average of .46 seconds more, they were more accurate by 4%. These results tend to prove that when a reward is offered there is a higher feeling of competence and personal control over performance. (leading to increased time for increased accuracy).
Referring to once again to Deci and Ryan’s Cognitive Evaluation Theory (CET) (Deci, Koestner, & Ryan, 1999) Deci claimed that the effects of rewards on intrinsic motivation depend on the initial interest in the task asked to perform. (Deci, Koestner, & Ryan, 1999) Based on this theory, intrinsic motivation is not only determined by a feeling of completeness, but also the type of person. (Frey & Osterloh, 2013). Frey and Osterloh say that different people are motivated by different things. This could potentially justify the differences in the numerous studies performed. Some of the participants could be extrinsically motivated (income maximizers & status seekers) meaning, they would be more driven to tangible, and intangible rewards whereas others could be intrinsically motivated (loyalists, formalists, and autonomists) meaning external rewards provide little to nothing. Knowing this, how can you distinguish between the results? If we add this distinction can you then say with 100% confidence that extrinsically motivated people are driven (completeness) by performance rewards, and intrinsically motivated people are discouraged (autonomy) by performance rewards?
Another study found after a series of tests in a workplace that performance-contingent rewards increased intrinsic motivation because the reward caused an increase in internal control over performance and perception of feedback. (Lopez, 1981) It seems that this is also the approach being used by a lot of organizations today. As mentioned earlier nearly all of the Fortune 500 companies implement a pay for performance compensation plan which signals proven success in such plans. However, successful startups and tech companies offer a mix in compensation plans relying on both (company performance) rewards (albeit with lower salaries) and intrinsic motivators (free food, unlimited vacation, open spaces and social engagements) proving that employees also enjoy working for a company for much more than pay alone. Both sectors are successful and continue to grow at a rapid pace
So, who’s right? It seems that compensation packages employed across the different business sectors prove that self-determination is being filled in both extrinsic and intrinsic ways.
In conclusion, pay for performance in the workplace is here to stay. The workplace is evolving faster than ever, and as a manager/executive, you need to understand the type of people in your organization/group. An example would be Consulting companies which pay high salaries to retain top talent (extrinsic motivators) vs. Tech Startups who promise a social atmosphere with unlimited autonomy (intrinsic motivators). Having this understanding will allow you to create an appropriate compensation plan for retaining your best employees. These plans are catered to obtaining a certain type of employee and are now combining both extrinsic and intrinsic motivators to achieve this. However, a recent 2015 SHRM survey stated that pay is one of the most significant contributors to worker happiness, helping cement the linkage between pay(extrinsic) and happiness(intrinsic). Until further research can prove otherwise there is no conclusive evidence to prove pay for performance compensation is detrimental to intrinsic motivation in the workplace.
Intrinsic motivation is said to be determined by feeling of competence and personal control over performance (or personal causality or self-determination) (Lopez, 1981).
According to Deci and Ryan’s Cognitive Evaluation Theory (CET) perceived autonomy can be reduced by various means, including the requirement to achieve a performance objective. Additionally, a performance based reward will cause a greater detriment to self-determination which in turn leads to lower intrinsic motivation (Deci & Ryan, 1985). Contradicting most of Deci and Ryan’s conclusions (Eisenberger, Rhoades, & Cameron, 1999) performed multiple cognitive studies in both a lab and work setting noting that Rewards produced greater perceived self-determination and personal autonomy than non-reward. These findings are critical because greater self-determination and personal autonomy indicate positive intrinsic
motivation.
To further examine these findings, I performed a study on my own by creating a five-question quiz that uses mathematical and logical questions. (Note this is not an appropriate scientific study due to control group and setting) The first survey was administered with no promise of reward. The group was told to answer the questions at their leisure, and the results were that it took an average of 0:58 seconds and an average score of 86% was achieved. When administering the survey to a different group with the promise of a reward ($5 for fastest time and 100% accuracy) it took an average of 1.44 seconds and an average score of 90% was recorded. (Table 1) While it took recipients and average of .46 seconds more, they were more accurate by 4%. These results tend to prove that when a reward is offered there is a higher feeling of competence and personal control over performance. (leading to increased time for increased accuracy).
Referring to once again to Deci and Ryan’s Cognitive Evaluation Theory (CET) (Deci, Koestner, & Ryan, 1999) Deci claimed that the effects of rewards on intrinsic motivation depend on the initial interest in the task asked to perform. (Deci, Koestner, & Ryan, 1999) Based on this theory, intrinsic motivation is not only determined by a feeling of completeness, but also the type of person. (Frey & Osterloh, 2013). Frey and Osterloh say that different people are motivated by different things. This could potentially justify the differences in the numerous studies performed. Some of the participants could be extrinsically motivated (income maximizers & status seekers) meaning, they would be more driven to tangible, and intangible rewards whereas others could be intrinsically motivated (loyalists, formalists, and autonomists) meaning external rewards provide little to nothing. Knowing this, how can you distinguish between the results? If we add this distinction can you then say with 100% confidence that extrinsically motivated people are driven (completeness) by performance rewards, and intrinsically motivated people are discouraged (autonomy) by performance rewards?
Another study found after a series of tests in a workplace that performance-contingent rewards increased intrinsic motivation because the reward caused an increase in internal control over performance and perception of feedback. (Lopez, 1981) It seems that this is also the approach being used by a lot of organizations today. As mentioned earlier nearly all of the Fortune 500 companies implement a pay for performance compensation plan which signals proven success in such plans. However, successful startups and tech companies offer a mix in compensation plans relying on both (company performance) rewards (albeit with lower salaries) and intrinsic motivators (free food, unlimited vacation, open spaces and social engagements) proving that employees also enjoy working for a company for much more than pay alone. Both sectors are successful and continue to grow at a rapid pace
So, who’s right? It seems that compensation packages employed across the different business sectors prove that self-determination is being filled in both extrinsic and intrinsic ways.
In conclusion, pay for performance in the workplace is here to stay. The workplace is evolving faster than ever, and as a manager/executive, you need to understand the type of people in your organization/group. An example would be Consulting companies which pay high salaries to retain top talent (extrinsic motivators) vs. Tech Startups who promise a social atmosphere with unlimited autonomy (intrinsic motivators). Having this understanding will allow you to create an appropriate compensation plan for retaining your best employees. These plans are catered to obtaining a certain type of employee and are now combining both extrinsic and intrinsic motivators to achieve this. However, a recent 2015 SHRM survey stated that pay is one of the most significant contributors to worker happiness, helping cement the linkage between pay(extrinsic) and happiness(intrinsic). Until further research can prove otherwise there is no conclusive evidence to prove pay for performance compensation is detrimental to intrinsic motivation in the workplace.