Extrinsic and Intrinsic Pay Programs Research Paper

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Intrinsic vs. Extrinsic Motivation


A detailed analysis of how differing organizations use various blends of extrinsic and intrinsic compensation and benefits strategies to maximize organizational potential to meet the needs of the workforce. Describes the myriad factors including the industry, strategic planning, compensation philosophy and recruitment/retention strategies that when balanced, create a changing yet dynamic and motivated generational workforce that succeeds in accomplishing workplace goals.

Intrinsic vs. Extrinsic Motivation

The purpose of this analysis is to describe how different organizations can potentially use different blends of extrinsic and intrinsic compensation and benefits strategies to maximize organizational potential to meet the needs of their workforce. Traditionally compensation has been a highly volatile and controversial aspect of human resource management, with managers typically siding on the intrinsic or extrinsic side of compensation strategies. However research suggests that a program must address multiple factors that will balance both extrinsic and intrinsic factors to succeed.

Extrinsic vs. Intrinsic Motivation

To understand how to balance extrinsic and intrinsic motivating factors within the workplace, one must first understand the difference between the two concepts Extrinsic motivation has to do with what someone wants you to do, or how you can benefit by accomplishing a certain task. For example, pay for performance is an example of an extrinsic motivating tactic employers use to motivate employees. Intrinsically motivated employees however, work because they want to, because there are internal factors that drive them to behave the way they do, whether that is positive or negative in nature Ideally, all employees would balance the two, although some employers may prefer that some employees were more self-determined or intrinsically motivated in nature to meet their personal goals and the goals of the organizations they worked with. Some studies suggest there are gender differences between men and women, meaning women are more intrinsically motivated and men more extrinsically motivated (Hendriks & Sousa, 2008). Still others suggest that extrinsic and intrinsic motivation are concepts that can be learned, adapted and shaped over time. These are ideas that we will explore in more detail below.

Overview of the Literature

According to Hendriks and Sousa (2008), while examining the role of work motivation, discovered that a crucial role for understanding how motivation is and is not managed "appears to lie in how individual and organizational understandings of work assessment, processes, and contexts connect to social mechanisms" that may be borrowed from the communities that exist outside of the university. They adopt a grounded theory approach in their research, suggesting that motivation is affected by many factors including how successful or unsuccessful individuals are at performing a task when motivated by goals.

Valence is also an important concept according to the researchers, noting that motivation is also influenced by the "desirability of the outcome" something known as Vroom's expectancy theory, whereby performance is augmented by ideals such as citizenship and/or counterproductive behaviors (Hendriks & Sousa, 2008). Extrinsic motivation may work through an indirect need satisfaction, such as monetary reward or symbolic compensation, as in the applaud of fellow co-workers; whereas those that are intrinsically motivated, the "locus" of motivation is fully internal, thus individuals will ignore external displays of recognition (Hendriks & Sousa, 2008). This is an important consideration when trying to balance the mechanisms by which employees are motivated.

Kunz & Quitmann (2011) use cognitive evaluation theory to explore how different characteristics of incentive systems, including performance incentive affect intrinsic motivation. Their analysis suggests that most of the characteristics of performance evaluation have a positive effect on intrinsic motivation which adds to the current research available on intrinsic motivation, opening the door for additional empirical research, as prior research has focused primarily on monetary rewards for intrinsic motivation, which often does not lead to highly motivated and satisfied employees.

Tocher, Field, & Giles (2006) suggest that for applicants into the workforce, compensation may indeed be a motivating factor, or an external motivating factor enticing applicants to enter into a relationship with an organization. Men and women differ however, with regard to what motivates them on the job when they begin employment. Some men and women differ to as to what they find attractive regarding prospective employers. There is some evidence that what recruiters feel potential job applicants want and what they truly desire differ (Tocher, Field & Giles, 2006). For examples, motivating factors for women entering the workforce may include having more flexible hours and shorter workdays, in part so they can care for childcare needs. Compensation benefits are most important to individuals that prepare to enter professional workforces; however female entrants into the workplace may place more value on benefits related to time and their family according to the researchers, rather than wages and bonuses related to compensation (Tocher, Field, and Giles, 2006). The studies conducted by Tocher, Field & Giles (2006) also revealed that women were less interested in performance-based pay systems than men were, and more interested in straight pay-based system that allowed flexible work plans and cafeteria benefits or company-paid health care plans. These findings certainly imply that intrinsic motivations are different across genders, at least in some respects. Knowing this can help recruitment professionals target their recruitment strategies and philosophies based on the positions and genders recruited for.

Van Herpen, Van Praag, and Cools (2005) use economic and psychological theories to support the design and implementation of performance measurement and compensation systems to affect employee motivation. Their study suggests that a positive relationship does exist between the perceived characteristics of the complete compensation system and extrinsic motivation. However, as evidenced by the studies previously discussed, these researchers also find that intrinsic motivation is not affected by monetary compensation. It is however found to be affected by promotional opportunities, and by allover work satisfaction. Promotional opportunities may be closely linked with employee's personal goals. Personal goals must be determined and closely linked with the employee's or individuals desires, wants and needs. These in turn can be shaped into broader goals that align with corporate goals. In this way, an employee is intrinsically motivated to succeed not only on a personal level, but also on a level that meets and exceeds the expectations of the corporation as a whole. This is how to best maximize and balance the intrinsic and external motivational factors that help employees maximize their potential within the organization.

These factors and aspects of external and intrinsic motivation can also be applied to the organization as a whole. Managers and corporate officials should sit down and establish organizational goals that take into consideration the external and intrinsic goals of the organization at large. It is possible for the organization to have broad-based external motivating factors that are separate from intrinsic motivating factors. For example, a company's Board of Directors may have external motivating factors that may include helping an organization to become globally based, or helping an organization to participate in globalization. However, each member of the Board of Directors or top management may be intrinsically motivated by personal factors which may include as the authors of several articles point out, recognition for the services they contribute to the organization, promotion, or the need to feel they work for an organization that recognizes and acknowledges their contributions and also acknowledges their needs to have flexible schedules to accommodate their work and family life (Tocher, Field, & Giles, 2006; Kunz & Quitmann, 2011).

Employers have the ability to use all of this information to attract more motivated applicants and a motivated applicant pool by following certain steps according to Tocher, Field, & Giles (2006). They must emphasize benefit and compensation information to those applicants that would be interested in this type of external motivation. They should also ensure the people hired to recruit are knowledgeable about all company benefits, including the ones that recruiters would likely be most interested in. If a company does offer pay-for-performance incentives, or security incentives, then these should be addressed when recruiting new applicants.

Interestingly, Tocher, Field and Giles (2006) suggest that gender-related trends seem to be diminishing, thus benefits including paid daycare or shorter workdays are not as important and thus should be less emphasized, as they feel that with the passage of time these will eventually be phased out. More and more employees, according to the researchers, will come to realize what organizations can practically offer them. On the other hand, to replace these types of benefits, some employers are offering employment counselors and consulting services to help families that require resources to help them cope with the burden of managing and balancing work and families, or problems associated with the burden of work and family.


Intrinsic and external motivating factors will continue to be an area for further research. Undoubtedly compensation and benefits will continue to be a leading motivational force among modern employees. While there are some studies suggesting that benefits including shorter and more flexible workdays may be phased out, there are increasing numbers of women entering the workforce and single parents that may argue that these…[continue]

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"Extrinsic And Intrinsic Pay Programs" (2011, September 20) Retrieved October 24, 2016, from http://www.paperdue.com/essay/extrinsic-and-intrinsic-pay-programs-117226

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