Since the recent economic downturn, there have been more nuanced discussions surrounding what kinds of benefits, rewards and incentives really attract and satisfy employees. At the heart of motivation are two overarching categories: extrinsic and intrinsic. Here's what business leaders must know about each to deliver what employees desire and what will inspire their best performance.

What is Extrinsic Motivation?

When an employee does something in hopes that it will result in a tangible, external reward or outcome, it's considered to be extrinsically motivated. Such stimuli typically come from an outside source; in the professional world, this is often a supervisor or manager. Common forms include praise, promotions, raises, bonuses, or material rewards such as cars or trips.

An employee can also be motivated by the desire to avoid negative external outcomes, such as a demotion, a negative review, being reprimanded, or having something taken away from them.

What is Intrinsic Motivation?

Intrinsic motivation comes from within. Rather than something that is desired or received as a result of performing or accomplishing a task, it is performing the task itself that gives a person a sense of accomplishment or satisfaction. This includes things like personal or professional growth, overcoming obstacles, and achieving goals.

Is One Better Than the Other?

Whether you agree with the adage, 'money can't buy happiness' or not, there is a case to be made--and has been--in support of this notion. Though no consensus has been reached, numerous experiments have been done over the years in attempts to settle the debate over whether extrinsic motivators (like money) can actually decrease a person's intrinsic motivation. There are also those who argue that this dichotomy can go so far as to interfere with happiness, and potentially impact organizational performance.

But there are also clear advantages. Extrinsic incentives can be used to motivate a group of people, which can spur healthy competition, collaboration, and productivity. Moreover, external motivators can lead to behavior shifts and accomplishments that may have otherwise remained unrealized potential.

How Can You Key In On Appropriate Incentives and Rewards?

The most effective way to satisfy employees--and really anyone, for that matter--is by providing solutions and rewards that address their individual needs and desires. Consider personalities. For example, some people have no problem with public displays of admiration and praise while others find it to be uncomfortable, which in this case could be counterproductive.  

Other factors to consider in determining appropriate motivation include what professional life stage of work they're in (establishing, mid-career, late career, etc.), what department or job function they support, areas in which they have excelled, and, of course, any direct requests  or inquiries they've made.

Many of Dotcom Distribution's employees are shift workers who have young families. Over time, we also observed that the frequency and timing of PTO requests coincided with religious holidays and observations. So, one of the ways we've learned to motivate our employees is by giving them a certain level of autonomy over their schedules. Today, we do this with a custom labor management system that allows them to pick and change their shift schedules using an intraorganizational app. While this is certainly classified as extrinsic incentive, it actually dovetails with the intrinsic motivation of feeling trusted and valued as an employee.

There's no rule saying a person only falls into one camp. Intrinsic and extrinsic motivation are not mutually exclusive categories; in fact, together, they generate holistic motivation. Employees appreciate and respond to managers who show an interest in their professional goals and interests, so the best research you can do starts with being present, supportive, and engaged.