Organizational leaders have several major duties, including ensuring the followers perform beyond expectations. Such efforts mean that employees’ performance and productivity are high. Research has revealed the links between types of motivation, for example, transformational leadership, and their effect on frontline worker performance (Buil, Martínez, & Matute, 2019; Weller, Süß, Evanschitzky, & Wangenheim, 2020; Ng, 2017). One of the means by which leaders inspire performance is through engagement, commitment, and motivation (Cesário & Chambel, 2017). According to Ng (2017), there are five core mechanisms identified in the research linking transformational leadership to employee performance. These are motivational, affective, social exchange, identification, and justice enhancement. This literature review will center on one of these mechanisms, that is, motivation. The focus will be on examining how motivation influences employee performance. This paper supports the thesis that both intrinsic and extrinsic motivation improve employee performance. These types of motivation will be followed by an examination of literature linking these concepts to that of employee performance.
The concept of motivation has become a major topic for debate among management practitioners and scholars because of its implications on organizational performance. Internal and external forms of motivation are called intrinsic and extrinsic, respectively. According to Locke and Schattke (2019), the term ‘intrinsic’ means inside the entity, while ‘extrinsic’ means outside. Intrinsic motivation can be perceived as those factors internal to the employees, often tied to human consciousness. Extrinsic motivation entails the physical aspects and comprises the factors that trigger employees’ commitment to a company and raises individual performance. Intrinsic motivation has been termed as “motivation without money” by Kuvaas, Buch, Weibel, Dysvik, and Nerstad (2017), meaning that employers target the factors that make employees embrace their jobs and commit to them (p. 245). Useful results of motivation include job engagement, positive affect, and employee productivity.
Intrinsic motivation has become a major focal point for researchers, especially considering that it is not associated with any physical rewards. Researchers such as Nerstad, Dysvik, Kuvaas, and Buch (2018) explain that staff members who feel that their company invests in them will feel obliged to reciprocate the benefits provided. From a self-determination theory (SDT), intrinsic motivation entails those activities done for ‘their own sake’ as described by Ryan and Deci (2020). In other words, intrinsic motivation focuses on the inherent interest and enjoyment. In businesses, intrinsic motivation is intended to make employees happy with their work environment and inspire them to deliver great results.
Extrinsic motivation also remains an important aspect for a number of reasons. Essentially, employees render their services to companies because of the beneficial outcomes associated with such an arrangement. These include their wellbeing and, from a social exchange theory perspective, the mutual benefits for both the worker and the employer results in positive economic and social exchanges (Veth, Korzilius, Heijden, Emans, & Lange, 2019). Extrinsic motivation often seeks to reward the employees for their work and efforts, frequently using tangible and physical benefits. Money rewards in terms of wages, salaries, and bonuses are a major form of extrinsic motivation. According to Kuvaas et al. (2017), extrinsic motivation can be described as the desire to undertake an activity to gain a positive consequence or to avoid a negative consequence. In an organization, employees will be working to get paid and to receive other rewards while avoiding punishments for failing to work or attain the desired levels of productivity.
There is adequate literature examining the impact of motivation on employee performance. Several scholarly works supporting the hypothesis that motivation improves performance will be explored. Kuvaas et al. (2017) study the hypothesis that individual performance is the most important result of motivation. Regarding intrinsic motivation, these scholars posit that it is intended to inspire the highest possible levels of employee’s efforts and energy, enthusiasm, and engagement. Creativity and contextual performance are other outcomes of intrinsic motivation, as discussed by Kuvaas et al. (2017). Their research is based on previous study, and the general conclusion from the scholarly works cited supports the hypothesis that intrinsic motivation positively affects the overall worker performance (Kuvaas et al., 2017). Therefore, the researchers confirm what many have indicated using their empirical analyses.
Extrinsic motivation can also be linked to high levels of employee performance. However, Kuvaas et al. (2017) develop and support a second hypothesis stating that extrinsic motivation negatively affects the overall performance. Their argument is that this type of motivation entails a perceived contingency between certain actions and the desired outcomes, for example, tangible incentives. Rather than inspiring workers to increase their efforts, extrinsic motivation serves to motivate staff to avoid undesired outcomes. An employee who is extrinsically motivated will feel coerced or seduced to work, considering that people often prefer autonomy (Kuvaas et al., 2017). Kuvaas et al. (2017) further argue that such workers tend to experience negative psychological states resulting from their jobs. However, the basic idea is that even extrinsic motivation can enforce greater levels of performance though not through employee commitment.
Both intrinsic and extrinsic motivation can be perceived as part of the broader subject of performance appraisals. Motivation can be defined as the willingness to increase the levels of efforts conditioned by the firm’s decision to satisfy certain individual needs of the employees (Idowu, 2017). The study by Idowu (2017) adopts the crowding theory perspective to argue that extrinsic motivation may reverse the effects of the intrinsic one. Based on Herzberg’s hygiene motivation theory, this researcher states that the motivation factors include recognition and the work itself (for intrinsic motivation) while the hygiene factors include salary and supervision (extrinsic motivation). These arguments support those of Kuvaas et al. (2017) in that extrinsic motivation forces employees to avoid negative outcomes. They also hold that intrinsic motivation arouses higher levels of effort in reciprocation of the higher levels of employee satisfaction.
Case studies offer a more detailed view of motivation influences personnel performance. One of such scholarly works has been presented by Japhet and Juliet (2019), where the definition for the term motivation used is the reason for an action or the cause to act in a prescribed way. These researchers find that in a capitalistic economy, the major rationale for motivation is that both employer and employee will increase their economic benefits as a result of employee motivation. Even though no distinction between the types of motivation is given, the basic argument is that motivation raises levels of performance and productivity. It is important to acknowledge that Japhet and Juliet (2019) highlight some of the motivation factors, including job satisfaction and leadership. Additionally, integration and recognition are mentioned, meaning that Japhet and Juliet (2019) are focused on intrinsic motivation. The most important point, however, is that these scholars find a positive link between motivation and performance.
Another case study yields similar results to the one mentioned above. Nabi, Islam, Dip, Md, and Hossain (2017) argue that performances can be seen as the “multiplicative function of motivation and ability” (p. 57). Their study concludes that extrinsic motivation is highly effective and recommends that organizations should put in place extrinsic rewards, often in financial terms (Nabi et al., 2017). As opposed to the studies by Kuvaas et al. (2017) and Idowu (2017), Nabi et al. (2017) are among the few who believe that monetary rewards can be motivational elements and not hygiene factors. Many experts often prefer companies that can pay higher salaries because of how they value their services. Regardless of the opinion about extrinsic motivation, the basic idea supported by all these studies is that stimulus improves individual performances.
Motivation positively affects individual employee performance across organizations, as explained in the studies above. The common definition of this term is that motivation inspires workers to increase their efforts and become more productive. Intrinsic and extrinsic motivation have been thoroughly discussed in this literature review. To many scholars, the former comprises of the motivation influences innate to the employees. On the other hand, extrinsic motivation is associated with the hygiene elements intended to avoid negative consequences. There is, however, a contention regarding the possibility of extrinsic becoming motivation factors. Regardless of this disagreement, the literature review presented above upholds the hypothesis that both types of motivation help improve employee performance.
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Cesário, F., & Chambel, M. (2017). Linking organizational commitment and work engagement to employee performance. Knowledge and Process Management, 24(2), 1-7. Web.
Idowu, A. (2017). Effectiveness of performance appraisal system and its effects on employee motivation. Nile Journal of Business and Economics, 3(5), 15-39. Web.
Japhet, N., & Juliet, N. (2019). Impact of motivation on employee performance: A study of Ikoku Federal College of Education. Journal of Management and Strategy, 9(1), 53-65. Web.
Kuvaas, B., Buch, R., Weibel, A., Dysvik, A., & Nerstad, C. (2017). Do intrinsic and extrinsic motivation relate differently to employee outcomes? Journal of Economic Psychology, 61, 244-258. Web.
Locke, E., & Schattke, K. (2019). Intrinsic and extrinsic motivation: Time for expansion and clarification. Current Opinion in Organ Transplantation, 5, 277-290. Web.
Nabi, N., Islam, M., Dip, T., Md, A., & Hossain, A. (2017). Impact of motivation on employee performances: A case study of Karmasangsthan Bank Limited, Bangladesh. International Journal of Business and Management Review, 5(4), 57-78. Web.
Nerstad, C., Dysvik, A., Kuvaas, B., & Buch, R. (2018). Negative and positive synergies: On employee development practices, motivational climate, and employee outcomes. Human Resource Management, 57(5), 1285-1302. Web.
Ng, T. (2017). Transformational leadership and performance outcomes: Analyses of multiple mediation pathways. The Leadership Quarterly, 28(3), 385-417. Web.
Ryan, R., & Deci, E. (2020). Intrinsic and extrinsic motivation from a self-determination theory perspective: Definitions, theory, practices, and future directions. Contemporary Educational Psychology, 61, 1-31. Web.
Veth, K., Korzilius, H., Heijden, B., Emans, B., & Lange, A. (2019). Which HRM practices enhance employee outcomes at work across the life-span? The International Journal of Human Resource Management, 30(19), 2777-2808. Web.
Weller, I., Süß, J., Evanschitzky, H., & Wangenheim, F. (2020). Transformational leadership, high performance work system consensus, and customer satisfaction. Journal of Management, 46(8), 1469-1497. Web.