🔥 Recently Launched : AON, SHRM and Vantage Circle Partnered Annual Rewards and Recognition Report 2024-25

Extrinsic Motivation: All You Need To Know

19 min read   |  
Last Updated on

People wouldn't be able to do half of what they are doing to achieve success if they weren't motivated. Motivation is what fuels the body and mind to complete a task. But, you can't control intrinsic motivation when it comes to inspiring your employees. At this point, Extrinsic motivation will take center stage.

Extrinsic motivation is prompted in an individual by giving them external rewards. These rewards could be anything like money, praise, assets, paid leaves, etc.

They serve as a source of external inspiration to keep your employees motivated and efficient.

According to a survey cited by Springworks, 46% of HR leaders consider employee retention to be their biggest concern.

During current times, most companies have shifted to work from home culture, thanks to the pandemic! It has not just impacted productivity but also the mental health of employees. Employees are left feeling more alienated, stressed, and lonely.

Thus, employee motivation has become a crucial factor. Here, Extrinsic motivation plays a vital role in keeping employees motivated. Along with that, it also helps in maintaining a healthy work culture.

All work and no play makes Jack a dull boy. But here's a twist. All work and no motivation makes Jack an unhappy employee too.

According to another survey by Clutch, 66% of employees who receive rewards are satisfied with them. This shows what an important role external rewards play in an organization.

Extrinsic Motivation, How Did The Idea Start?

Extrinsic motivation quotes

As per Herzberg's two-factor theory of motivation, there are two factors that an organization can fine-tune to uplift people. It holds true not only for an organization but for individuals too. The two factors are- Satisfiers and Hygiene factors.

Satisfiers are the internal motivators like- a sense of belonging, pride, freedom, etc.

Similarly, the hygiene factor includes external motivators such as working conditions, pay, external rewards, praise, etc.

Extrinsic motivators are part of Herzberg’s hygiene factors.

Extrinsic motivation is also explained through Maslow's Theory of Motivation. These fall in the lower level of Maslow's Pyramid.

Also read: Maslow's Hierarchy of Needs in Employee Engagement (Pre and Post Covid-19)

Maslow pyramid of motivation

It acts as a catalyst in completing a mundane and tedious task. This is what we term Extrinsic motivation.

What Is Extrinsic Motivation?

On many occasions, we find people uninterested and unenthusiastic about their work. It happens more with the employees engaged in activities without a dynamic work environment.

People feel drained and burned out when a monotonous work schedule creeps in. They show very little interest in completing a task. This leads to lesser productivity and eventually an increase in employee turnover.

When we keep repeating the same work every day, our brain becomes accustomed to following a regular work schedule. It prepares itself to function in the same way. We stop caring when there isn't any new challenge in front of us. We are simply putting on a show.

At times like these, external factors or motivators come to the rescue.

As humans, we are drawn towards feeling valued. We are more passionate about a piece of work if it comes with a reward.

But wait. That is not all.

Extrinsic motivation is not simply confined to getting the work done. Often it is about avoiding unwanted situations too.

Let's look at an example- An employee will work hard to finish a job on time when he knows there will be severe consequences if he doesn't. These consequences will act as a motivation for the employee. He will want to avoid it at any cost and thus finish the work on time.

It does not mean he enjoys it but, it is necessary to avoid the unwanted outcome. This becomes an extrinsic motivator too!

It is mainly practiced by Transactional leaders, who use a dynamic system of rewards and penalties to keep the employees motivated.

Extrinsic Motivation v/s Intrinsic Motivation

Intrinsic motivation comes from within you and is powered by your own dreams, aspirations, wants, and wishes
- Joanna Jast

Both Extrinsic and Intrinsic factors are crucial in keeping one motivated. But, to utilize them effectively, let's have a look at where they differ-

Extrinsic motivation vs intrinsic motivation

Relationship Between Extrinsic and Intrinsic Motivation

With more research into the topic and diversity in views, their relation keeps growing more intricate. For example- Ryan and Deci have defined both extrinsic and intrinsic motivation as two separate entities.

But, they also suggested that the same factor may enhance intrinsic motivation by promoting feelings of self-determination. Harackiewicz and Sansone indicated that the same extrinsic motivators also influence feelings of self-motivation.

In contrast, Lepper and Henderlong suggested that both Intrinsic and Extrinsic motivation can operate simultaneously.

A current study of both kinds of motivation examined their individuality and also analyzed the relationship between them. A study by Bateman & Crant; 2003, Lepper, Corpus, & Iyengar; 2005 have addressed this issue. They found that no remarkable negative relationship between extrinsic and intrinsic motivation has been observed.

Extrinsic and intrinsic motivation are both different phenomena used in different situations to aim for various objectives. But the best approach is to be able to use them simultaneously.

Can Extrinsic and Intrinsic Motivation Co-exist?


Yes, they can co-exist, but the key is to balance the two against each other. This is the most challenging part.

Rather than considering them as two different entities, you must consider them as two sides of the same coin.

However, this balance will depend on the task at hand too. It will not be possible to balance both types of motivation in every job.

Balancing it will maximize the motivation level of your employees. For example- An employee wants a promotion not just for more challenging work but also for increased pay. This will maximize his potential as both the motivations will be at work.

Is Extrinsic Motivation Bad?

Let's face it. Too much of anything is bad. Just like anything else, both these motivation types have got their fair share of pros and cons too!

Extrinsic motivation is not bad, but continuous usage will make an employee rely too much on rewards. It may backfire by reducing the motivation in employees when they are not rewarded.

Certain psychologists also state that increasing the dependency on a reward will make the employees lose their inherent interest.

Having said that, lack of Extrinsic motivation will not help either. Sometimes it can also help in breaking the initial friction to develop into intrinsic motivation eventually.

For example- an employee might not know his/her interest in coding until given a project to complete. The initial approach towards it will be to conclude the task for the given extrinsic motivators. But in due course, it will become an activity where the employee will find interest.

Tip- The answer is to find a balance!

Goals power extrinsic motivation, and goal-centric behavior focuses more on relevant tasks, thereby increasing productivity.

Motivation In The Corporate World

Extrinsic motivation in corporates

With rising global prosperity, technology and digitalization are diffusing into every industry. With machines doing human work, the advent of artificial intelligence, and cutthroat competition, corporate functioning has changed a great deal.

Businesses nowadays are far more different from what they used to be two decades back.

Modern corporations nowadays not just want productivity to be high but also to keep the employees highly motivated. It is proven that employees work at their highest capacity limit when they are satisfied.

Role of People in Extrinsic Motivation

Apart from physical rewards, people play an important role in motivating employees too. Motivation can come from anyone. It can be your managers, peers, senior leaders, or anyone in the organization.

Managers can appreciate an employee or offer a spot reward for a good piece of work. These are small gestures but can bring an immense amount of motivation to an employee.

Appreciation by peers can also be a source of motivation for an employee. An employee spends most of the time during their job with their peers. Positive feedback from them will create a healthy peer-to-peer relationship as well as keep your employee motivated. Hence, this is also a great source of motivation.

Advantages and Disadvantages of Extrinsic Motivation

Advantages and disadvantages of extrinsic motivation

A few advantages of extrinsic motivation are-

• Increase Productivity

When your employees are aware of a reward, they will be more interested in the work. As a result, there will be a significant increase in productivity.

• Less Absenteeism and Turnover

Employee satisfaction on the job is directly proportional to less absenteeism. When your employees are content at work, they will enjoy coming to the office. Thus, they are less likely to be absent, and the turnover will reduce significantly.

Also read: The HR Professionals Guide to Employee Absenteeism

• Induces Goal-Oriented Behavior

When you announce a reward, your employees get one step closer to achieving their goals. They will have a direction to work towards it. This will induce in them a goal-oriented behavior, and they will be more purposeful.

Quote on Extrinsic motivation

• Healthy Workplace Culture

Happy employees will constantly improve your workplace culture. A toxic work environment will create bitter relations among your employees. This will, in return, hamper your productivity to a great extent.

Also read: Workplace Culture: Its Misconceptions and Important Aspects

• Better Employee-Employer Relations

When your employees are happy with you, they will be more enthusiastic and driven to work for you. They will have a positive approach towards the company and the job, which is beneficial in the long run.

Also read: Importance Of Employer Employee Relationship In Companies

A few disadvantages of extrinsic motivation are-

• Reduces Intrinsic Motivation

Quote on Extrinsic motivation

Just like the quote goes, too many external rewards will make your employees get used to it. It will, in turn, reduce the internal drive to perform better. They will be more dependent on rewards and will reduce productivity without them.

Also read: 5 Factors That Restore The Power Of Intrinsic Motivation In The Workplace

• Does Not Create Passion

Continuous use of Extrinsic rewards will make your employees impassionate. They will grow to dislike their jobs and only do the bare minimum. The quality of work eventually decreases.

• Rewards Should Grow

If you are extrinsically motivating someone, the reward values must keep scaling up. For example- giving a gift card every time will not work as the employees will get used to it. Therefore, there should be constant revamping of the rewards. Timely and surprise rewards boost more productivity than the same set of rewards.

Types of Extrinsic Motivation

In more detail, Extrinsic motivation can be categorized into four types-

External Regulation

In external regulation, the behavior is controlled by external rewards. You will see that an employee will perform best when they are promised a 10% bonus. The apparent bonus governs the employee's behavior, and he performs well to get it.

Although the employee's behavior is not entirely unintentional, the activity is controlled by the external reward.

When great rewards are attached to great efforts, the employees are motivated to work harder. Even if the work is tedious, the employees will put in their best effort to complete it.
Thus, the behavior is externally regulated.

Introjected Regulation

In introjected regulation, the behavior is more internalized than external. But, it is not the same as intrinsic motivation. While in intrinsic motivation, there is an inherent interest in the work. In introjected regulation, the underlying emotions are feelings of avoiding shame, guilt, etc.

It inspires you to reinforce a behavior not because you want to. But, it is because you want to avoid the inner feeling of guilt or shame. This feeling is the backbone that pushes you to do the work.

It will make your employees stressed about the work. This will result in burnout and worry. It is practiced mainly by micromanagers creating a slightly tricky working environment.

Regulation Through Identification

In regulation, through identification, an employee can identify the importance of their task. And thus act towards it.

With this motivation, your employees will value the task at hand and believe that it is beneficial. It is not backed by a feeling of guilt or shame and immediate rewards. They will genuinely believe that the task or behavior will favor them and are motivated to work towards it.

For example- Companies relocating employees to a remote location for six months on a crucial project. The employees will know that it will expedite their promotion, which they really want. This will make them value their task, and they will be more motivated even though they have to relocate.

Integrated Regulation

In integrated regulation, the behavior is backed by self-introspection and by understanding one's beliefs and values. It is self-motivation that is fully optimized.

By this point, one understands their external motivational needs and correlates them with their beliefs and values. Every decision made is not backed by guilt but by reason. Your employee will know exactly why they want to do the task, and it will not be imposed.

Examples of Extrinsic Motivation

To give you a better idea, here are a few very simple and easy-to-understand examples of Extrinsic motivation.

• Workers in a factory are working overtime to get more bonus.

• Employee working on a tedious project for the most-awaited promotion.

• An employer praising his employee for good performance.

• An employee is completing a project on time for the performance hike.

These are a few examples to give you a basic idea of how Extrinsic motivation pushes you to complete a particular task in a workplace.

Types of Extrinsic Rewards

Not all extrinsic rewards are the same. It's high time for us to learn their traits. Let us have a look at them!

Tangible Rewards

Tangible rewards are the ones that have a physical and measurable attribute. They are also called external rewards.

For example- a manager rewards an employee for his outstanding performance at work. He does this by giving him a gift card or giving away gadgets like laptops, mobile phones, etc.

Intangible Rewards

These are the rewards that do not have a physical form. They can be recognition or praise, which cannot be measured but are external rewards.

Further Extrinsic rewards also include Financial and Non-Financial rewards. Although intrinsic rewards are exclusively non-financial, extrinsic rewards can be either.

Financial Extrinsic Rewards are the ones that assign a monetary value or that can enhance the economic condition. They can be pension benefits, paid leaves, etc.

However, Non-Financial Rewards do not have any financial value assigned to them. They are benefits that enhance an employees' work life, such as health benefits, club benefits, etc.

Yet, they do not have any monetary value attached to them.

Extrinsic Motivation and Employee Retention

To get a practical idea of how difficult it is to maintain employee retention in an organization, let us take the help of a few statistics.


(Sources: Glassdoor, Hartford Business, Accessperks)

Also read: 10 Eye-opening Employee Retention Statistics You Should Take Note Of.

To be precise, the retention of employees is more difficult than hiring them. With companies evolving constantly, a wide range of possible alternatives are emerging too. An employee would not hesitate to move into a better position with better pay.

Hence, maintaining a healthy company culture and keeping the employees motivated is of utmost importance in today's workplaces.

It gives your company a better employee retention rate and leads to a manifold increase in productivity.

This is how employee motivation goes in hand with employee retention.

Motivation and Employee Efficiency

Apart from increasing the overall performance, you should also keep in mind the individual efficiency of an employee. When your employees are skilled, they are more efficient. However, only being skilled but not motivated will compromise your productivity too. Therefore, one must never undervalue motivation!

Your employee doesn't just want job security but also quality employment, better opportunities, and recognition in the organization. Without motivation, you will see a rapid decline in productivity and work efficiency. This will not just hamper individual goals but your organization's goals too.

A motivated employee will work twice as hard and find themselves working for a more significant cause than just for the salary. If your employees can line their satiation for success with the company's overall agenda for growth. In that case, it benefits both them and your company.

Quote on Extrinsic motivation

If motivation in your employees is low, there will be a rapid rise in inefficiency. Employees will be engrossed in their phones, distracted, and largely unfocused.

On the flip side, motivated employees will be more focused and work-driven. They will not just be an asset to your organization but will grow individually too. Whether your company is well established or a start-up, motivation is equally important at every level.

As we have seen, there are many benefits linked to motivation. But is it costly?

The answer is no. It does not cost a fortune, and sometimes it can be done even for free. A simple word of praise to employees after the day's work can work wonders for them. They will feel that all the day's toil was worth something.

These small things can go a long way and make the employee like their workplace. They would want to work in a place where their hard work is appreciated and rewarded.

Extrinsic Motivation During Remote Work

With the current pandemic situation, most of the companies have resorted to remote work. It has come as both a boon and a bane for organizations.

Man is, by nature, a social animal. But, due to the pandemic and lockdown imposed worldwide, everyone is locked in their homes. This has taken a toll on everyone.

Employees who are used to working together are now working alone remotely. Keeping up your employee's morale and dealing with Covid-19 stress has become of utmost importance now.

With sales figures going down, lesser employee availability, and remote work, it is challenging for the leadership to maintain an optimistic attitude and keep employees engaged.

The only solution here to keep the employees uplifted is to provide great recognition and benefits. These fringe benefits and rewards will keep their moods lifted and motivate them to work even at home.

Although Covid-19 stress is inevitable, providing your employees with attractive benefits will take away the work anxiety for a while. It can also be put through as a placebo effect.

We are all living in difficult times, and any single effort right now will make a difference.

Read more: Amazing Virtual Employee Recognition Ideas to increase your employee productivity.

Ways To Give Extrinsic Rewards to Boost Employee Motivation

There are multiple ways and types of rewards that can be given to your employees to increase productivity. Let us look at a few ways to add external rewards in the workplace that might boost up employee productivity.

1. Celebrate Them!

Celebrating your employees and motivating them extrinsically

Yes, you read that right. Celebrate the employees. Be it someone's birthday, Mother's Day, or work anniversary.

Every person deserves to feel special. A small token or a gesture could make someone's day too.

Sometimes, giving your employees a gift card or a small note thanking them for their tireless efforts could help you win them over.

The only thing employees want to know is that you care about them and their needs. These small gestures could go a very long way!!!!!

Recommended Article: 7 Terrific Office Birthday Celebration Ideas

2. Conduct Random Contests!

Who wants to work in a boring workplace, right? Why not occasionally spark joy? There could be a random scavenger hunt, a quick spell bee, or a small bingo game.

Conducting random contests and giving away hampers like small accessories, gadgets that the employees can use will seal the deal!

3. Include Family Packages

Adding family packages for extrinsic motivation

Now, a big concern that arises when a person starts working is work-life balance. Most people get stuck between an angry boss and a furious partner. Sounds familiar?

Well, how about you attach an attractive package for the employee and his family once he finishes the most tedious project? A Valentine's Day package for the couple or a family weekend getaway package. It is a win-win deal for both.

We lack both professionally and personally when we fail to maintain a proper work-life balance. The lack of support on the personal front does hamper our productivity at work. And being a good employer, you will have to keep a check on these to maintain a happy workspace.

At times, it is not about the salary. But it is also about how at-home employees feel while at work. And how compassionate you are with your employee's needs.

4. Give Employees Bonuses and Raise Whenever Possible!!

This obviously has to be in line with the organization's business, but the bonus is one of the significant extrinsic motivators. According to a survey by Glassdoor, on average, 35% of employees leave the job when they do not get a good raise. This is a pretty big number!!

Therefore, it becomes an essential aspect in maintaining employee retention.

5. Giveaways

Giveaways are a very classic and easy way to reward someone, which can also be used as a promotional tool. Through giveaways, the employee will not just accept the token of appreciation but will also advocate it on their social media. Again, Voila!

6. Make The Rewards Engrossing!

Make the rewards engrossing to extrinsically motivate employees

Nobody enjoys receiving monotonous incentives. As a result, it's essential to make sure that the incentives are unique.

To make the rewards more customized and engaging, you need to know your employees first. Once that is done, you can customize the rewards accordingly.

Let's say your employee is also a fitness enthusiast. Imagine the effort he will put in if he is rewarded for his work with a free diet plan. He will surely burn a few more calories at work to get the reward he desires!

He will not just complete the work. He will also be more productive, and there will be an added enthusiasm because of the attached extrinsic reward.

This is similar to how we promise kids at school to bring good grades in return for a new game. It helps in the workplace too!

Also read: 50 Rewards and Recognition Ideas to Boost Employee Recognition [2021 Updated]

Vantage Circle offers the best employee benefits with Vantage Rewards; schedule a free demo today!

7. A Word of Praise

Word of praise is an extrinsic motivation

An extremely feasible option is praising someone for their work. This costs absolutely nothing but goes a long way. A word of praise can simply make someone's day.

Especially during the pandemic times that we are living in, a single word of praise can do the job of a thousand rewards.

These will come in the category of intangible non-financial extrinsic motivators.

Also read: 50 Best Words of Appreciation for Employees You Can't Ignore

Frequently Asked Questions

1. What is extrinsic motivation?

Extrinsic motivation refers to the external motivation that is prompted in an individual by giving them external rewards.

2. What is an extrinsic reward?

It is a reward (tangible/intangible) that helps in motivating an individual to do a particular task.

3. What is an example of an extrinsic reward?

Praise, Fame, Good grades, Salary, Bonus, Gifts, etc.

4. What is the difference between extrinsic and intrinsic motivation?

Extrinsic motivation is induced by an external reward, while intrinsic motivation is inherent in an individual. They perform the task not for the reward but for inner satisfaction. It makes them feel internally rewarding.

5. Who can give Extrinsic rewards?

Anyone can give extrinsic rewards. It can be peers, managers, parents, friends, juniors.

6. Are extrinsic rewards mandatory in an organization?

No, extrinsic rewards are not mandatory. But when offered, it sure does help improve the efficiency and productivity to a great deal.

7. What are the four types of extrinsic motivation?

The four basic types are-

  1. External Regulation

  2. Introjected Regulation

  3. Regulation through Identification

  4. Integrated Regulation

8. What are the advantages of extrinsic motivation?

Extrinsic motivation increases productivity, lowers absenteeism, creates goal-oriented behavior, and improves the organizational culture.

9. Is money intrinsic or extrinsic?

Money, salary are types of extrinsic rewards.

10. When should extrinsic rewards be used?

Extrinsic rewards should be used when your employees are not interested in their job and productivity is declining. It can also be used when your organizational culture is becoming too negative and employee engagement is reducing.

11. Is it bad to be extrinsically motivated?

It is not bad to be extrinsically motivated, especially when the goal is short-term. It creates an instant motivation inside an individual to attain the goal and work towards it.

12. What is the meaning of extrinsic?

Extrinsic means external, originating on the outside.

13. What is an extrinsic goal?

It is a goal that is mainly focused on external rewards like money, status, etc. The goal is backed by external rewards rather than internal interest.

14. Can Extrinsic motivation be useful for long-term goals?

Although it depends on the individual's way of perceiving the reward, most psychologists believe that Extrinsic motivation is often helpful for short-term goals.

15. What is the main role of extrinsic motivation?

The primary role of extrinsic motivation is to instantly boost an individual for performing a certain task.

If you are lucky enough to be someone’s employer, you have a moral obligation to make sure people do look forward to coming to work in the morning.
– John Mackey

Key Takeaways

Thus, extrinsic motivation plays a significant role in shaping the organization's culture and maintaining it as a positive space to work.

On the flip side, it is also essential to know that extrinsic motivators will not work if the value of reward for an employee is zero. In that case, the employee will not be motivated to work for the given reward.

That being so, it is of utmost importance that you are aware of your employee's needs.

As per Vroom's expectancy theory of motivation, before doing a task, a person asks himself three questions-

Expectancy: Will I be able to?

Instrumentality: Will I get a reward?

Valence: Will the reward be desirable?

If the employee is low on Valence, even the best extrinsic reward won't motivate him. Therefore, it can be said that extrinsic motivation is very situational. Also, continuously rewarding the employee for the work he already likes will make him lose interest. It is also known as the overjustification effect.

Therefore, fulfilling the organization's long-term goals will benefit you the most if you know your employees well.

As the famous quote goes-

An employee's motivation is a direct result of the sum of interactions with his or her manager.
– Bob Nelson.

Namrata Borgohain

This article is written by Namrata Borgohain who is an International Marketing Specialist at Vantage Circle. In her free time, she will be found either searching for cute dog videos or virtually wandering in streets of Santorini. For any related queries, contact editor@vantagecircle.com.

Book My 30-min Demo
Join us in driving a
Culture of Employee Appreciation Globally!
Vantage Rewards
Celebrating 2M+ Happy Corporate Employees
Elevating Company Culture Across

Know More
Not Interested

The Ultimate Guide to Employee Rewards and Recognition

The Ultimate Guide to Employee Rewards and Recognition