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Intrinsic and Extrinsic Drivers of Motivation

Human Resources Management – Group Project Introduction The emergence of large multinational companies in the late nineteenth century necessitated a change in the professional world in regards to motivating factors in the workplace. While extrinsic motivators have traditionally been a more common way to stimulate good work ethic in employees, intrinsic motivators have become a greater focus in the last several years.

Many companies encounter difficulties with intrinsic motivation due to lack of time, money, and risk of change. Therefore, the reason for choosing this topic is to demonstrate that, despite the challenges, companies should still participate in intrinsic motivation to create a sustainable environment and recognize the long-term benefits. This paper will explore the connection of intrinsic drivers of motivation to long-term career goals, and extrinsic drivers to the short-term goals.

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Both are equally important to a company’s workforce, but there is an ideal balance that can be achieved to maximize motivation. A review of the literature researched will be presented, followed by an analysis of the interview and the methodology of its execution. The body of the analysis will compare both points of view and will conclude with the final recommendations. Review of the literature : In the attempt of setting the context, it should be precisely explained how intrinsic and extrinsic drivers of motivation are defined. Intrinsic |Extrinsic | |It comes from the rewards inherent to a task or activity itself – |It comes from outside of the individual – material drivers | |personal drivers | | |Responsibility, utonomy, recognition, growth and learning, structure|Salary, grades, promotions, bonuses, prizes, threat of punishment, | |of working position |coercion, can also include approval of project or patent. | Throughout our research, we identified a third hybrid type of motivation called “internalized extrinsic motivation” (Birkinshaw, 2010) which consists of receiving external recognition internalized by the individual and therefore becoming intrinsic (social drivers).

According to Edward Deci and Richard Ryan, it is composed of the need for competence, for autonomy and for relatedness to others. Now being aware of these facts, we will show in which way literature explains how intrinsic motivation can be stimulated and what its major advantages are. Through the stimulation of intrinsic drivers, such as improving responsibilities, recognition, achievement, growth or learning, job enrichment can be developed (Herzberg). This strategy must be considered a long term process (Appendix A).

These motivators have a long-term effect on employee’s behaviour in comparison to hygiene factors (pay, relation with co-worker, supervision, status, job security) which need to be satisfied frequently. From the perspective of a manager who desires to intrinsically motivate his employee, Herzberg advises to adapt the level of the job to the employee’s skills, and to give the employee the opportunity and freedom to demonstrate their potential extra-abilities.

Possibly change the above sentence to: Herzberg advises that managers who use intrinsic motivation should adapt the level of the job to the employee’s skills providing the employee the opportunity and freedom to demonstrate their potential growth. Another theory where intrinsic motivators are involved is Locke’s Goal setting theory. Goal setting is a simple, straightforward, and highly effective technique for motivating employee performance because it gives direction, and clearly defines the role, responsibility and potential recognition of the employee.

Goal setting has proved itself as an efficient mean to improve intrinsic motivation especially when combined with feedback and when goals are challenging and specific. Ideally, all employees should participate in the goal setting process. Consequently, employees will be aware of their objectives, and thus create expectations about their future performance.

Vroom’s well known process theory called “Expectancy theory” (Vroom, 1964) explains how motivation is increased according to these 3 variables : · Valence (perceived value or degree of preference that an individual has for an outcome) · Instrumentality (individual’s perceived likelihood that good performance will lead to valued rewards; measured between 0 no chance and 1 certainty) · Expectancy (individual’s perceived likelihood that effort will result in good performance; measured between 0 no chance and 1 certainty). Motivation = V x I x E Motivation is thus linked to a defined goal and expectation.

However, goal setting is no panacea. It will not compensate for the under payment of employees or for poor management. If, for example, the goals are unfair, arbitrary, or unreachable, the result may be dissatisfaction and poor controls. If difficult goals are set without proper quality controls then quantity may be achieved at the expense of quality. But how do extrinsic motivators act in comparison to intrinsic stimulators? In contrast to intrinsic drivers, extrinsic are rather clearly defined and easily perceptible, and often entitled to “rewards”.

They can be categorised in two different groups: monetary rewards and non-monetary rewards (see scheme below; Gunnigle, 2010). PUT THE TABLE When looking further into these components of motivation, it is made clear that extrinsic motivators satisfy basic needs, such as survival, security, self-development and could therefore be related to Maslow’s Hierarchy of needs. A reward system is very important to each company, as it must meet certain conditions. It should promote both internal and external equity, reflecting a fair image of rewarding and thus, motivating (Gunnigle, p166, 2010).

When creating a reward system, a manager should not be misled by “the 6 dangerous myths about pay” (Pfeffer, Harvard Business Review, 1998). Two of them should assist in the understanding that changing labour wages does not necessarily mean that labour costs will change in the same direction. If labor wages are increased, productivity increases, and thus labour cost decreases. If rates are cut, new employees must be hired, and therefore unexperimented, slow and less capable workers will increase labour costs. In addition, it is not true that people only work for money.

People work mainly for their career development, sense of achievement, self development, enjoyable work, which are all intrinsic motivators. Individual incentive pay does not necessarily improve performance. Better ways to improve it are offering employees intellectually engaging work, a family friendly environment and the opportunity to work with fun. Overall, the literature shows that extrinsic motivators are far easier to implant in companies and according to Julian Birskinshaw , “they still continue to devote half their effort to the extrinsic side of the equation”.

This is why we have chosen to compare this theory to a real life experience. declan browne : an effetive way to satisfy employees would be to find what they want and, to the extent posible, give it to them. (Locke’s value theory). Research Methodology To explore the effects of different types of motivation in the workplace, Dawn Stad was interviewed for her first-hand experience with motivating factors. Dawn is a Lead Business Systems Analyst at the Boston Consulting Group in Boston, US. She has been with the company for almost hree and a half years and prior to that she worked at PriceWaterhouseCoopers as a Senior Associate in Performance Improvement. The Boston Consulting Group (BCG) is a management consulting firm with 74 offices around the world, renowned for its success rate and high quality services. It is considered to be one of the most prestigious consulting firms in the world and has been classified as one of the top ten companies to work at in the United States (Vault, 2011). The company is a partnership, meaning that it is privately owned and therefore does not have to disclose its financial information to the general public (Hoovers, 2011).

However, BCG’s 2010 revenues are estimated to be near $3 billion, making it a frontrunner in the industry (Hoovers, 2011). As an industry, management consulting services are estimated to be valued at around $158 billion in the US in 2008 and almost $300 billion worldwide (Management Consulting Services, 2011). It is a very large sector with more than 100,000 individual enterprises operating in the US alone. Many companies in this sector have been said to be great places to work at and motivation is a very large component of that (Management Consulting Services, 2011).

In companies such as BCG, which is considered to have some of the best healthcare, retirement, spousal, and various other benefits in the industry, one would assume that the HR department plays a large role in ensuring that all employees receive equal access to the services they are entitled to. Dawn Stad’s interview was helpful in seeing how helpful the HR department is and what sort of things a typical employee is looking for when trying to seek employment at the company. The interview was conducted on November 12, 2011 over the Internet, using the video conferencing application Skype.

This was the most convenient way to conduct the interview since Dawn is based in the US. It lasted for approximately 30 minutes and the questions were carefully selected so as to see exactly what the employee values most at this company, and perhaps at any place of employment in general. So as not to lead Dawn into answering the overall question of motivation in a way that we decided as interviewers, the questions were selected to be intentionally varied and not overly concise, so that the interviewee could come to the conclusion on her own.

When asked what is her main motivator at work, a direct question, Dawn replied that she wished to excel in her career path and look for self-improvement. However, as the questioning got a little less direct, more of Dawn’s responses touched on monetary compensation and it seems that that is her main motivator at BCG, an extrinsic one. Analysis / Discussion The literature reviewed proved that intrinsic and extrinsic types of motivation are equally important and while extrinsic motivation is easily measured intrinsic motivation cannot be ignored.

Dawn Stad emphasizes the importance of monetary reward however, when taking a closer look at the interview intrinsic motivators are also of clear importance to her. Stad states that “the office environment and culture is nice but I would not really consider it to be a beneficial factory to my work. I enjoy working from home more and I think I’m sometimes more productive when I work on my own schedule from home. ” This statement is somewhat contradictory because although Stad says the environment is not beneficial to her work it is the environment that gives her the flexibility to work at home.

In addition to the flexibility of working hours and conditions, Stad stated that BCG also provides training and promotional opportunities. According to Herzberg, these intrinsic motivators should have a long-term effect on the employee’s behavior. Stad does not highlight this as her main motivation but this could be due to the fact that the extrinsic factors are a part of her daily working life. Regular monetary reward is provided on a weekly or monthly basis and therefore is a more obvious indicator motivation. Even bonuses are provided on a biannual or annual basis.

However, it is the intrinsic factors that allow her to work at home when her life requires she do so or to improve upon her skills at her leisure. These are the reasons why she chooses to stay at the job and be continually motivated to achieve her long-term goals. Locke and Vroom’s theories together highlight the importance of goal setting. They agree that goals need to be clear and well defined in order to be effective. The interview shows that BCG also wants its employees to set goals. They provide many opportunities for promotion and improvement allowing their employees to constantly set new goals.

Stad was asked both what motivates her as an individual and what motivates others within the company. As an individual she feels that promotions and potential growth are her motivation but for her fellow colleagues it is monetary reward that would be the best motivation. This again can be related to the short and the long term. Stad was considering her own, personal long-term goals when being asked the first question and provided an intrinsically motivated answer. When answering the second, she was considering what could be done at this moment to motivate her colleagues.

Therefore, monetary reward may provide the highest short-term motivation but in terms of employee retention the intrinsic motivators prove more successful. Overall, this theory can be related to Maslow’s hierarchy of needs, with extrinsic motivators being the essential factors or the bottom of the triangle and the intrinsic motivators being the non-essential or the top of the triangle. Monetary reward is necessary and an individual would not take a job without it. However, intrinsic rewards are the additional more personal aspects which will make an individual stay at a job.

For example, the opportunity for promotion was necessary for Stad to remain in her position, it was her self-actualization. Conclusions & Recommendations Appendices APPENDIX A: |Principle |Motivators involved (high level satisfaction) | |Removing some controls while retaining accountability |Responsibility and personal achievement | |Increasing the accountability of individuals for own work. Responsibility and recognition | |Giving a person a complete natural unit of work (module, division, |Responsibility, achievement and recognition | |area, and so on) | | |Granting additional authority to an employee in his activity ; job |Responsibility, achievement and recognition | |freedom | | |Making periodic reports directly available to the worker himself |Internal recognition | |rather than to the supervisor | | |Introducing new and more difficult tasks not previously handled |Growth and learning | |Assigning individuals specific or specialized tasks, enabling them to|Responsibility, growth and advancement | |become experts | | APPENDIX B: INTERVIEW 1. For which company do you currently work and in which position? I’m employed at the Boston Consulting Group and I’m a Lead Business Analyst there. 2. What are the main resources that the HR department provides for you as an employee? HR mostly just provides information about benefits, corporate policies, etc. through an intranet site. 3.

What do you consider your main motivator at work? (i. e. salary, promotion, self-improvement, etc. ) I think my main motivator is to excel in career path and find good growth potential. 4. How is the wage/salary/bonus system set up? Is this effective in motivating you to work? BCG has a good base compensation and a great benefits package. It is somewhat effective in motivating me to work but there’s definitely room for improvement in this area. 5. Does your role have much room for progression and promotion? Yes, definitely! I believe the company is invested in me as an employee and they would like to see me succeed and climb the career ladder. 6.

In what ways (if any) does your department or the HR department reward/congratulate you for individual tasks/projects successfully completed? Sometimes successful tasks will be rewarded with awards or little “trophies”, other times we might get monetary rewards through gift certificates or something similar. 7. Do you enjoy the office environment and do you consider it to be a beneficial factor in your work capacity? Yes, the office environment and culture is nice but I would not really consider it to be a beneficial factor to my work. I enjoy working from home more and I think I’m sometimes more productive when I work on my own schedule from home. 8.

How flexible is your daily schedule? What is the flexibility of your role in terms of working from home, taking a sick/vacation day, or taking a maternity leave? My daily schedule is fairly flexible. I’m able to work from home a couple times a month. Sick/vacation days are extremely flexible, but this really depends on your manager. I’m not sure about maternity leave but based on my knowledge of the company, it’s probably flexible as well. 9. Does your company provide any trainings or seminars from outside your department that you can attend? If so, do you find these to be beneficial? Yes, lately they’ve been offering various trainings for us and they’ve been helpful.

More often than not, the trainings are just in my department to help us improve our skills with certain applications but sometimes it is general seminars that the partners in the office think would be interesting for us. 10. Do you find that psychological motivation (i. e. a “pat on the back”, being told you did a good job) is important at your company? It’s nice to be told you’re doing a good job, but it’s not as motivational as being appreciated through compensation/bonuses. 11. What do you consider to be the main reason that people apply for work at your company? The brand/name/reputation. 12. What are some things that you think the company can make changes in to help boost motivation for employees? I think in the end most people just care about the money.

The best way to help motivate the employees would be to increase base compensation and bonuses, that’s really all it comes down to! BIBLIOGRAPHY Hoovers. (2011). Hoovers Company Records: The Boston Consulting Group Inc. Hoovers Inc. “Management Consulting Services. ” Encyclopedia of American Industries, Online Edition. Gale, 2011. Reproduced in Business and Company Resource Center. Farmington Hills, Mich. :Gale Group. 2011. http://galenet. galegroup. com. remote. library. dcu. ie/servlet/BCRC Vault. (2011). The Boston Consulting Group, Inc. Retrieved Nov 16, 2011, from Vault Career Intelligence: http://www. vault. com/wps/portal/usa/companies/company-profile? companyId=322&search_type=company

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