DTU ProjectLab - User contributions [en-gb]

Extrinsic Motivation in the Workplace

2023-05-09T21:57:18Z

Philip Brandt:

Author: ''Philip Alexander Østergaard Brandt - s164495, Spring 2023''

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

__TOC__

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''test''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect <ref name=''11''> ''Weibel, A., Wiemann, M., & Osterloh, M. (2014). A behavioral economics perspective on the overjustification effect: Crowding-in and crowding-out of intrinsic motivation. The oxford handbook of work engagement, motivation, and self-determination theory, 72-84.'' </ref>.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12.]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

===== Risk of Creating a Bribing Mentality =====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity. The framework assumes that motivation is determined by the expected benefits and expected costs. The benefits are divided into two categories: intrinsic benefits, such as the positive feelings one would gain through the activity, and extrinsic benefits such as the rewards the individual would receive. Similarly, the costs of the framework can be divided into intrinsic and extrinsic costs. By taking these factors into account, the framework aims to increase the motivation for a specific exercise.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation (Chapter 2). Springer.
:- In the debate of extrinsic motivation, this article is highly relevant. It discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees. Here, excessive extrinsic rewards refer to monetary rewards that exceed the expectations of the employee. This piece is especially useful for managers who are interested in learning about the relationship between extrinsic rewards and the motivation of their employees. The article also provides suggestions about how an organization can structure their reward systems to promote employee trust and cooperation.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory and determine the impact of intrinsic and extrinsic motivation on the work engagement of the employees. The study discusses some unique findings, differing from most research conducted within the field. One of the findings was that there was no indication that extrinsic motivation would diminish the intrinsic motivation of an employee. The finding of this study confirms just how complex the topic of extrinsic motivation is, thus making this article relevant to people who want to gain an even deeper understanding of the subject, in addition to the general knowledge.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This study examines the motivation crowding effect and demonstrates the fact that it is also of empirical relevance. The article states that there is empirical evidence that supports the existence of crowding-in and crowding-out, thus confirming that it is not just a theory. Evidence is presented in the form of laboratory studies conducted by both psychologists and economists and furthermore, field research by econometric studies. The evidence in the article is gathered from different areas of the economy, different societies and countries. Thus, making it relevant to anyone who wants to dig deeper into the empirical relevance of the motivation crowding effect..

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and proposes a continuum with three types of motivation: intrinsic motivation, extrinsic motivation and amotivation characterised by seven dimensions. It describes two studies that focused on the Greek version of the academic motivation scale (AMS), thus allowing the reader to gain a deeper understanding of self-determination theory. The results of the study indicate that the Greek version of the AMS has satisfactory levels of consistency which allows it to be used for assessing intrinsic motivation, extrinsic motivation and amotivation for Greek high school students. The study is relevant for people interested in the measurement of motivation in an academic context.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T21:57:05Z

Philip Brandt:

Author: ''Philip Alexander Østergaard Brandt - s164495, Spring 2023''

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

__TOC__

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''test''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect <ref name=''11''> ''Weibel, A., Wiemann, M., & Osterloh, M. (2014). A behavioral economics perspective on the overjustification effect: Crowding-in and crowding-out of intrinsic motivation. The oxford handbook of work engagement, motivation, and self-determination theory, 72-84.'' </ref>.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

===== Risk of Creating a Bribing Mentality =====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity. The framework assumes that motivation is determined by the expected benefits and expected costs. The benefits are divided into two categories: intrinsic benefits, such as the positive feelings one would gain through the activity, and extrinsic benefits such as the rewards the individual would receive. Similarly, the costs of the framework can be divided into intrinsic and extrinsic costs. By taking these factors into account, the framework aims to increase the motivation for a specific exercise.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation (Chapter 2). Springer.
:- In the debate of extrinsic motivation, this article is highly relevant. It discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees. Here, excessive extrinsic rewards refer to monetary rewards that exceed the expectations of the employee. This piece is especially useful for managers who are interested in learning about the relationship between extrinsic rewards and the motivation of their employees. The article also provides suggestions about how an organization can structure their reward systems to promote employee trust and cooperation.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory and determine the impact of intrinsic and extrinsic motivation on the work engagement of the employees. The study discusses some unique findings, differing from most research conducted within the field. One of the findings was that there was no indication that extrinsic motivation would diminish the intrinsic motivation of an employee. The finding of this study confirms just how complex the topic of extrinsic motivation is, thus making this article relevant to people who want to gain an even deeper understanding of the subject, in addition to the general knowledge.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This study examines the motivation crowding effect and demonstrates the fact that it is also of empirical relevance. The article states that there is empirical evidence that supports the existence of crowding-in and crowding-out, thus confirming that it is not just a theory. Evidence is presented in the form of laboratory studies conducted by both psychologists and economists and furthermore, field research by econometric studies. The evidence in the article is gathered from different areas of the economy, different societies and countries. Thus, making it relevant to anyone who wants to dig deeper into the empirical relevance of the motivation crowding effect..

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and proposes a continuum with three types of motivation: intrinsic motivation, extrinsic motivation and amotivation characterised by seven dimensions. It describes two studies that focused on the Greek version of the academic motivation scale (AMS), thus allowing the reader to gain a deeper understanding of self-determination theory. The results of the study indicate that the Greek version of the AMS has satisfactory levels of consistency which allows it to be used for assessing intrinsic motivation, extrinsic motivation and amotivation for Greek high school students. The study is relevant for people interested in the measurement of motivation in an academic context.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T21:56:13Z

Philip Brandt:

Author: ''Philip Alexander Østergaard Brandt - s164495, Spring 2023''

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

__TOC__

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference <ref name=test/>.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''test''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect <ref name=''11''> ''Weibel, A., Wiemann, M., & Osterloh, M. (2014). A behavioral economics perspective on the overjustification effect: Crowding-in and crowding-out of intrinsic motivation. The oxford handbook of work engagement, motivation, and self-determination theory, 72-84.'' </ref>.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

===== Risk of Creating a Bribing Mentality =====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity. The framework assumes that motivation is determined by the expected benefits and expected costs. The benefits are divided into two categories: intrinsic benefits, such as the positive feelings one would gain through the activity, and extrinsic benefits such as the rewards the individual would receive. Similarly, the costs of the framework can be divided into intrinsic and extrinsic costs. By taking these factors into account, the framework aims to increase the motivation for a specific exercise.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation (Chapter 2). Springer.
:- In the debate of extrinsic motivation, this article is highly relevant. It discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees. Here, excessive extrinsic rewards refer to monetary rewards that exceed the expectations of the employee. This piece is especially useful for managers who are interested in learning about the relationship between extrinsic rewards and the motivation of their employees. The article also provides suggestions about how an organization can structure their reward systems to promote employee trust and cooperation.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory and determine the impact of intrinsic and extrinsic motivation on the work engagement of the employees. The study discusses some unique findings, differing from most research conducted within the field. One of the findings was that there was no indication that extrinsic motivation would diminish the intrinsic motivation of an employee. The finding of this study confirms just how complex the topic of extrinsic motivation is, thus making this article relevant to people who want to gain an even deeper understanding of the subject, in addition to the general knowledge.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This study examines the motivation crowding effect and demonstrates the fact that it is also of empirical relevance. The article states that there is empirical evidence that supports the existence of crowding-in and crowding-out, thus confirming that it is not just a theory. Evidence is presented in the form of laboratory studies conducted by both psychologists and economists and furthermore, field research by econometric studies. The evidence in the article is gathered from different areas of the economy, different societies and countries. Thus, making it relevant to anyone who wants to dig deeper into the empirical relevance of the motivation crowding effect..

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and proposes a continuum with three types of motivation: intrinsic motivation, extrinsic motivation and amotivation characterised by seven dimensions. It describes two studies that focused on the Greek version of the academic motivation scale (AMS), thus allowing the reader to gain a deeper understanding of self-determination theory. The results of the study indicate that the Greek version of the AMS has satisfactory levels of consistency which allows it to be used for assessing intrinsic motivation, extrinsic motivation and amotivation for Greek high school students. The study is relevant for people interested in the measurement of motivation in an academic context.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T21:55:43Z

Philip Brandt: /* Application in the Workplace */

Author: ''Philip Alexander Østergaard Brandt - s164495, Spring 2023''

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

__TOC__

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''test''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect <ref name=''11''> ''Weibel, A., Wiemann, M., & Osterloh, M. (2014). A behavioral economics perspective on the overjustification effect: Crowding-in and crowding-out of intrinsic motivation. The oxford handbook of work engagement, motivation, and self-determination theory, 72-84.'' </ref>.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

===== Risk of Creating a Bribing Mentality =====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity. The framework assumes that motivation is determined by the expected benefits and expected costs. The benefits are divided into two categories: intrinsic benefits, such as the positive feelings one would gain through the activity, and extrinsic benefits such as the rewards the individual would receive. Similarly, the costs of the framework can be divided into intrinsic and extrinsic costs. By taking these factors into account, the framework aims to increase the motivation for a specific exercise.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation (Chapter 2). Springer.
:- In the debate of extrinsic motivation, this article is highly relevant. It discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees. Here, excessive extrinsic rewards refer to monetary rewards that exceed the expectations of the employee. This piece is especially useful for managers who are interested in learning about the relationship between extrinsic rewards and the motivation of their employees. The article also provides suggestions about how an organization can structure their reward systems to promote employee trust and cooperation.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory and determine the impact of intrinsic and extrinsic motivation on the work engagement of the employees. The study discusses some unique findings, differing from most research conducted within the field. One of the findings was that there was no indication that extrinsic motivation would diminish the intrinsic motivation of an employee. The finding of this study confirms just how complex the topic of extrinsic motivation is, thus making this article relevant to people who want to gain an even deeper understanding of the subject, in addition to the general knowledge.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This study examines the motivation crowding effect and demonstrates the fact that it is also of empirical relevance. The article states that there is empirical evidence that supports the existence of crowding-in and crowding-out, thus confirming that it is not just a theory. Evidence is presented in the form of laboratory studies conducted by both psychologists and economists and furthermore, field research by econometric studies. The evidence in the article is gathered from different areas of the economy, different societies and countries. Thus, making it relevant to anyone who wants to dig deeper into the empirical relevance of the motivation crowding effect..

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and proposes a continuum with three types of motivation: intrinsic motivation, extrinsic motivation and amotivation characterised by seven dimensions. It describes two studies that focused on the Greek version of the academic motivation scale (AMS), thus allowing the reader to gain a deeper understanding of self-determination theory. The results of the study indicate that the Greek version of the AMS has satisfactory levels of consistency which allows it to be used for assessing intrinsic motivation, extrinsic motivation and amotivation for Greek high school students. The study is relevant for people interested in the measurement of motivation in an academic context.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T21:54:53Z

Philip Brandt:

Author: ''Philip Alexander Østergaard Brandt - s164495, Spring 2023''

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

__TOC__

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect <ref name=''11''> ''Weibel, A., Wiemann, M., & Osterloh, M. (2014). A behavioral economics perspective on the overjustification effect: Crowding-in and crowding-out of intrinsic motivation. The oxford handbook of work engagement, motivation, and self-determination theory, 72-84.'' </ref>.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

===== Risk of Creating a Bribing Mentality =====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity. The framework assumes that motivation is determined by the expected benefits and expected costs. The benefits are divided into two categories: intrinsic benefits, such as the positive feelings one would gain through the activity, and extrinsic benefits such as the rewards the individual would receive. Similarly, the costs of the framework can be divided into intrinsic and extrinsic costs. By taking these factors into account, the framework aims to increase the motivation for a specific exercise.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation (Chapter 2). Springer.
:- In the debate of extrinsic motivation, this article is highly relevant. It discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees. Here, excessive extrinsic rewards refer to monetary rewards that exceed the expectations of the employee. This piece is especially useful for managers who are interested in learning about the relationship between extrinsic rewards and the motivation of their employees. The article also provides suggestions about how an organization can structure their reward systems to promote employee trust and cooperation.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory and determine the impact of intrinsic and extrinsic motivation on the work engagement of the employees. The study discusses some unique findings, differing from most research conducted within the field. One of the findings was that there was no indication that extrinsic motivation would diminish the intrinsic motivation of an employee. The finding of this study confirms just how complex the topic of extrinsic motivation is, thus making this article relevant to people who want to gain an even deeper understanding of the subject, in addition to the general knowledge.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This study examines the motivation crowding effect and demonstrates the fact that it is also of empirical relevance. The article states that there is empirical evidence that supports the existence of crowding-in and crowding-out, thus confirming that it is not just a theory. Evidence is presented in the form of laboratory studies conducted by both psychologists and economists and furthermore, field research by econometric studies. The evidence in the article is gathered from different areas of the economy, different societies and countries. Thus, making it relevant to anyone who wants to dig deeper into the empirical relevance of the motivation crowding effect..

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and proposes a continuum with three types of motivation: intrinsic motivation, extrinsic motivation and amotivation characterised by seven dimensions. It describes two studies that focused on the Greek version of the academic motivation scale (AMS), thus allowing the reader to gain a deeper understanding of self-determination theory. The results of the study indicate that the Greek version of the AMS has satisfactory levels of consistency which allows it to be used for assessing intrinsic motivation, extrinsic motivation and amotivation for Greek high school students. The study is relevant for people interested in the measurement of motivation in an academic context.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T21:54:38Z

Philip Brandt:

Author: ''Philip Alexander Østergaard Brandt - s164495, Spring 2023''

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

__TOC__

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference <ref name=9/>.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect <ref name=''11''> ''Weibel, A., Wiemann, M., & Osterloh, M. (2014). A behavioral economics perspective on the overjustification effect: Crowding-in and crowding-out of intrinsic motivation. The oxford handbook of work engagement, motivation, and self-determination theory, 72-84.'' </ref>.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

===== Risk of Creating a Bribing Mentality =====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity. The framework assumes that motivation is determined by the expected benefits and expected costs. The benefits are divided into two categories: intrinsic benefits, such as the positive feelings one would gain through the activity, and extrinsic benefits such as the rewards the individual would receive. Similarly, the costs of the framework can be divided into intrinsic and extrinsic costs. By taking these factors into account, the framework aims to increase the motivation for a specific exercise.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation (Chapter 2). Springer.
:- In the debate of extrinsic motivation, this article is highly relevant. It discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees. Here, excessive extrinsic rewards refer to monetary rewards that exceed the expectations of the employee. This piece is especially useful for managers who are interested in learning about the relationship between extrinsic rewards and the motivation of their employees. The article also provides suggestions about how an organization can structure their reward systems to promote employee trust and cooperation.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory and determine the impact of intrinsic and extrinsic motivation on the work engagement of the employees. The study discusses some unique findings, differing from most research conducted within the field. One of the findings was that there was no indication that extrinsic motivation would diminish the intrinsic motivation of an employee. The finding of this study confirms just how complex the topic of extrinsic motivation is, thus making this article relevant to people who want to gain an even deeper understanding of the subject, in addition to the general knowledge.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This study examines the motivation crowding effect and demonstrates the fact that it is also of empirical relevance. The article states that there is empirical evidence that supports the existence of crowding-in and crowding-out, thus confirming that it is not just a theory. Evidence is presented in the form of laboratory studies conducted by both psychologists and economists and furthermore, field research by econometric studies. The evidence in the article is gathered from different areas of the economy, different societies and countries. Thus, making it relevant to anyone who wants to dig deeper into the empirical relevance of the motivation crowding effect..

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and proposes a continuum with three types of motivation: intrinsic motivation, extrinsic motivation and amotivation characterised by seven dimensions. It describes two studies that focused on the Greek version of the academic motivation scale (AMS), thus allowing the reader to gain a deeper understanding of self-determination theory. The results of the study indicate that the Greek version of the AMS has satisfactory levels of consistency which allows it to be used for assessing intrinsic motivation, extrinsic motivation and amotivation for Greek high school students. The study is relevant for people interested in the measurement of motivation in an academic context.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T21:54:26Z

Philip Brandt:

Author: ''Philip Alexander Østergaard Brandt - s164495, Spring 2023''

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

__TOC__

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference <ref name=9>.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect <ref name=''11''> ''Weibel, A., Wiemann, M., & Osterloh, M. (2014). A behavioral economics perspective on the overjustification effect: Crowding-in and crowding-out of intrinsic motivation. The oxford handbook of work engagement, motivation, and self-determination theory, 72-84.'' </ref>.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

===== Risk of Creating a Bribing Mentality =====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity. The framework assumes that motivation is determined by the expected benefits and expected costs. The benefits are divided into two categories: intrinsic benefits, such as the positive feelings one would gain through the activity, and extrinsic benefits such as the rewards the individual would receive. Similarly, the costs of the framework can be divided into intrinsic and extrinsic costs. By taking these factors into account, the framework aims to increase the motivation for a specific exercise.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation (Chapter 2). Springer.
:- In the debate of extrinsic motivation, this article is highly relevant. It discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees. Here, excessive extrinsic rewards refer to monetary rewards that exceed the expectations of the employee. This piece is especially useful for managers who are interested in learning about the relationship between extrinsic rewards and the motivation of their employees. The article also provides suggestions about how an organization can structure their reward systems to promote employee trust and cooperation.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory and determine the impact of intrinsic and extrinsic motivation on the work engagement of the employees. The study discusses some unique findings, differing from most research conducted within the field. One of the findings was that there was no indication that extrinsic motivation would diminish the intrinsic motivation of an employee. The finding of this study confirms just how complex the topic of extrinsic motivation is, thus making this article relevant to people who want to gain an even deeper understanding of the subject, in addition to the general knowledge.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This study examines the motivation crowding effect and demonstrates the fact that it is also of empirical relevance. The article states that there is empirical evidence that supports the existence of crowding-in and crowding-out, thus confirming that it is not just a theory. Evidence is presented in the form of laboratory studies conducted by both psychologists and economists and furthermore, field research by econometric studies. The evidence in the article is gathered from different areas of the economy, different societies and countries. Thus, making it relevant to anyone who wants to dig deeper into the empirical relevance of the motivation crowding effect..

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and proposes a continuum with three types of motivation: intrinsic motivation, extrinsic motivation and amotivation characterised by seven dimensions. It describes two studies that focused on the Greek version of the academic motivation scale (AMS), thus allowing the reader to gain a deeper understanding of self-determination theory. The results of the study indicate that the Greek version of the AMS has satisfactory levels of consistency which allows it to be used for assessing intrinsic motivation, extrinsic motivation and amotivation for Greek high school students. The study is relevant for people interested in the measurement of motivation in an academic context.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T21:51:14Z

Philip Brandt: /* Annotated Bibliography */

Author: ''Philip Alexander Østergaard Brandt - s164495, Spring 2023''

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

__TOC__

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect <ref name=''11''> ''Weibel, A., Wiemann, M., & Osterloh, M. (2014). A behavioral economics perspective on the overjustification effect: Crowding-in and crowding-out of intrinsic motivation. The oxford handbook of work engagement, motivation, and self-determination theory, 72-84.'' </ref>.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

===== Risk of Creating a Bribing Mentality =====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity. The framework assumes that motivation is determined by the expected benefits and expected costs. The benefits are divided into two categories: intrinsic benefits, such as the positive feelings one would gain through the activity, and extrinsic benefits such as the rewards the individual would receive. Similarly, the costs of the framework can be divided into intrinsic and extrinsic costs. By taking these factors into account, the framework aims to increase the motivation for a specific exercise.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation (Chapter 2). Springer.
:- In the debate of extrinsic motivation, this article is highly relevant. It discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees. Here, excessive extrinsic rewards refer to monetary rewards that exceed the expectations of the employee. This piece is especially useful for managers who are interested in learning about the relationship between extrinsic rewards and the motivation of their employees. The article also provides suggestions about how an organization can structure their reward systems to promote employee trust and cooperation.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory and determine the impact of intrinsic and extrinsic motivation on the work engagement of the employees. The study discusses some unique findings, differing from most research conducted within the field. One of the findings was that there was no indication that extrinsic motivation would diminish the intrinsic motivation of an employee. The finding of this study confirms just how complex the topic of extrinsic motivation is, thus making this article relevant to people who want to gain an even deeper understanding of the subject, in addition to the general knowledge.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This study examines the motivation crowding effect and demonstrates the fact that it is also of empirical relevance. The article states that there is empirical evidence that supports the existence of crowding-in and crowding-out, thus confirming that it is not just a theory. Evidence is presented in the form of laboratory studies conducted by both psychologists and economists and furthermore, field research by econometric studies. The evidence in the article is gathered from different areas of the economy, different societies and countries. Thus, making it relevant to anyone who wants to dig deeper into the empirical relevance of the motivation crowding effect..

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and proposes a continuum with three types of motivation: intrinsic motivation, extrinsic motivation and amotivation characterised by seven dimensions. It describes two studies that focused on the Greek version of the academic motivation scale (AMS), thus allowing the reader to gain a deeper understanding of self-determination theory. The results of the study indicate that the Greek version of the AMS has satisfactory levels of consistency which allows it to be used for assessing intrinsic motivation, extrinsic motivation and amotivation for Greek high school students. The study is relevant for people interested in the measurement of motivation in an academic context.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T21:47:36Z

Philip Brandt: /* Annotated Bibliography */

Author: ''Philip Alexander Østergaard Brandt - s164495, Spring 2023''

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

__TOC__

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect <ref name=''11''> ''Weibel, A., Wiemann, M., & Osterloh, M. (2014). A behavioral economics perspective on the overjustification effect: Crowding-in and crowding-out of intrinsic motivation. The oxford handbook of work engagement, motivation, and self-determination theory, 72-84.'' </ref>.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

===== Risk of Creating a Bribing Mentality =====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity. The framework assumes that motivation is determined by the expected benefits and expected costs. The benefits are divided into two categories: intrinsic benefits, such as the positive feelings one would gain through the activity, and extrinsic benefits such as the rewards the individual would receive. Similarly, the costs of the framework can be divided into intrinsic and extrinsic costs. By taking these factors into account, the framework aims to increase the motivation for a specific exercise.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation (Chapter 2). Springer.
:- In the debate of extrinsic motivation, this article is highly relevant. It discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees. Here, excessive extrinsic rewards refer to monetary rewards that exceed the expectations of the employee. This piece is especially useful for managers who are interested in learning about the relationship between extrinsic rewards and the motivation of their employees. The article also provides suggestions about how an organization can structure their reward systems to promote employee trust and cooperation.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory and determine the impact of intrinsic and extrinsic motivation on the work engagement of the employees. The study discusses some unique findings, differing from most research conducted within the field. One of the findings was that there was no indication that extrinsic motivation would diminish the intrinsic motivation of an employee. The finding of this study confirms just how complex the topic of extrinsic motivation is, thus making this article relevant to people who want to gain an even deeper understanding of the subject, in addition to the general knowledge.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This study examines the motivation crowding effect and demonstrates the fact that it is also of empirical relevance. The article states that there is empirical evidence that supports the existence of crowding-in and crowding-out, thus confirming that it is not just a theory. Evidence is presented in the form of laboratory studies conducted by both psychologists and economists and furthermore, field research by econometric studies. The evidence in the article is gathered from different areas of the economy, different societies and countries. Thus, making it relevant to anyone who wants to dig deeper into the empirical relevance of the motivation crowding effect..

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and proposes a continuum with three types of motivation: intrinsic motivation, extrinsic motivation and amotivation characterised by seven dimensions. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T21:42:08Z

Philip Brandt: /* Annotated Bibliography */

Author: ''Philip Alexander Østergaard Brandt - s164495, Spring 2023''

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

__TOC__

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect <ref name=''11''> ''Weibel, A., Wiemann, M., & Osterloh, M. (2014). A behavioral economics perspective on the overjustification effect: Crowding-in and crowding-out of intrinsic motivation. The oxford handbook of work engagement, motivation, and self-determination theory, 72-84.'' </ref>.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

===== Risk of Creating a Bribing Mentality =====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity. The framework assumes that motivation is determined by the expected benefits and expected costs. The benefits are divided into two categories: intrinsic benefits, such as the positive feelings one would gain through the activity, and extrinsic benefits such as the rewards the individual would receive. Similarly, the costs of the framework can be divided into intrinsic and extrinsic costs. By taking these factors into account, the framework aims to increase the motivation for a specific exercise.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation (Chapter 2). Springer.
:- In the debate of extrinsic motivation, this article is highly relevant. It discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees. Here, excessive extrinsic rewards refer to monetary rewards that exceed the expectations of the employee. This piece is especially useful for managers who are interested in learning about the relationship between extrinsic rewards and the motivation of their employees. The article also provides suggestions about how an organization can structure their reward systems to promote employee trust and cooperation.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory and determine the impact of intrinsic and extrinsic motivation on the work engagement of the employees. The study discusses some unique findings, differing from most research conducted within the field. One of the findings was that there was no indication that extrinsic motivation would diminish the intrinsic motivation of an employee. The finding of this study confirms just how complex the topic of extrinsic motivation is, thus making this article relevant to people who want to gain an even deeper understanding of the subject, in addition to the general knowledge.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This study examines the motivation crowding effect and demonstrates the fact that it is also of empirical relevance. The article states that there is empirical evidence that supports the existence of crowding-in and crowding-out, thus confirming that it is not just a theory. Evidence is presented in the form of laboratory studies conducted by both psychologists and economists and furthermore, field research by econometric studies. The evidence in the article is gathered from different areas of the economy, different societies and countries. Thus, making it relevant to anyone who wants to dig deeper into the empirical relevance of the motivation crowding effect..

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T21:28:49Z

Philip Brandt: /* Motivation Crowding Theory */

Author: ''Philip Alexander Østergaard Brandt - s164495, Spring 2023''

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

__TOC__

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect <ref name=''11''> ''Weibel, A., Wiemann, M., & Osterloh, M. (2014). A behavioral economics perspective on the overjustification effect: Crowding-in and crowding-out of intrinsic motivation. The oxford handbook of work engagement, motivation, and self-determination theory, 72-84.'' </ref>.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

===== Risk of Creating a Bribing Mentality =====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity. The framework is based on the assumption that motivation is determined by the expected benefits and expected costs. The benefits are divided into two categories: intrinsic benefits, such as the positive feelings one would gain through the activity, and extrinsic benefits such as the rewards the individual would receive. Similarly, the costs of the framework can be divided into intrinsic and extrinsic costs. By taking these factors into account, the framework aims to increase the motivation for a specific exercise.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation (Chapter 2). Springer.
:- In the debate of extrinsic motivation, this article is highly relevant. It discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees. Here, excessive extrinsic rewards refer to monetary rewards that exceed the expectations of the employee. This piece is especially useful for managers who are interested in learning about the relationship between extrinsic rewards and the motivation of their employees. The article also provides suggestions about how an organization can structure their reward systems to promote employee trust and cooperation.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory and determine the impact of intrinsic and extrinsic motivation on the work engagement of the employees. The study discusses some unique findings, differing from most research conducted within the field. One of the findings was that there was no indication that extrinsic motivation would diminish the intrinsic motivation of an employee. The finding of this study confirms just how complex the topic of extrinsic motivation is, thus making this article relevant to people who want to gain an even deeper understanding of the subject, in addition to the general knowledge.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T21:25:23Z

Philip Brandt: /* Annotated Bibliography */

Author: ''Philip Alexander Østergaard Brandt - s164495, Spring 2023''

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

__TOC__

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

===== Risk of Creating a Bribing Mentality =====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity. The framework is based on the assumption that motivation is determined by the expected benefits and expected costs. The benefits are divided into two categories: intrinsic benefits, such as the positive feelings one would gain through the activity, and extrinsic benefits such as the rewards the individual would receive. Similarly, the costs of the framework can be divided into intrinsic and extrinsic costs. By taking these factors into account, the framework aims to increase the motivation for a specific exercise.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation (Chapter 2). Springer.
:- In the debate of extrinsic motivation, this article is highly relevant. It discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees. Here, excessive extrinsic rewards refer to monetary rewards that exceed the expectations of the employee. This piece is especially useful for managers who are interested in learning about the relationship between extrinsic rewards and the motivation of their employees. The article also provides suggestions about how an organization can structure their reward systems to promote employee trust and cooperation.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory and determine the impact of intrinsic and extrinsic motivation on the work engagement of the employees. The study discusses some unique findings, differing from most research conducted within the field. One of the findings was that there was no indication that extrinsic motivation would diminish the intrinsic motivation of an employee. The finding of this study confirms just how complex the topic of extrinsic motivation is, thus making this article relevant to people who want to gain an even deeper understanding of the subject, in addition to the general knowledge.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T21:14:16Z

Philip Brandt: /* Annotated Bibliography */

Author: ''Philip Alexander Østergaard Brandt - s164495, Spring 2023''

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

__TOC__

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

===== Risk of Creating a Bribing Mentality =====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity. The framework is based on the assumption that motivation is determined by the expected benefits and expected costs. The benefits are divided into two categories: intrinsic benefits, such as the positive feelings one would gain through the activity, and extrinsic benefits such as the rewards the individual would receive. Similarly, the costs of the framework can be divided into intrinsic and extrinsic costs. By taking these factors into account, the framework aims to increase the motivation for a specific exercise.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation (Chapter 2). Springer.
:- In the debate of extrinsic motivation, this article is highly relevant. It discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees. Here, excessive extrinsic rewards refer to monetary rewards that exceed the expectations of the employee. This piece is especially useful for managers who are interested in learning about the relationship between extrinsic rewards and the motivation of their employees. The article also provides suggestions about how an organization can structure their reward systems to promote employee trust and cooperation.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T21:04:08Z

Philip Brandt: /* Annotated Bibliography */

Author: ''Philip Alexander Østergaard Brandt - s164495, Spring 2023''

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

__TOC__

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

===== Risk of Creating a Bribing Mentality =====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity. The framework is based on the assumption that motivation is determined by the expected benefits and expected costs. The benefits are divided into two categories: intrinsic benefits, such as the positive feelings one would gain through the activity, and extrinsic benefits such as the rewards the individual would receive. Similarly, the costs of the framework can be divided into intrinsic and extrinsic costs. By taking these factors into account, the framework aims to increase the motivation for a specific exercise.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation (Chapter 2). Springer.
:- This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T21:00:04Z

Philip Brandt: /* Annotated Bibliography */

Author: ''Philip Alexander Østergaard Brandt - s164495, Spring 2023''

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

__TOC__

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

===== Risk of Creating a Bribing Mentality =====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity. The framework is based on the assumption that motivation is determined by the expected benefits and expected costs. The benefits are divided into two categories: intrinsic benefits, such as the positive feelings one would gain through the activity, and extrinsic benefits such as the rewards the individual would receive. Similarly, the costs of the framework can be divided into intrinsic and extrinsic costs. By taking these factors into account, the framework aims to increase the motivation for a specific exercise.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation.
:- This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T20:02:01Z

Philip Brandt:

Author: ''Philip Alexander Østergaard Brandt - s164495, Spring 2023''

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

__TOC__

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

===== Risk of Creating a Bribing Mentality =====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation.
:- This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T20:01:51Z

Philip Brandt:

Author: ''Philip Alexander Østergaard Brandt - s164495, Spring 2023''

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

__TOC__

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

===== Risk of Creating a Bribing Mentality =====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation.
:- This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:58:57Z

Philip Brandt:

Author: ''Philip Alexander Østergaard Brandt - s164495, Spring 2023''

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

__TOC__

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

===== Risk of Creating a Bribing Mentality =====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation.
:- This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:58:49Z

Philip Brandt:

Author: ''Philip Alexander Østergaard Brandt s164495, Spring 2023''

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

__TOC__

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

===== Risk of Creating a Bribing Mentality =====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation.
:- This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:57:39Z

Philip Brandt:

Author: ''Philip Alexander Østergaard Brandt, Spring 2023''

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

__TOC__

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

===== Risk of Creating a Bribing Mentality =====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation.
:- This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:57:22Z

Philip Brandt:

''Philip Alexander Østergaard Brandt, Spring 2023''

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

__TOC__

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

===== Risk of Creating a Bribing Mentality =====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation.
:- This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:57:12Z

Philip Brandt:

''Developed by Philip Alexander Østergaard Brandt s164495, Spring 2023''

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

__TOC__

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

===== Risk of Creating a Bribing Mentality =====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation.
:- This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:54:51Z

Philip Brandt:

''Developed by Philip Alexander Østergaard Brandt s164495''

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

__TOC__

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

===== Risk of Creating a Bribing Mentality =====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation.
:- This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:50:13Z

Philip Brandt:

''Developed by Philip Alexander Østergaard Brandt s164495''

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

===== Risk of Creating a Bribing Mentality =====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation.
:- This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:49:38Z

Philip Brandt:

''Developed by Luisa Fernanda Salazar Rivera s222401''

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

===== Risk of Creating a Bribing Mentality =====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation.
:- This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Articles Spring Term 2023

2023-05-09T19:35:54Z

Philip Brandt:

=Overview of 2023 Wiki Collections=

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|Fjeldsøe
|s184141
|New
|[[Stakeholder Mapping]]

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|Group 29
|Miriam
|Khader
|s194717
|New
|[[Leadership styles and development]]
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|Group 5
|Maria
|Arrillaga Tarazona
|s222708
|New? / revised?
|[[Program Evaluation and Review Technique (PERT)]]

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|Group 24
|Josefine
|Steinfurth
|s183648
|New
|[[Project based organisations]]

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|Group 5
|Patricio Alejandro
|Fabro
|s220269
|New
|[[Metrics in Portfolio management]]

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|Group 10
|Jurek Noah
|von Petersdorff-Campen
|s222570
|New
|[[Competency Mapping for Project Management]]

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|Group 15
|Inke
|Lindberg
|s223191
|New
|[[Post-occupancy evaluation (POE)]]
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|Group 16
|Ahmet
|Ibre
|s222442
|New
|[[Social loafing in multidisciplinary teams]]

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|Group 16
|Marie-Therese
|Guidje
|s180863
|New? / revised?
|[[Sustainable Project management]]
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|Group 12
|Peter
|Andresen
|s190517
|New
|[[Project performance with Value Stream management]]
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|Group 3
|Annas
|Jadi
|s194831
|New/ Revised
|[[Key performance indicators for portfolio management]]
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|Group X
|Fabio
|Colombo
|s212492
|New/ Revised
|[[Robust Decision Making: better decisions under uncertainty]]
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|Group 20
|Rune
|Knudsen
|s193983
|New
|[[Task Interdependecies in Projects]]
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|Group 24
|Mia
|Hemmingsen
|s183639
|New/ Revised
|[[Seven stages of change]]
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|Group 1
|Christina
|Kjær
|s183504
|New
|[[The 6C Model]]
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|Group 21
|Jakob
|Berling
|s230256
|New
|[[Successful Teamwork]]
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|Group 1
|Joakim
|Cayouette
|s193978
|Revised
|[[Forecasting]]
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|Group 30
|Amalie
|Pedersen
|s193967
|New
|[[Lean project management and its implementation]]
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|Group 30
|Filip Furbo
|Enevoldsen
|s193967
|New
|[[Optimism bias in teams]]
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|Group 23
|Nicolai
|Frausing
|s175034
|New
|[[Benefit Realization Management]]
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|Group 4
|Emma
|Egelund
|s171516
|Revised
|[[Network Planning in Project Management]]
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|Group 21
|Henrik
|Svensson
|s230245
|New
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|Group 11
|Luisa Fernanda
|Salazar Rivera
|s222401
|New
|[[Building Effective Work Breakdown Structures (WBS)]]
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|Group 15
|Michele
|Ferrante
|s220282
|New
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|Group 4
|Helena
|Mladenovski
|s183367
| New
|[[Situational Leadership Theory (SLT)]]
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|Group 20
|Rolf
|Wollesen
|s193972
| New
|[[Burndown chart]]
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|Group 6
|Gianluca
|Santinon
|s222630
|New
|[[The Rolling-Wave planning technique]]
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|Group X
|Hanna
|Rakel Bjarnadóttir
|s223414
|New
|[[How to achieve sustainable management using ISO21500]]
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|Group 5
|Marta
|Santos
|s226759
|New
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|Group 16
|Hendrik
|Stegers
|s230258
|New
|[[Communication Theories in Project Management]]
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|Group X
|Jiafei
|Xia
|s213084
|New
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|Group 8
|Frederik
|Høgdal
|s173876
|New
|[[Levels of uncertainties]]
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|Group 30
|Jianan
|Yang
|s230033
|New
|[[Communication Funnel Problems in Project Management]]
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|Group 18
|Ellen Cathrine
|Luke
|s184404
|New & Revised
|[[Project War Rooms: Physical vs. Virtual]]
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|Group 17
|Canovas Iglesias
|Carla
|s226573
|New
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|Group 2
|Ólafur Þorri
|Sigurjónsson
|s222540
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|Group 11
|Dario
|Fiorica
|s222631
|New
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|Group 10
|Benjamin
|Søndberg
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|Group 24
|Kristian
|Brandstrup
|s183653
|New
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|Group 14
|Mads
|Marum
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|New / Reviced
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|Group 30
|Jeppe
|Paludan-Müller
|s185048
|New
|[[Feasibility risk assessments of transport projects using Monte Carlo-simulations]]
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|Group 5
|Rejath
|Ramachandran
|s226673
|New? / revised?
|[[A modern re-think of Fayolism]]
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|Group 29
|Onur
|Osman Mustafa
|s223710
|New
|[[Resource Leveling in Construction Projects]]
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|Group 15
|Philip
|Wiehe Larsen
|s154259
|New
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|Group 9
|Michael
|Vinther
|s163490
|New
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|Group 21
|Alberto
|Pillon
|s222629
|New
|[[Driving Continuous Improvement with retrospective meetings]]
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|Group 2
|Unnar Óli
|Arnarsson
|s222543
|New
|[[The Role of Due Diligence in Project Management]]
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|Group 9
|Mateusz
|Szaryk
|s213423
|New
|[[Incentive contract]]
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|Group 23
|Mariely
|Sousa
|s230555
|New
|[[Return on Investment (ROI)]]
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|Group 31
|Vinay Kumar
|Meena
|s230019
|New
|[[The implication of ethics in project management]]
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|Group 10
|Niels Peter
|Lindegaard
|s194473
|New
|[[Risk assessment using Failure mode and effects analysis]]
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|Group 6
|Nils Hendrik
|Lange
|s223634
|New
|[[Eisenhower Decision Matrix in Project, Program and Portfolio Management]]
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|Group 20
|Caroline Hellerung
|Holm
|s175026
|New
|[[Resistance to Change Mapping]]
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|Group 24
|Radost
|Deneva
|s230780
|New
|[[Eisenhower decision matrix]]
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|Group 4
|Marie
|Hoel
|s193960
|New
|[[The Hawthorne effect in management]]
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|Group 4
|Carl Bygum
|Knudsen
|s193995
|New
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|Group 14
|Md Huzzatul Islam
|Shuvo
|s222392
|New
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|Group 23
|Esther Kiara
|Pattipeilohy
|s230264
|New
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|Group 6
|Lars Ole
|Holdensen
|s224931
|New
|[[Management vs Leadership qualities]]
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|Group 11
|Ingeborg
|Rasmussen
|s22218
|New
|[[Conflict management using the Myers-Briggs Type Indicator (MBTI)]]
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|Group 22
|Blomsterberg
|Gudrun
|s222534
|New
|[[Negotiations]]
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|Group 1
|Thorgaard
|Sigrid
|s186044
|New
|[[Critical Chain]]
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|Group 12
|Laurberg
|Emilie
|s193880
|New
|[[Choosing the right communication network for your project]]
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|Group 2
|Bjarki Rúnar
|Sverrisson
|s222547
|New? / revised?
|[[Biases in Project Management and How to Overcome Them with the Two Systems of Thinking]]
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|Group 25
|Anirudh Ram
|Sriram
|s220045
|New
|[[SMART goals in strategy planning]]
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|-
|Group 25
|Mohamed
|Filali
|s212771
|New
|[[Agile prototyping in construction and project management]]
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|Group 16
|Pavel
|Delimarschi
|s222606
|New
|[[Nominal group technique]]
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|Group 31
|Nik Rasmus
|Meier-Sawatzki
|s223232
|New
|[[Effort-Reward-Imbalance]]
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|Group 31
|Antonia Leonie
|Kaul
|s222581
|New
|[[FMEA – Failure Mode and Effects Analysis]]
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|Group 3
|Ioannis
|Marinopoulos
|s220152
|New
|[[War Rooms: An Assessment of Benefits, Drawbacks, and Best Practices]]
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|Group 31
|Alessia
|Pacani
|s230269
|New
|[[Hofstede's Cultural Dimensions Theory]]
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|-
|Group 3
|Stefano
|Vigato
|s230253
|New? / revised?
|[[The Agile Stage-Gate Model]]
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|Group 1
|Sophia Lykke
|Anderse
|s183592
|New
|[[Critical path vs. critical chain]]
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|Group 1
|Sebastian Petchkorn
|Følsgaard
|s193958
|New
|[[SWOT Analysis 101]]
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|Group 30
|Qian
|Xiao
|s230120
|New
|[[Work Break Down Structure(WBS)]]
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|Group 12
|Rhishihesan
|Kugathason
|s193873
|New
|[[Optimizing a company and it's PPM with a PMO system]]
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|-
|Group 18
|Christian Bülow
|Fuglsang
|s194519
|New
|[[Micro_management]]
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|Group 17
|Carolina
|Valderrama
|s193873
|New
|[[Managerial Solutions for Social Loafing]]
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|-
|Group 17
|Felipe
|Chacon Cabrera
|s223298
|New
|[[The Bright Side Of Bias]]
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|Group 31
|Marta
|Kryskow
|s230230
|New
|[[The Eisenhower urgent/important matrix]]
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|Group 8
|Vittorio
|Sguazzo
|s214148
|New
|[[Impact(sustainability)]]
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|Group 3
|Syed Rayyan
|Ahmed
|s220144
|New
|[[Planning for communication in projects]]
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|Group 10
|Philip Alexander Østergaard
|Brandt
|s164495
|New
|[[Extrinsic Motivation in the Workplace]]
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Extrinsic Motivation in the Workplace

2023-05-09T19:33:36Z

Philip Brandt:

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

===== Risk of Creating a Bribing Mentality =====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation.
:- This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:33:20Z

Philip Brandt: /* Risk of Creating a Bribing Mentality */

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

=== Risk of Creating a Bribing Mentality ===

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation.
:- This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:33:09Z

Philip Brandt: /* Risk of Creating a Bribing Mentality */

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

==== Risk of Creating a Bribing Mentality ====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward they receive, whenever they complete the given task. However, after some time there is a risk that the employee will start to expect a reward every time, they complete a task, known as the bribing mentality. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward, as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation.
:- This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:26:06Z

Philip Brandt:

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

==== Risk of Creating a Bribing Mentality ====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward which could be a bonus, whenever they complete the given task. However, after some time the employee might start to expect a reward every time, they complete a task. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and at the same time are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation.
:- This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:25:50Z

Philip Brandt: /* Introduction */

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If an individual is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

==== Risk of Creating a Bribing Mentality ====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward which could be a bonus, whenever they complete the given task. However, after some time the employee might start to expect a reward every time, they complete a task. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and at the same time are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation.
:- This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:23:35Z

Philip Brandt:

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If someone is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 10.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

==== Risk of Creating a Bribing Mentality ====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward which could be a bonus, whenever they complete the given task. However, after some time the employee might start to expect a reward every time, they complete a task. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and at the same time are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation.
:- This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:19:50Z

Philip Brandt: /* Abstract */

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. Furthermore, it is discussed what an organization should consider before applying extrinsic motivation, and what they can do to mitigate the risks. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If someone is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 7.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

==== Risk of Creating a Bribing Mentality ====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward which could be a bonus, whenever they complete the given task. However, after some time the employee might start to expect a reward every time, they complete a task. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and at the same time are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation.
:- This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:14:06Z

Philip Brandt: /* Annotated Bibliography */

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If someone is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 7.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

==== Risk of Creating a Bribing Mentality ====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward which could be a bonus, whenever they complete the given task. However, after some time the employee might start to expect a reward every time, they complete a task. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and at the same time are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' Studer, B., & Knecht, S. (2016). Chapter 2 - A benefit–cost framework of motivation for a specific activity. In B. Studer & S. Knecht (Eds.), Progress in Brain Research (Vol. 229). Elsevier.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.

*''''' Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation.
:- This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.

*''''' Putra, E. D., Sukesi, T. R., & Indriani, W. (2017). Extrinsic and intrinsic motivation on work engagement in the hospitality industry: Test of motivation crowding theory. Tourism and Hospitality Research, 17(2), 228-241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.

*''''' Frey, B. S., & Jegen, R. (2001). Motivation crowding theory. Journal of Economic Surveys, 15(5), 589-611.
:- This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.

*''''' Barkoukis, V., Tsorbatzoudis, H., Grouios, G., & Sideridis, G. (2008). The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale. Assessment in Education: Principles, Policy & Practice, 15(1), 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:09:18Z

Philip Brandt: /* Annotated Bibliography */

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If someone is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 7.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

==== Risk of Creating a Bribing Mentality ====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward which could be a bonus, whenever they complete the given task. However, after some time the employee might start to expect a reward every time, they complete a task. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and at the same time are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' B. Studer, S. Knecht, Chapter 2 - A benefit–cost framework of motivation for a specific activity, Editor(s): Bettina Studer, Stefan Knecht, Progress in Brain Research, Elsevier, Volume 229, 2016.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.

*''''' Kwok, A.O.J., Watabe, M., Ahmed, P.K. Excessive Extrinsic Rewards in Workplace Relationships. In: Augmenting Employee Trust and Cooperation, 2021.
:- This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.

*''''' Putra, Eka Diraksa, et al. “Extrinsic and Intrinsic Motivation on Work Engagement in the Hospitality Industry: Test of Motivation Crowding Theory.” Tourism and Hospitality Research, vol. 17, no. 2, SAGE Publications Inc., 2017, pp. 228–241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.

*''''' Frey, Bruno S., and Reto Jegen. “Motivation Crowding Theory.” Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 2001, pp. 589–611.
:- This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.

*''''' Vassilis Barkoukis, Haralambos Tsorbatzoudis, George Grouios & Georgios Sideridis (2008) The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale, Assessment in Education: Principles, Policy & Practice, 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:08:27Z

Philip Brandt: /* Annotated Bibliography */

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If someone is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 7.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

==== Risk of Creating a Bribing Mentality ====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward which could be a bonus, whenever they complete the given task. However, after some time the employee might start to expect a reward every time, they complete a task. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and at the same time are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' B. Studer, S. Knecht, Chapter 2 - A benefit–cost framework of motivation for a specific activity, Editor(s): Bettina Studer, Stefan Knecht, Progress in Brain Research, Elsevier, Volume 229, 2016.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.

*''''' Kwok, A.O.J., Watabe, M., Ahmed, P.K. Excessive Extrinsic Rewards in Workplace Relationships. In: Augmenting Employee Trust and Cooperation, 2021.
:-This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.

*''''' Putra, Eka Diraksa, et al. “Extrinsic and Intrinsic Motivation on Work Engagement in the Hospitality Industry: Test of Motivation Crowding Theory.” Tourism and Hospitality Research, vol. 17, no. 2, SAGE Publications Inc., 2017, pp. 228–241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.

*''''' Frey, Bruno S., and Reto Jegen. “Motivation Crowding Theory.” Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 2001, pp. 589–611.
:-This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.

*''''' Vassilis Barkoukis, Haralambos Tsorbatzoudis, George Grouios & Georgios Sideridis (2008) The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale, Assessment in Education: Principles, Policy & Practice, 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:08:17Z

Philip Brandt: /* Annotated Bibliography */

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If someone is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 7.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

==== Risk of Creating a Bribing Mentality ====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward which could be a bonus, whenever they complete the given task. However, after some time the employee might start to expect a reward every time, they complete a task. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and at the same time are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' B. Studer, S. Knecht, Chapter 2 - A benefit–cost framework of motivation for a specific activity, Editor(s): Bettina Studer, Stefan Knecht, Progress in Brain Research, Elsevier, Volume 229, 2016.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.

*''''' Kwok, A.O.J., Watabe, M., Ahmed, P.K. Excessive Extrinsic Rewards in Workplace Relationships. In: Augmenting Employee Trust and Cooperation, 2021.
:-This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.

*''''' Putra, Eka Diraksa, et al. “Extrinsic and Intrinsic Motivation on Work Engagement in the Hospitality Industry: Test of Motivation Crowding Theory.” Tourism and Hospitality Research, vol. 17, no. 2, SAGE Publications Inc., 2017, pp. 228–241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.

*''''' Frey, Bruno S., and Reto Jegen. “Motivation Crowding Theory.” Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 2001, pp. 589–611.
:- This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.

*''''' Vassilis Barkoukis, Haralambos Tsorbatzoudis, George Grouios & Georgios Sideridis (2008) The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale, Assessment in Education: Principles, Policy & Practice, 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:07:17Z

Philip Brandt: /* Annotated Bibliography */

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If someone is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 7.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

==== Risk of Creating a Bribing Mentality ====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward which could be a bonus, whenever they complete the given task. However, after some time the employee might start to expect a reward every time, they complete a task. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and at the same time are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' B. Studer, S. Knecht, Chapter 2 - A benefit–cost framework of motivation for a specific activity, Editor(s): Bettina Studer, Stefan Knecht, Progress in Brain Research, Elsevier, Volume 229, 2016.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.
*''''' Kwok, A.O.J., Watabe, M., Ahmed, P.K. Excessive Extrinsic Rewards in Workplace Relationships. In: Augmenting Employee Trust and Cooperation, 2021. This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.
*''''' Putra, Eka Diraksa, et al. “Extrinsic and Intrinsic Motivation on Work Engagement in the Hospitality Industry: Test of Motivation Crowding Theory.” Tourism and Hospitality Research, vol. 17, no. 2, SAGE Publications Inc., 2017, pp. 228–241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.

*''''' Frey, Bruno S., and Reto Jegen. “Motivation Crowding Theory.” Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 2001, pp. 589–611.
:- This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.

*''''' Vassilis Barkoukis, Haralambos Tsorbatzoudis, George Grouios & Georgios Sideridis (2008) The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale, Assessment in Education: Principles, Policy & Practice, 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:06:55Z

Philip Brandt: /* Annotated Bibliography */

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If someone is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 7.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

==== Risk of Creating a Bribing Mentality ====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward which could be a bonus, whenever they complete the given task. However, after some time the employee might start to expect a reward every time, they complete a task. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and at the same time are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' B. Studer, S. Knecht, Chapter 2 - A benefit–cost framework of motivation for a specific activity, Editor(s): Bettina Studer, Stefan Knecht, Progress in Brain Research, Elsevier, Volume 229, 2016.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.
*''''' Kwok, A.O.J., Watabe, M., Ahmed, P.K. Excessive Extrinsic Rewards in Workplace Relationships. In: Augmenting Employee Trust and Cooperation, 2021. This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.
*''''' Putra, Eka Diraksa, et al. “Extrinsic and Intrinsic Motivation on Work Engagement in the Hospitality Industry: Test of Motivation Crowding Theory.” Tourism and Hospitality Research, vol. 17, no. 2, SAGE Publications Inc., 2017, pp. 228–241.
:- This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.
*''''' Frey, Bruno S., and Reto Jegen. “Motivation Crowding Theory.” Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 2001, pp. 589–611. :- This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.
*''''' Vassilis Barkoukis, Haralambos Tsorbatzoudis, George Grouios & Georgios Sideridis (2008) The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale, Assessment in Education: Principles, Policy & Practice, 39-55.
:- This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:06:25Z

Philip Brandt: /* Annotated Bibliography */

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If someone is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 7.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

==== Risk of Creating a Bribing Mentality ====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward which could be a bonus, whenever they complete the given task. However, after some time the employee might start to expect a reward every time, they complete a task. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and at the same time are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*''''' B. Studer, S. Knecht, Chapter 2 - A benefit–cost framework of motivation for a specific activity, Editor(s): Bettina Studer, Stefan Knecht, Progress in Brain Research, Elsevier, Volume 229, 2016.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.
*''''' Kwok, A.O.J., Watabe, M., Ahmed, P.K. Excessive Extrinsic Rewards in Workplace Relationships. In: Augmenting Employee Trust and Cooperation, 2021. This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.
*''''' Putra, Eka Diraksa, et al. “Extrinsic and Intrinsic Motivation on Work Engagement in the Hospitality Industry: Test of Motivation Crowding Theory.” Tourism and Hospitality Research, vol. 17, no. 2, SAGE Publications Inc., 2017, pp. 228–241. This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.
*''''' Frey, Bruno S., and Reto Jegen. “Motivation Crowding Theory.” Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 2001, pp. 589–611. This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.
*''''' Vassilis Barkoukis, Haralambos Tsorbatzoudis, George Grouios & Georgios Sideridis (2008) The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale, Assessment in Education: Principles, Policy & Practice, 39-55. This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:06:07Z

Philip Brandt: /* Annotated Bibliography */

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If someone is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 7.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

==== Risk of Creating a Bribing Mentality ====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward which could be a bonus, whenever they complete the given task. However, after some time the employee might start to expect a reward every time, they complete a task. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and at the same time are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

*'''''B. Studer, S. Knecht, Chapter 2 - A benefit–cost framework of motivation for a specific activity, Editor(s): Bettina Studer, Stefan Knecht, Progress in Brain Research, Elsevier, Volume 229, 2016.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.
*'''''Kwok, A.O.J., Watabe, M., Ahmed, P.K. Excessive Extrinsic Rewards in Workplace Relationships. In: Augmenting Employee Trust and Cooperation, 2021. This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.
*''''' Putra, Eka Diraksa, et al. “Extrinsic and Intrinsic Motivation on Work Engagement in the Hospitality Industry: Test of Motivation Crowding Theory.” Tourism and Hospitality Research, vol. 17, no. 2, SAGE Publications Inc., 2017, pp. 228–241. This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.
# Frey, Bruno S., and Reto Jegen. “Motivation Crowding Theory.” Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 2001, pp. 589–611. This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.
# Vassilis Barkoukis, Haralambos Tsorbatzoudis, George Grouios & Georgios Sideridis (2008) The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale, Assessment in Education: Principles, Policy & Practice, 39-55. This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:05:37Z

Philip Brandt: /* Annotated Bibliography */

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If someone is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 7.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

==== Risk of Creating a Bribing Mentality ====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward which could be a bonus, whenever they complete the given task. However, after some time the employee might start to expect a reward every time, they complete a task. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and at the same time are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

#'''''B. Studer, S. Knecht, Chapter 2 - A benefit–cost framework of motivation for a specific activity, Editor(s): Bettina Studer, Stefan Knecht, Progress in Brain Research, Elsevier, Volume 229, 2016.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.
#'''''Kwok, A.O.J., Watabe, M., Ahmed, P.K. Excessive Extrinsic Rewards in Workplace Relationships. In: Augmenting Employee Trust and Cooperation, 2021. This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.
# Putra, Eka Diraksa, et al. “Extrinsic and Intrinsic Motivation on Work Engagement in the Hospitality Industry: Test of Motivation Crowding Theory.” Tourism and Hospitality Research, vol. 17, no. 2, SAGE Publications Inc., 2017, pp. 228–241. This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.
# Frey, Bruno S., and Reto Jegen. “Motivation Crowding Theory.” Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 2001, pp. 589–611. This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.
# Vassilis Barkoukis, Haralambos Tsorbatzoudis, George Grouios & Georgios Sideridis (2008) The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale, Assessment in Education: Principles, Policy & Practice, 39-55. This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:05:30Z

Philip Brandt: /* Annotated Bibliography */

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If someone is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 7.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

==== Risk of Creating a Bribing Mentality ====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward which could be a bonus, whenever they complete the given task. However, after some time the employee might start to expect a reward every time, they complete a task. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and at the same time are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

# '''''B. Studer, S. Knecht, Chapter 2 - A benefit–cost framework of motivation for a specific activity, Editor(s): Bettina Studer, Stefan Knecht, Progress in Brain Research, Elsevier, Volume 229, 2016.
:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.
# '''''Kwok, A.O.J., Watabe, M., Ahmed, P.K. Excessive Extrinsic Rewards in Workplace Relationships. In: Augmenting Employee Trust and Cooperation, 2021. This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.
# Putra, Eka Diraksa, et al. “Extrinsic and Intrinsic Motivation on Work Engagement in the Hospitality Industry: Test of Motivation Crowding Theory.” Tourism and Hospitality Research, vol. 17, no. 2, SAGE Publications Inc., 2017, pp. 228–241. This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.
# Frey, Bruno S., and Reto Jegen. “Motivation Crowding Theory.” Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 2001, pp. 589–611. This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.
# Vassilis Barkoukis, Haralambos Tsorbatzoudis, George Grouios & Georgios Sideridis (2008) The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale, Assessment in Education: Principles, Policy & Practice, 39-55. This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:05:20Z

Philip Brandt: /* Annotated Bibliography */

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If someone is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 7.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

==== Risk of Creating a Bribing Mentality ====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward which could be a bonus, whenever they complete the given task. However, after some time the employee might start to expect a reward every time, they complete a task. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and at the same time are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

# '''''B. Studer, S. Knecht, Chapter 2 - A benefit–cost framework of motivation for a specific activity, Editor(s): Bettina Studer, Stefan Knecht, Progress in Brain Research, Elsevier, Volume 229, 2016.

:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.

# '''''Kwok, A.O.J., Watabe, M., Ahmed, P.K. Excessive Extrinsic Rewards in Workplace Relationships. In: Augmenting Employee Trust and Cooperation, 2021. This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.
# Putra, Eka Diraksa, et al. “Extrinsic and Intrinsic Motivation on Work Engagement in the Hospitality Industry: Test of Motivation Crowding Theory.” Tourism and Hospitality Research, vol. 17, no. 2, SAGE Publications Inc., 2017, pp. 228–241. This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.
# Frey, Bruno S., and Reto Jegen. “Motivation Crowding Theory.” Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 2001, pp. 589–611. This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.
# Vassilis Barkoukis, Haralambos Tsorbatzoudis, George Grouios & Georgios Sideridis (2008) The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale, Assessment in Education: Principles, Policy & Practice, 39-55. This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:04:49Z

Philip Brandt: /* Annotated Bibliography */

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If someone is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 7.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

==== Risk of Creating a Bribing Mentality ====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward which could be a bonus, whenever they complete the given task. However, after some time the employee might start to expect a reward every time, they complete a task. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and at the same time are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

# '''''B. Studer, S. Knecht, Chapter 2 - A benefit–cost framework of motivation for a specific activity, Editor(s): Bettina Studer, Stefan Knecht, Progress in Brain Research, Elsevier, Volume 229, 2016.

:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.

# Kwok, A.O.J., Watabe, M., Ahmed, P.K. Excessive Extrinsic Rewards in Workplace Relationships. In: Augmenting Employee Trust and Cooperation, 2021. This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.
# Putra, Eka Diraksa, et al. “Extrinsic and Intrinsic Motivation on Work Engagement in the Hospitality Industry: Test of Motivation Crowding Theory.” Tourism and Hospitality Research, vol. 17, no. 2, SAGE Publications Inc., 2017, pp. 228–241. This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.
# Frey, Bruno S., and Reto Jegen. “Motivation Crowding Theory.” Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 2001, pp. 589–611. This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.
# Vassilis Barkoukis, Haralambos Tsorbatzoudis, George Grouios & Georgios Sideridis (2008) The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale, Assessment in Education: Principles, Policy & Practice, 39-55. This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:04:28Z

Philip Brandt: /* Annotated Bibliography */

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If someone is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 7.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

==== Risk of Creating a Bribing Mentality ====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward which could be a bonus, whenever they complete the given task. However, after some time the employee might start to expect a reward every time, they complete a task. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and at the same time are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

# B. Studer, S. Knecht, Chapter 2 - A benefit–cost framework of motivation for a specific activity, Editor(s): Bettina Studer, Stefan Knecht, Progress in Brain Research, Elsevier, Volume 229, 2016.

:- This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.

# Kwok, A.O.J., Watabe, M., Ahmed, P.K. Excessive Extrinsic Rewards in Workplace Relationships. In: Augmenting Employee Trust and Cooperation, 2021. This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.
# Putra, Eka Diraksa, et al. “Extrinsic and Intrinsic Motivation on Work Engagement in the Hospitality Industry: Test of Motivation Crowding Theory.” Tourism and Hospitality Research, vol. 17, no. 2, SAGE Publications Inc., 2017, pp. 228–241. This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.
# Frey, Bruno S., and Reto Jegen. “Motivation Crowding Theory.” Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 2001, pp. 589–611. This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.
# Vassilis Barkoukis, Haralambos Tsorbatzoudis, George Grouios & Georgios Sideridis (2008) The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale, Assessment in Education: Principles, Policy & Practice, 39-55. This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:03:47Z

Philip Brandt: /* Annotated Bibliography */

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If someone is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 7.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

==== Risk of Creating a Bribing Mentality ====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward which could be a bonus, whenever they complete the given task. However, after some time the employee might start to expect a reward every time, they complete a task. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and at the same time are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

# B. Studer, S. Knecht, Chapter 2 - A benefit–cost framework of motivation for a specific activity, Editor(s): Bettina Studer, Stefan Knecht, Progress in Brain Research, Elsevier, Volume 229, 2016. This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.
# Kwok, A.O.J., Watabe, M., Ahmed, P.K. Excessive Extrinsic Rewards in Workplace Relationships. In: Augmenting Employee Trust and Cooperation, 2021. This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.
# Putra, Eka Diraksa, et al. “Extrinsic and Intrinsic Motivation on Work Engagement in the Hospitality Industry: Test of Motivation Crowding Theory.” Tourism and Hospitality Research, vol. 17, no. 2, SAGE Publications Inc., 2017, pp. 228–241. This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.
# Frey, Bruno S., and Reto Jegen. “Motivation Crowding Theory.” Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 2001, pp. 589–611. This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.
# Vassilis Barkoukis, Haralambos Tsorbatzoudis, George Grouios & Georgios Sideridis (2008) The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale, Assessment in Education: Principles, Policy & Practice, 39-55. This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T19:03:25Z

Philip Brandt: /* Annotated Bibliography */

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If someone is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 7.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

==== Risk of Creating a Bribing Mentality ====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward which could be a bonus, whenever they complete the given task. However, after some time the employee might start to expect a reward every time, they complete a task. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and at the same time are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

# '''''Nuchpho, P. (2014). Risk Assessment in the Organization by Using FMEA Innovation: A Literature Review.'''' <ref name="Nuchpo"/>
:- This article explains some of the basics of the FMEA method along with the standard way of calculating the RPN number and some of the limitations of the method, including what can be done about it with fuzzy approaches.

# ''''' Ben-Daya, M. (2009). Handbook of Maintenance Management and Engineering''''' <ref name="Handbook_MME"/>
:- This book gives a thorough explanation of how to do a FMEA and in what cases it is applied. Some of the perspective of the book is in relation to production systems but gives a good introduction to the FMEA and its history.

# '''''Project Management Institute Inc (PMI), (2019). Standard for Risk Management in Portfolios, Programs, and Projects''''' <ref name="PMI_standard"/>
:- This is the standard for risk management and gives a more high-level explanation of the risk management process used for both project, program, and portfolio management. Provides good explanations on the difference between risk analysis, assessment and management.

# '''''Damnjanovic, I. (2019). Project Risk Management Fundamentals. Springer''''' <ref name="Risk_springer"/>
:- Another book on managing risk that goes a bit more in depth than the PMI standard and also explains the difference between qualitative and quantitative analysis.

# '''''L. Pokoradi, S. Kocak and E. Toth-Laufer, Fuzzy Hierarchical Failure Mode and Effect Analysis, ''''' <ref name="fuzzy"/>
:- Article that provides state of the art research on improvements to the FMEA method using fuzzy approaches that removes some of the issues with the RPN number that has been criticized earlier.

# B. Studer, S. Knecht, Chapter 2 - A benefit–cost framework of motivation for a specific activity, Editor(s): Bettina Studer, Stefan Knecht, Progress in Brain Research, Elsevier, Volume 229, 2016. This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.
# Kwok, A.O.J., Watabe, M., Ahmed, P.K. Excessive Extrinsic Rewards in Workplace Relationships. In: Augmenting Employee Trust and Cooperation, 2021. This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.
# Putra, Eka Diraksa, et al. “Extrinsic and Intrinsic Motivation on Work Engagement in the Hospitality Industry: Test of Motivation Crowding Theory.” Tourism and Hospitality Research, vol. 17, no. 2, SAGE Publications Inc., 2017, pp. 228–241. This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.
# Frey, Bruno S., and Reto Jegen. “Motivation Crowding Theory.” Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 2001, pp. 589–611. This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.
# Vassilis Barkoukis, Haralambos Tsorbatzoudis, George Grouios & Georgios Sideridis (2008) The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale, Assessment in Education: Principles, Policy & Practice, 39-55. This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T18:53:42Z

Philip Brandt: /* Introduction */

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays a significant role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If someone is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 7.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

==== Risk of Creating a Bribing Mentality ====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward which could be a bonus, whenever they complete the given task. However, after some time the employee might start to expect a reward every time, they complete a task. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and at the same time are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

# B. Studer, S. Knecht, Chapter 2 - A benefit–cost framework of motivation for a specific activity, Editor(s): Bettina Studer, Stefan Knecht, Progress in Brain Research, Elsevier, Volume 229, 2016. This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.
# Kwok, A.O.J., Watabe, M., Ahmed, P.K. Excessive Extrinsic Rewards in Workplace Relationships. In: Augmenting Employee Trust and Cooperation, 2021. This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.
# Putra, Eka Diraksa, et al. “Extrinsic and Intrinsic Motivation on Work Engagement in the Hospitality Industry: Test of Motivation Crowding Theory.” Tourism and Hospitality Research, vol. 17, no. 2, SAGE Publications Inc., 2017, pp. 228–241. This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.
# Frey, Bruno S., and Reto Jegen. “Motivation Crowding Theory.” Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 2001, pp. 589–611. This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.
# Vassilis Barkoukis, Haralambos Tsorbatzoudis, George Grouios & Georgios Sideridis (2008) The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale, Assessment in Education: Principles, Policy & Practice, 39-55. This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

<references />

Extrinsic Motivation in the Workplace

2023-05-09T18:43:14Z

Philip Brandt: /* Introduction */

== Abstract ==

This article explores the concept of extrinsic motivation that is used by companies and organizations to increase the performance and productivity of the employees through external punishments or rewards. To better understand extrinsic motivation, the article debates the self-determination theory’s three psychological needs for intrinsic motivation: autonomy, competence, and relatedness. The article also covers the categorization of the four types of extrinsic motivation, based on the degree of self-determination. The article concludes that companies should be careful when using extrinsic motivation as this might impact the intrinsic motivation of the employees in the future. Furthermore, extrinsic motivation is only a short-term solution and should not be the only motivational factor, thus making it important that the company also fulfils the employee’s psychological needs, to maintain their intrinsic motivation.

== Introduction ==

In the realm of project, program and portfolio management, the motivation of the employees plays an impactful role. Motivation refers to the inner drive propelling individuals toward specific goals <ref name=''1''> ''Motivation. Oxford Reference. Retrieved 6 May. 2023, from https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100212318.'' </ref>. There are two distinct types of motivation: intrinsic and extrinsic. If someone is intrinsically motivated, they obtain personal satisfaction from performing tasks they enjoy; while if someone is extrinsically motivated, they are motivated by outside forces like rewards or punishment. In project, program and portfolio management, organizing the workforce through external motivators can be an instrumental tool in generating positive results and reaching milestones on time. By linking individual incentives with collective goals, companies can create an environment where workers strive to perform their best, leading to greater success rates and higher profitability. Extrinsic motivation is an important factor in project, program and portfolio management; however, it is not specifically mentioned in the standards. The standards aim to provide guidance that is applicable in a wide range of scenarios but also recognize that project, program and portfolio management is highly context-dependent. Thus, it is difficult to provide standardized guidance for the application of extrinsic motivation as it is very subjective and dependent on individual factors, which will also be discussed throughout this article.

== Extrinsic Motivation ==

To understand extrinsic motivation, one must first understand where the term becomes relevant. In the 1930s, the American psychologist and behaviorist B. F. Skinner, began studying reinforcement theory <ref name=''2''> ''Skinner, B. F. (1938). The Behavior of Organisms. New York: Appleton-Century.'' </ref>. The reinforcement theory builds upon the assumption that the behavior of an individual can be shaped through the consequences of its actions. Behaviors or actions that lead to positive consequences, such as rewards, are more likely to occur again, whereas actions leading to negative consequences, such as punishment, are less likely to be repeated. This phenomenon is also referred to as the law of effect and aims to understand and predict the impact of the consequences on behvaior. The consequences that reinforcement theory aims to predict the outcome of, can be referred to as extrinsic motivation. The external factors reward or punishment, can be used in different ways. The rewards can be classified into two categories: intangible rewards and tangible rewards. Intangible rewards refer to emotions and psychology and are non-physical. Examples of this would be recognition, sense of accomplishment or praise. Tangible rewards refer to items or objects and are physical. Examples of this would be salary, bonusses or gifts. To decrease the likelihood of a certain action repeating itself, one can apply the other category of extrinsic motivation, punishment. As with rewards, there are also two main categories for punishment: positive punishment and negative punishment. To apply positive punishment, one must add something unpleasant to decrease the undesired behavior. This could be assigning an employee with extra work or simply assigning them an unpleasant task. Moving on to negative punishment, it involves removing something desirable, also with the goal of decreasing an undesired behavior. This could be things such as taking away an employee’s bonus or privileges <ref name=''2''> ''McConnell, JV. (1990). Negative reinforcement and positive punishment. Teaching of Psychology 17(4): 247–49. https://doi.org/10.1207/s15328023top1704_10.'' </ref>.

=== Self-Determination Theory ===

When applying extrinsic motivation, one must consider how it affects the individual's intrinsic motivation. To understand the impact of extrinsic motivation on intrinsic motivation, the self-determination theory (SDT) was developed by Edward L. Deci and Richard Ryan. According to SDT <ref name=''3''> ''Wang, C. K. J., Liu, W. C., Kee, Y. H., & Chian, L. K. (2019). Competence, autonomy, and relatedness in the classroom: Understanding students' motivational processes using the self-determination theory. Heliyon, 5(7)'' </ref> , an individual has three different psychological needs to be intrinsically motivated: autonomy, competence, and relatedness <ref name=''4''> ''Law, L., Wilson, D., Lawman, H. G., & Delamater, A. M. (2020). Self-Determination Theory. Encyclopedia of Behavioral Medicine, 1980–1982. https://doi.org/10.1007/978-3-030-39903-0_1620'' </ref>. If one of these basic needs are not met, it might result in frustration, loss of interest or being disengaged in their work, thus reducing their intrinsic motivation <ref name=''5''> ''Studer, B., & Knecht, S. (2016). A benefit-cost framework of motivation for a specific activity. Progress in Brain Research, 229'' </ref> <ref name=''6''> ''Amabile, T. M. (1993). Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review'' </ref>.
A lack of autonomy in one's work can be caused by having little to no control over tasks, decisions, or schedules. This could be a consequence of being micromanaged, thus taking away the individual’s room for independent thoughts and actions. Following this, the employee might start feeling like they have no impact, and the work is becoming less meaningful.
An example of lack of competence at work could be that an employee is assigned to a task that they cannot solve, which could be due to lack of training or being unfamiliar with the task. This can cause the employee to doubt their abilities and feel like they are underqualified for the task, which can lead to frustration and feeling insecure.
An example of lack of relatedness could be if an employee feels disconnected from their co-workers or organization. This can lead to loneliness and a feeling of doing work that is meaningless as they are not part of the “community”.
When looking at the different forms of extrinsic motivation, SDT specifies four different forms that are shown on the self-determination continuum in Figure 1. These include external regulation, introjection, identification, and integration. To the far left in the black box, amotivation is located. Here, the individual is not motivated and few to none of their basic needs are met. To the far right in the green box is the opposite situation, an individual entirely driven by intrinsic motivation. When moving from left to right on the continuum, the form of motivation becomes gradually more intrinsic <ref name=''7''> '' Levesque, C., Copeland, K. J., Pattie, M. D., & Deci, E. L. (2010). Intrinsic and Extrinsic Motivation. In Encyclopedia of Body Image and Human Appearance. Elsevier.'' </ref>.

[[File:Continuum2.JPG|frame|Figure 1: Continuum of self-determination, own figure based on reference 7.]]

==== External regulation ====

External regulation is located the furthest to the left of the four different forms of extrinsic motivation, in Figure 1. This means that it is the one with the lowest degree of self-determination and is often referred to as extrinsic motivation. The idea behind external regulation is to make the individual either chase a reward or avoid a negative consequence. An example of a reward would be if an employee worked extra hours to receive their bonus, whereas a negative consequence would be working extra hours to avoid getting laid off.

==== Introjected regulation ====

Introjected regulation is a type of extrinsic motivation that makes the individual perform certain actions by internalizing external pressure. This could be things such as the desire to avoid feeling guilt, shame, or fear. As with external regulation, introjected regulation is also driven by pressure, but with external regulation the pressure comes from the “outside” as contrary to internal where the pressure comes from the inside. An example of this could be an employee taking on additional tasks as they may feel like they are letting down their colleagues or organization if they do not, which creates a fear inside the employee, thus pressuring them internally.

==== Identified regulation ====

Identified regulation occurs when a behavior has been regulated through identification. This means that the behavior of an individual has been regulated through certain actions and now the individual is identifying itself with the given behavior. When this occurs, the individual is still extrinsically motivated because they are trying to reach a goal, but as they start valuing the activities, that must be completed to reach the goal, they start identifying themselves with the behavior, resulting in self-determination. An example of this could be an employee who is working on a project understands how important the project is for the goal of the company. The employee could also see the project as an opportunity for developing competences that could help them advancing in their career.

==== Integrated regulation ====

This type of motivation is the furthest to the right on the continuum in Figure 1, thus making it the type of extrinsic motivation with the highest degree of self-determination. With integrated regulation, the individual’s behavior is not only regulated, but the individual has also integrated the behavior and thrives in it. An example of this could be that an employee who is very passionate about sustainability is allocated to a sustainability project. This would align their personal values with the project, thus seeing the project as an opportunity to contribute to a cause that they are passionate about.

== Application in the Workplace ==

In organizations, it is critical to keep the employees motivated <ref name=''8''> ''Kwok, A. O. J., Watabe, M., & Ahmed, P. K. (2021). Excessive extrinsic rewards in workplace relationships. In Augmenting Employee Trust and Cooperation. Springer Singapore.'' </ref>. Extrinsic motivation makes it possible for the organizations to determine the actions and also investigate behavior models of the employees. In almost every company, the employees are extrinsically motivated by their salary, which is rewarded for doing their work. However, despite having a satisfying salary, it takes more than that to keep an employee motivated, which companies are aware of. A common extrinsic motivation tool is bonuses, which close to all companies use. This is to ensure that the employee does not show up to work just to be present, but also tries to perform, thus triggering the bonus. These rewards are tangible, but the intangible extrinsic rewards are also taken into use in a lot of organizations. This is done by publicly announcing the employee of the month, giving out promotions and praising employees in public <ref name=''9''> ''Gerhart, B., & Fang, M. Y. (2015). Intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 489-521.'' </ref>.

A company that is known to make use of extrinsic rewards is Google <ref name=''10''> ''Luenendonk, M. (2019, September 16). The Google Way of Motivating Employees. Cleverism. https://www.cleverism.com/google-way-motivating-employees/'' </ref>. Google does a great job at keeping their employees motivated through various initiatives. Examples of these are flexible spending accounts, free health and dental benefits, vacation packages, an onsite hair salon and Google even allows its employees to spend 20% of their working hours to pursue special projects and interests. These benefits are just the tip of the iceberg, but also raises the question as to how Google can stay profitable with such initiatives in place. The answer is simple, Google has managed to balance their employees extrinsic and intrinsic motivation by providing extrinsic rewards in deliberate manner. This has not only resulted in the employees performing well, but Google employees also usually surpass management expectations, which means that the extrinsic motivation is a profitable initiative from the management.

=== Motivation Crowding Theory ===

When an organization is looking into the motivation of their employees and how they should use extrinsic motivation, motivation crowding theory must be considered. Motivation crowding theory is a concept that refers to the idea that extrinsic motivation might impact one’s intrinsic motivation, negatively. According to the theory that was first introduced in 1970 by Richard Titmuss, extrinsic motivation might “crowd out” the intrinsic motivation. In Figure 2 there are shown two graphs, S and S’. Looking at the graph S, when the extrinsic reward is increased from O to R, the work effort also increases from A to A'. However, as soon as motivation crowding becomes present, the individual’s work effort will switch to the graph S’. In this case, the raise of extrinsic rewards from O to R will now move the individual's work effort to C, instead of B. In this scenario, the increase in rewards causes the work effort to go from A to A<nowiki>''</nowiki> as the intrinsic motivation has now been crowded out and the individual is only motivated by extrinsic rewards. Once this happens, their behavior will now follow the S' graph and the work effort can be increased by increasing the external reward <ref name=''11''> ''Frey, Bruno S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 589–611'' </ref>. Motivation crowding theory is relevant in all organizations and should be understood by all project, program and portfolio managers before giving out rewards. If done incorrectly, the extrinsic rewards might end up decreasing the intrinsic motivation of the employees, also known as the overjustification effect.

[[File:Crowding.png|frame|Figure 2: Motivation crowding theory visualized, based on reference 12]]

==== Overjustification Effect ====

The overjustification effect arises when an individual is externally rewarded for something that they previously found interesting and exciting without receiving any rewards, for instance taking on extra tasks at work or being in charge of arranging the Friday bars. Once this happens, it will become more difficult for the person to perform the given activity without being extrinsically motivated. This makes it even more important that organizations are careful when making use of extrinsic rewards as a motivational tool. Over an extended period of time, research shows that an employee that receives extrinsic rewards for completing a task they find enjoyable, leads to decreased intrinsic motivation for the task in the future <ref name=''12''> ''Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 627–668'' </ref>. In order to mitigate this risk, there are several things an organization can do, which will now be discussed.

===== Timing of Reward =====

First, the organization must consider when the timing is right for the rewards. Many organizations choose to pay out bonusses for successful projects after they are completed. This might seem logic, however, offering an employee a reward after completing a task, is more likely to decrease their intrinsic motivation than if they are rewarded during the task, which could for example be as a progress payment. This is due to the fact that the employee might view the task as being completed for the reward rather than the enjoyment of the task. If the reward is given during the task the employee is more likely to interpret it as an encouragement to keep up the good work instead of the reward being the primary goal for the task.

===== Purpose of Reward =====

Secondly, an organization must pay attention to the purpose of the rewards. The rewards should be given to increase the overall success of the company. However, one should not tie the rewards to a very narrowly defined target or goal, which could be giving the employees an individual sales target. Instead, the companies should connect the rewards with broader goals, thus incentivizing teamwork rather than the employees only focusing on their own sales. An example of this being done wrong occurred in 2016 when the Wells Fargo cross-selling scandal took place <ref name=''13''> ''Kelly, J. (2020), Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Retrieved March 17, 2023 from https://www.forbes.com/sites/jackkelly/2020/02/24/wells-fargo-forced-to-pay-3-billion-for-the-banks-fake-account-scandal/?sh=179aa46442d2'' </ref>. The company tried to utilize extrinsic motivation by implementing a performance-based salary, which rewarded the employees for opening new credit cards and checking accounts, however, the sales quota was set so high that the employees started opening accounts for customers without their consent. Furthermore, the initiative resulted in individually rewarded performances, incentivizing the employees to think of themselves rather than their colleagues and the company.

===== Type of Reward =====

One more important thing to consider when making use of extrinsic motivation, is that the reward should be aligned with the employee’s interests, which makes the reward seem more supportive rather than controlling, thus avoiding a reduction in intrinsic motivation. A mistake made by countless companies is to award the employees under the assumption that they all desire the same thing, money. Some people will be motivated by having more flexible hours of work or being granted extra vacation days while others will be motivated by step-up opportunities. If an organization takes time to align the type of rewards with the employees through personal meetings, it will make them feel appreciated and not like a small fish in a big pond.

==== Risk of Creating a Bribing Mentality ====

When a company makes use of extrinsic motivation by giving out rewards to employees, there is also the risk of creating a bribing mentality. The employee will be happy with the reward which could be a bonus, whenever they complete the given task. However, after some time the employee might start to expect a reward every time, they complete a task. When this expectation is present, the employee might stop striving to deliver a great piece of work and instead only deliver the bare minimum required for them to obtain the reward as extrinsic motivators does not create passion. To avoid creating a bribing mentality a company can assure that the rewards are given out in a consistent way and at the same time are aligned with the values of the employees.

== Limitations ==

When applying extrinsic motivation in the workplace, organizations are in great danger of reducing the individual’s intrinsic motivation in the process, as discussed above. Extrinsic motivation should always be applied as a short-term strategy to motivate the employees into achieving certain goals as it may not lead to sustained performance and engagement in the long term. This is because extrinsic rewards can make the individual focus on the rewards rather than the task itself. Furthermore, employees might become more hesitant to take on tasks that do not offer a clear extrinsic reward, making the individuals mostly focused on tasks that offer the most immediate benefits. Extrinsic motivation is overall a tool that can lead to great results if applied properly. It is, however, not possible to replace poor management or bad workplace conditions with extrinsic rewards, but it can be used as a supplement in an overall healthy organizational culture.

When looking into which organizations should be applying extrinsic rewards, it might not be suitable for all lines of business. Companies in more creative lines of work might be hindered by the use of extrinsic rewards. This is because the nature of their work requires a higher level of autonomy, and therefore it is important not to stifle their creativity and intrinsic motivation. Lastly, organizations such as non-profits or socially responsible businesses should also be extra cautious when considering the use of extrinsic motivation, as this kind of work is already inherently rewarding.

== Annotated Bibliography ==

The annotated bibliography included in this article outlines the key references that have been utilized for this article. These references can be studied to obtain more in-depth knowledge about how to apply extrinsic motivation in the workplace.

# B. Studer, S. Knecht, Chapter 2 - A benefit–cost framework of motivation for a specific activity, Editor(s): Bettina Studer, Stefan Knecht, Progress in Brain Research, Elsevier, Volume 229, 2016. This article discusses a framework that aims to understand how an individual can be motivated to perform a task or activity based on the assumption that motivation is based on the expected benefits and expected costs.
# Kwok, A.O.J., Watabe, M., Ahmed, P.K. Excessive Extrinsic Rewards in Workplace Relationships. In: Augmenting Employee Trust and Cooperation, 2021. This paper discusses the effect of excessive extrinsic rewards in the workplace and how one can predict the reactions of the employees and what they will expect in the future.
# Putra, Eka Diraksa, et al. “Extrinsic and Intrinsic Motivation on Work Engagement in the Hospitality Industry: Test of Motivation Crowding Theory.” Tourism and Hospitality Research, vol. 17, no. 2, SAGE Publications Inc., 2017, pp. 228–241. This paper describes a study that was conducted in the hospitality industry to empirically test the motivation crowding theory.
# Frey, Bruno S., and Reto Jegen. “Motivation Crowding Theory.” Journal of Economic Surveys, vol. 15, no. 5, Blackwell Publishing Ltd, 2001, pp. 589–611. This is a study that demonstrates that motivation crowding is of empirical relevance and the paper will give a better understanding of motivation crowding.
# Vassilis Barkoukis, Haralambos Tsorbatzoudis, George Grouios & Georgios Sideridis (2008) The assessment of intrinsic and extrinsic motivation and amotivation: Validity and reliability of the Greek version of the Academic Motivation Scale, Assessment in Education: Principles, Policy & Practice, 39-55. This article explains self-determination theory and explains intrinsic motivation, extrinsic motivation and amotivation. It describes two studies that focused on the Greek version of the academic motivation scale, thus allowing the reader to gain a deeper understanding of self-determination theory.

== References ==

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