Leadership: Intrinsic vs Extrinsic Motivation

The previous article introduced the concept of leadership development and the steps that organizations can take to ensure that leaders are groomed by identifying potential leaders and then fast tracking them. This article looks at one trait of potential leaders that goes a long way in determining the success or otherwise of the leaders. This trait is motivation, the will to succeed, and the desire to do well, which is an integral part of leadership development. Motivation is necessary for leaders to reach the top and the types of motivation are intrinsic and extrinsic motivation. Intrinsic motivation is the will to succeed by changing oneself from within and extrinsic motivation is the performance that is driven by external rewards. The point here is that individuals have to be motivated from within and then they have to be rewarded with external benefits and benefits to achieve the best results in organizations.

This is clear from the emphasis that HR managers and senior executives place on matching rewards with performance that is first driven from within. To explain further, leaders have to be motivated to perform by a strong urge to succeed from within and then the external rewards have to match their performance.

Employees who are only motivated by external rewards do not make great leaders and conversely, employees who are not rewarded for their performance stagnate and lose morale. Hence, the strategic fit between intrinsic motivation and extrinsic motivation has to be just right for organizations to get the best from their employees. This is the reason many organizations go the whole distance in aligning incentives with performance. Unless employees are motivated from within, incentives and rewards can only help that much and unless high performers are rewarded appropriately, intrinsic motivation withers away.

The recent global economic crisis brought to the fore the system of flawed incentives that was in place in the investment banks and Wall Street firms. The point here is that though the bankers were performing well, the rewards were too high and this made them take unnecessary risks and not heed to the “inner voice” that guides us all in our daily life and career. Since this internal director compels us to be ethical and normative, the absence of conscience among the bankers led to their taking unnecessary risks with their business practices. The underlying incentives that were disproportionate to their actual performance made them oblivious to risk and ethics. Hence, the balance of intrinsic and extrinsic motivation has to be just right for high performance that is also ethical and normative in nature.

Finally, all of us need a higher vision for ourselves to succeed and this is the extra something that drives us to greater heights. As many theorists have pointed out, once the need for wealth and status is achieved, the higher needs of self-actualization or the need to be driven by vision appears. Hence, the conclusion is that intrinsic motivation is the driver for success as leaders and the rewards have to match this but not exceed beyond a certain point.