One of the primary drivers of organizational goals is employees. Organizations employ different strategies to maximize employee potential and optimize employee productivity. Employee motivation and incentives are similar concepts that organizations use to engage and drive employees to enhance performance and achieve desired organizational goals. This article aims to share the difference between both concepts and explain their relation to incentives.
Employee Motivation
Perkbox describes employee motivation as the “level of commitment employees bring to the role daily.” Employee motivation refers to the psychological factors and processes influencing employees’ enthusiasm, commitment, and effort in performing their tasks and contributing to organizational goals. Companies will suffer from reduced productivity and the threat of low output and unrealized goals when employees are not motivated. Studies have shown that motivated employees are more engaged, productive, and satisfied with their work. Such fulfillment invariably leads to better performance and organizational outcomes.
Types of Motivation
There are two main types of motivation: intrinsic and extrinsic motivation.
Intrinsic Motivation: Intrinsic motivation is internal and self-driven. It is the internal drive and natural inclination that an individual has to engage in an activity or pursue a goal because of the satisfaction derived from doing it well. Intrinsic motivation does not depend on external rewards or incentives. Intrinsically motivated individuals find joy and personal fulfillment in achieving set goals. Intrinsic motivation helps individuals master their profession because they constantly seek ways to improve and develop their skills/abilities. Intrinsically motivated employees are passionate and exhibit a sense of purpose in their actions.
Extrinsic Motivation: Extrinsic Motivation refers to the external factors that drive motivation and stimulate and influence an individual’s behavior. Extrinsic motivation generally involves attaching rewards to particular tasks. In many cases, extrinsic motivators are performance-driven and given only to employees who hit a specific performance mark.
In a workplace, extrinsic motivation can include rewards, recognition, and paid breaks. Employers provide such incentives to encourage specific behaviors that can positively contribute to meeting organizational goals. While Extrinsic Motivators can serve as a good source of employee motivation, extrinsic rewards may result in only temporary advances in performance improvement. Such performance improvements may diminish if rewards are not increased over time or are taken away.
To best motivate employers over a long period, employers need to pair extrinsic motivators with intrinsic ones (based on the individuals’ goals). Such a pairing will likely result in a much more driven employee who feels that their job is gratifying.
Employee Incentives
Employee incentives are rewards or benefits employers offer to drive a particular behavior with employees. Employees are incentivized to perform their best and achieve specific organizational goals.
The main difference between extrinsic motivation and incentives is that incentives tend to be majorly positive and are generally tangible. Extrinsic motivation is a broader concept that covers any external factor that influences employee behavior, and it can involve both tangible and intangible rewards or consequences.
Incentives can be understood as a form/part of extrinsic motivation as they are external influences on employees. Incentives, similar to extrinsic motivators, are generally tied to performance measures. Examples of incentives are bonuses, commissions, profit sharing, recognition, awards, extra paid breaks, and career advancement opportunities.
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