Polytechnic University of the Philippines

Mabini Campus
Sta. Mesa, Manila

Effects of Intrinsic and Extrinsic Motivation on Employees’

Performance in Private Organizations:

A Comparative Study

In partial fulfillment for the subject

Human Behavior in Organization
(PSYC 40033)

Submitted by:
BUSTO, Daniel V.
CASANGUAN, Sittie Kayla Farhana M.
CECE, Daniella N.
CUEVAS, Clarie
JUSAIN, Kyla Amor
LEONEN, Josiephine
LERONA, Frits A.
RIPALDA, Ryu Ichi
TALANIA, Ellyse Gabrielle S.
Submitted to:
Ms. Ma. Aurora P. De Leon

October 2018
 Abstract

Reward systems are considered as forerunners of employee

motivation and either intrinsic or extrinsic motivation contributes

to employee satisfaction and thus, enhances performance and

productivity. However, it remains as one of the sensitive subjects

for it determines the level of input that employees will put in the

organization to commit to good performance.

Secondary data, such as news articles and magazine

journals, that feature about the said topic and was published

within the last ten (10) years will be used in comparing the effects

of intrinsic and extrinsic motivation in the performance of

employees in private organizations.

Studies showed that intrinsic motivation can boost

employees’ driving force to work, while extrinsic motivation can

make employees satisfied and well-driven. Both two types of

motivation are important in the workplace for it drive every single

action. On the other hand, Rajesh Singh’s study showed that

intrinsic motivation is more effective than the extrinsic motivation.

 Therefore, both intrinsic and extrinsic motivation are

effective in making employees as productive as they could.

However, one type of motivation may be more effective than the

other one under different circumstances.

Keywords: intrinsic, extrinsic, motivation, employees,

rewards

Introduction

Employees spend time at work for more or less than eight

hours of doing their respective paper works and assigned tasks

everyday wherein they need more energy to cope up with their

everyday routine at their own field. And motivations as their fuel

for energy plays a crucial role.

With the unending demands of the business world, it is

inevitable that employees may get stressed and break down due

to pile of works. Many have hard time focusing and might end up

having unfinished and poor performance. All businesses should

attach importance to the quality phenomenon in order to survive

within the competitive market structure. What is more, beyond

this basic level of importance attached to the quality concept, it

has become necessary to focus on this issue carefully.

In order to be successful or even more successful, today’s

both private and public work organizations need to maximize the

use of their employees’ skills. In Every industry’s success, staff

are the key resources. The most important asset of any company

in the 21st century is Human Asset (Hafiza, Shah, Jamsheed, &

Zaman, 2011) .

Since all organizations are concerned with what should be

done to achieve sustained levels of performance through people,

it means giving close attention to how individuals can best be

motivated through such means as incentives, rewards, and

importantly, the work they do and the organization context within

which they carry out that work cannot be understated (Armstrong,

2010). Without increased motivation and morale of the

employees, the organization risks losing valuable employees and

will be at a disadvantage in attracting potential top talents

(Dessler, 2003).
 According to Caruth and Handiogten (2002), reward

systems most especially are considered as forerunners of

employee motivation. Since employees’ knowledge, skills and

abilities are the most important driving force to the success of any

organization, continuing commitment and support to them could

be realized through looking for effective ways to reward their

contributions, loyalty, dedication and efforts.

Motivation is a multidimensional framework because people

are usually motivated by a combination of different factors. Page

(2008) defined it as the process that accounts for an individual

intensity, direction, and persistence of effort toward attaining a

goal. Tosi , Mero and Rizzo (2000) on the other hand stated that

motivation has both psychological and managerial meaning. The

psychological meaning of motivation refers to the internal mental

state of a person that relates to the initiation, direction,

persistence intensity and termination of behavior. While the

managerial meaning deals with the activity of managers and the

leaders to induce others in order to produce results desired or

outlined by the organization or by the manager which conforms to

a relationship between motivation, ability and performance.

Inspite of the existing studies, motivation of employees in

the workplace remains one of the sensitive subjects that

determines the level of input that employees will put in the

organization to commit to good performance. This means that

motivation either Intrinsic or Extrinsic contributes to employee

satisfaction and thus, enhances performance and productivity

(Bhattacharyya, 2007) and it is expressed by Lawler (2003) that

in the 21st century, treating people right is not an option but a

necessity.

Related Literature

Employee motivation deals to the factors that cause workers

to act in a certain way while doing their work, and this can

incorporate how dedicated the worker remains to organization

goals and how empowered they feel in their everyday work.

According to DiPietro et al. (2014), motivating employees and

keeping them satisfied all the time are some of the ways that the
managers and organizations retain employees and produce

excellent service. These authors are in agreement with Nohria et

al. (2008) who stated that the most enduring and elusive

challenge managers have is getting people to do their best work,

even in trying circumstances, however; Thahier et al. (2014)

mentioned that motivating employees is highly essential since

motivation of each individual is his readiness to wholeheartedly

work hard for high efficiency; which means the worker will utilize

every capability that he has for his organization by using the

obtainable opportunities to achieve his organization's main goal.

In additional, the mentioned authors further quote McClelland on

need for achievement, need for power, and need for affiliation as

motivators for achievement and satisfaction. On the opposite,

Nohria et al. (2008) analyzed that the things that influence

decisions and underlie all that we do are the drives to procure both

tangible and intangible things; the need to bond with others;

understand; and shield or secure against exterior dangers and

foster justice. In an article published by DiPietro et al. (2014), it

presented that workers are motivated by intrinsic and extrinsic

factors which are driven by the interest or enjoyment of the job

(intrinsic) and things that originate from outside the individual, for

example, cash or rewards (extrinsic). This is similar to what Cho

& Perry (2011) said that people are intrinsically motivated when

they look for enjoyment, fulfillment of curiosity, self-expression,

or individual challenge in the workplace while extrinsically

motivated when they take part in activities to acquire a goal that

is separate from the work itself. Motivation or employee rewards

come in different structures, for example, enhancing working

conditions, giving chances to development, and perceiving worker

achievements or compensation, however, utilizing intrinsic

motivators like giving a sense of belonging for the employee and

acknowledgment of a job well done goes far in making them

excited for their jobs. In addition, according to Honore (2009) &

DiPietro et al. (2014), job enrichment, empowerment and sharing

power enable some employees feel motivated at work. Also, there

are influencing conditions in order to have intrinsic and extrinsic

effects of motivation. Cho & Perry (2011) introduced two

situational elements- managerial trustworthiness and goal

preparedness as the influencing factors for intrinsic effects while

an individual attribute to extrinsic reward expectancy. They also

suggested that the trustworthiness of managers and goal

directedness increase the force of intrinsic motivation on

employee satisfaction, whereas extrinsic rewards expectancy

decreases the force. DiPietro et al. (2014) emphasized that with

trustworthiness comes motivation for the employees as they will

have elevated expectations of learning from their manager.

Having trustworthy managers enable employees to coordinate

their endeavors toward their task performance without stressing

over interruptions from managers or conflicts with them. While

Burton (2012) explained that extrinsic motivation comes about

when an activity is done to accomplish some separable outcome,

one doesn't really appreciate doing the task but since there is an

outcome they want to attain, they will be motivated to do it.

However, as extrinsic motivation increases, intrinsic motivation

decreases because the individual begins to search for external

rewards instead of working on something for personal fulfillment.

 Body of the Research

This chapter presents the method that was used in

gathering the necessary data and information in the entire study.

This chapter also analysed and interpreted the data gathered. The

various findings were presented in the succeeding tables with

corresponding discussion and explanations.

Data Gathering

This study firstly aimed to compare the effects of intrinsic

and extrinsic motivation on employees’ performances in private

organizations. To gather the necessary data needed, the

researchers utilized secondary textual data on previously

conducted studies and literatures such as PDFs and articles. The

researchers identified the effects of intrinsic and extrinsic

motivation on employees in different aspects of their workplace

and sought to know the most effective motivator to the

employees.
 Data Analysis

Table 1.

Effects on Employee Motivation

Intrinsic Extrinsic

Self-esteem Organizational Policies and

Administration

Progression Salary

Ambition Work Nature

Commitment Job Security

Integrity Interpersonal Relationship

Responsibility Benefits/Bonuses

Table 1 pertains to the different effects of intrinsic and

extrinsic motivations on employees and their workplace.

Intrinsic Motivation is performing activity by enjoying it

and do not depends on the external factors or rewards that awaits

them. It involves engaging in a behaviour because it is personally

rewarding. Essentially, the behaviour itself is its own reward.

Extrinsic Motivation is when we are motivated to perform

certain activities because of the external rewards. In this case,

you engage in a behaviour not because you enjoy it or you find it

satisfying, but in order to get something in return or avoid

something unpleasant like punishments.

When people are intrinsically motivated, they will seek to

perform well because they either enjoy performing the actual

tasks or enjoy the challenge of successfully completing the task.

When they are extrinsically motivated, they don’t particularly

enjoy the tasks but are motivated to perform well to receive some

type of reward to avoid negative consequences (Deci & Ryan,

1985). People who are intrinsically motivated don’t need external

rewards such as pay or praise. In fact, being paid for something

they enjoy may reduce their satisfaction and intrinsic motivation

(Deci, Koestner, & Ryan, 1999).

 An interesting debate has formed between researchers who

believe that rewards reduce intrinsic motivation and those who

don’t. A meta-analysis by Cameron and Pierce (1994) concluded

that research does not support the idea that rewards reduce the

idea that rewards reduce intrinsic motivation. However, the meta-

analysis has been criticized by Ryan and Deci (1996) as

misrepresenting the data. Thus, this appears that this debate will

continue.

Motivation is one that drives, encourages and sustain

enthusiasm in people's behaviors. It is composed of two important

factors; Extrinsic & Intrinsic motivators. Eminent management

should understand profoundly the effect of each of the above

motivators and the mechanism between them, such as how

intrapersonal motivators lead to interpersonal and vice versa.

There are different technologies can be used as an intrinsic

motivation. Self-esteem is the inner driving force that moves

freely no matter what the person is currently experiencing. On the

other hand, self-esteem can be considered as extrinsic motivator

as well. For some instance, a person can buy a luxurious item as

a trophy for achievement and a satisfaction for one’s desire.

Progression serves as an internal motivator where a person is

more driven when the paths are quite clear and certain. Ambition

direct a person and affects the attitude to a job. It promotes the

sense of achievement that leads to a positive job performance.

Commitment also serves as an intrinsic motivation where a person

encourage personal engagement on the job with positive attitude.

Integrity gives some sort of privilege to a person with high

integrity. Superiority gives the essence of power that leads to

motivation by achieving reliability and credibility. Responsibility

can be conjoined with integrity. Attainment of success and

accomplishing of achievement is more certain when a person is

motivated with higher responsibility and integrity (Barrak, 2014).

Extrinsic motivation refers to behavior that is driven by

external rewards such as money, popularity, praises and etc. This

type of motivation arises from outside the individual, as opposed

to intrinsic motivation, which originates inside of the individual.

 Organizational Policies that are pro-employees are good

source of motivation in which the workers could fully exert an

effort to the job without conflict from the interest of the person

and the management. Increase in Salary results positive job

attitude and performance as an employee increase its interest on

the work.

Work Nature that fits the abilities of the employees helps

them to be motivated to do their job. Having a good work nature

will help the employees to improve their work performances.

Job Security also helps employees to be motivated at work.

Knowing that you have your job secured or knowing that you have

this assurance that you will keep you job without the risk of

becoming unemployed, employees will be motivated to perform

well in their workplace.

Interpersonal Relationship refers to a strong association

among individuals working together in the same organization.

Employees working together ought to share a special bond for

them to deliver their level best.

Benefits or Bonuses help the employees to perform well at

their workplace. Having benefits and bonuses for employees who

are working hard will motivate them to do better and better

because of the desire to get those incentives.

Table 2. Most Effective Employee Motivation: Intrinsic Vs. Extrinsic

Related Studies and Literature

Employee Motivation

Intrinsic Both types of motivation

are proven effective but there

are some organizations that

intrinsic motivation is more

effective than extrinsic. Just

like in the study that was

conducted by Rajesh Singh in a

hospital, his research involves

nurses who works there. It

turned out that they prefer

intrinsic motivation but it does

not mean that they do not

value extrinsic rewards.

Utilising and investing in

non-financial rewards,

employees not only improve

their performance but also

promotes their organizational

citizenship according to

Munyua, (2017). Therefore the

study recommends to stride

more in investing employees’

motivation through non-

 monetary incentives as they

are sustainable.

Extrinsic From the findings of

Wafula et al., (2015) there was

significant relationship between

working conditions and

employee performance in the

Medium Class Hotels in Kenya.

The correlational study results

indicated that there was

positive and significant

relationship between incentives

and employee performance.

The results revealed that there

was significant relationship

between interpersonal relations

and employee performance.

 Table 2 presents the different studies and literatures about

intrinsic and extrinsic motivations on employees. The tables above

summarizes studies conducted from different researchers around

the world.

Data Interpretation

From the data above, the researchers can imply that

intrinsic motivation is more effective that extrinsic. At the same

time, this ideas behind intrinsic and extrinsic motivation can be

balanced that might be the key to the managerial and

organizational success of the workplace and its employees. The

different effects enlisted above varies for every employee based

on their personalities and expectations.

Conclusion

Motivation is what keeps everyone going and moving amidst

of all the circumstances they have to face everyday. In the context

of work and profession, nothing beats motivation in making

employees extra driven when it comes to their work and craft—

truly, motivation plays a very crucial role in determining one’s

productivity and willingness to work. Due to the stressful setting,

pressure and loads of work, private companies seek to find ways

to keep their employees prolific when it comes to their tasks

regardless of the fact that they were encompassed by the

situations mentioned above. Motivation is composed of two

factors, namely Intrinsic Motivation and Extrinsic Motivation.

Intrinsic Motivation comes from within, the driving force that does

not include the external factors whilst Extrinsic Motivations came

from the outside, solely making someone motivated from external

and tangible rewards. Intrinsic Motivations are Self-esteem,

Progression, Ambition, Commitment, Integrity, and Responsibility

whilst Extrinsic Motivations include Organizational Policies and

Administrations, Salary, Work Nature, Job Security, Interpersonal

Relationship, and Benefits or Bonuses. Perhaps, the things

mentioned above are different in nature but the common

denominator is, these are all helpful in making an employee

motivated with of course taking the circumstances and situations

into account.

Implications on Employees' Performance

Studies show that if someone or an employee to be specific

is intrinsically motivated, most likely his or her performance will

be at its best simply because they enjoy what they are doing. In

contrast with the former, when an employee is motivated

extrinsically, he or she is solely focused in finishing the tasks to

avoid dillemmas and consequences. This goes to show that

although both are effective in making employees as productive as

they could, there are notable differences specifically on how the

employees look at their jobs at the context of passion or simply

just work. Motivation is relative to the nature of work, Intrinsic

Motivation may not work on this type of work but may work on

others, same goes with the Extrinsic Motivation. Amidst of the fact

that both are effective, other organizations find Intrinsic

Motivation more effective than of the Extrinsic as proven by

Rajesh Singh's study. Intrinsic Motivations promotes

Organizational Citizenship wherein employees are willing to go

above and beyond for the benefit of the team and the company.

Utilising and promoting Intrinsic Motivations can boost the

employees driving force to work simply because its sustainable

and within one’s self. However, Extrinsic Motivation will not be

crossed-out in the equation because Extrinsic Motivation, per se,

is a valuable tool in making an employee satisfied and well-driven.

 References

Aamodt, M. G. (2010). Industrial/Organizational Psychology: An Applied

Approach. Employee motivation.

Barrak, M. (2014). Extrinsic and intrinsic motivator and their affect at

the work place. Retrieved from:

https://www.linkedin.com/pulse/20140724073655-147339648-

extrinsic-and-intrinsic-motivator-and-their-affect-at-the-

work-place

Burton, K. (2012, May). A Study of Motivation: How to Get Your

Employees Moving. Retrieved October 4, 2018, from

https://spea.indiana.edu/doc/undergraduate/ugrd_thesis2012_

mgmt_burton.pdf

Cherry, K. (2018). Extrinsic Motivation vs Intrinsic Motivation: What’s

the difference. Retrieved from

https://www.verywellmind.com/differences-between-extrinsic-

and- ntrinsic-motivation-2795384
Cho, Y., & Perry, J. L. (2011, November 2). Intrinsic Motivation and

Employee Attitudes. Retrieved October 4, 2018, from

http://journals.sagepub.com/doi/abs/10.1177/0734371X114214

95?journalCode=ropa

DiPietro, R. B., Nierop, T., & Kline, S. F. (2014, June). Motivation and

Satisfaction of Lodging Employees: An Exploratory Study of

Aruba. Retrieved October 4, 2018, from

https://www.researchgate.net/publication/272122032_Motivatio

n_and_Satisfaction_of_Lodging_Employees_An_Exploratory_Stu

dy_of_Aruba

Honore, J. (2009). Employee Motivation. Retrieved October 4, 2018,

from

https://web.a.ebscohost.com/abstract?direct=true&profile=ehos

t&scope=site&authtype=crawler&jrnl=15350568&AN=43417953

&h=VYAPP0pYJZCdoQoG9A Xawub7T63a

FjGeq1Iq2YThbGkTgwmHKWLMe5CiCaPpi

xB3IFBp0GpBND/bDrfbSDQ==&crl=f&resultNs=AdminWebAuth&

resultLocal=ErrCrlNotAuth&crlhashurl=login.aspx?direct=true&pr
 ofile=ehost&scope=site&authtype=crawler&jrnl=15350568&AN=

43417953

Munyua, K. M., (2017). Influence of Intrinsic Motivation on Job

Performance and Organizational Commitment among the

Employees: Case of K-Unity, Kiambu County, Kenya.

Nohria, N., Groysberg, B., & Lee, L. E. (2008, August). Employee

motivation: A powerful new model. Retrieved October 4, 2018,

from https://www.ncbi.nlm.nih.gov/pubmed/18681299

Thahier, R., Risani, F., & Ridjal, S. (2014, January). The influence of

leadership style and motivation upon employee performance in

the provincial secretary office of West Sulawesi. Retrieved October

4, 2018, from

https://www.researchgate.net/publication/271025082_The_influ

ence_of_leadership_style_and_motivation_upon_employee_perf

ormance_in_the_provincial_secretary_office_of_West_Sulawes

Wafula, M., Korir, M., & Tirong, T. (2015). Effect of Extrinsic Motivation

on Employee Performance in Medium Class Hotels in Kisumu

City, Kenya. European Journal of Business and Management.

Vol.7, No.7