Unfortunately, unless you’re one of the lucky few who were born with a silver spoon, a job is a necessary part of life. Despite being a fact of life for individuals living in modern, urban societies, what job we choose to have, whether we enjoy it, and how well we perform at it are all influenced by motivation.

Consider what makes you get up in the morning (even when you desperately want those five extra minutes), go to work, and accomplish your tasks. Is it because you need a paycheck to support your lifestyle? Is it because you feel valued by your colleagues? Or maybe it’s because you’re passionate about the work you do. 

Figuring out what motivates employees is important for companies seeking to attract and retain the best talent. Motivation influences productivity, engagement, quality of work, and work culture, which ultimately all impact a business’s success and profitability. A recent Gallup report found that employees who are not engaged or actively disengaged contribute to approximately $1.9 trillion in lost productivity.¹

While historically, external factors like financial compensation may have been enough to motivate people, as people’s attitudes toward work have shifted over generations, other motivators like purpose, opportunities for growth, and work-life balance have become increasingly important. Additionally, as the complexity of tasks has increased over the years, with many requiring out-of-the-box problem-solving and creativity, employees must feel motivated by a sense of purpose and mastery. The importance of employee motivation has made it an important factor in behavioral science, with companies trying to figure out the perfect recipe for success.²

Extrinsic Motivation: Motivation that comes from external factors. We are extrinsically motivated by the desire to gain a reward, such as a paycheck, or by a desire to avoid a punishment, such as being fired. Employee motivation is often tied to extrinsic factors.4

Intrinsic Motivation: Motivation that comes from within. Instead of being motivated by the promise of a reward or the fear of punishment, being intrinsically motivated means that satisfaction comes from completing the task itself. Intrinsic motivation is powerful for employee motivation, as it is more sustainable. However, as you can imagine, few people would be likely to continue performing well at work (or even showing up!) if they did not receive financial compensation.4

Incentivization: Anything that motivates a person and impacts their behavior. This can include external rewards, such as bonus structures or promotions, or intrinsic rewards, like feeling fulfilled because you are passionate about the work you do. 

Maslow’s Hierarchy of Needs: A psychological theory on motivation and happiness developed by Abraham Maslow. The theory was based on an understanding of humans as complex beings who have various levels of need. Basic needs, at the bottom of the pyramid, must be met before someone can fulfill more complex needs at the top of the pyramid. The five levels of the hierarchy are: physiological needs, safety needs, belongingness and love needs, esteem needs, and self-actualization needs.

Herzberg’s Motivation Theory:A psychological theory of motivation, also known as the Two-Factor Theory, developed by Frederick Herzberg. The theory suggests that there are two distinct sets of factors that contribute to job satisfaction and motivation: hygiene factors and motivators.

Early in human history, people were primarily motivated by biological factors. Actions were taken in order to meet survival needs, such as hunting for food or finding shelter for rest. However, as human societies became more complex and simple biological needs were more easily met, motivation began to come from other resources.2

During the Industrial Revolution, theories on employee motivation primarily centered around the role of money. These theories were based on the idea of humans as homo economicus—the belief that people behave in ways to maximize utility. People would therefore behave to gain rewards, such as money, and avoid punishment, such as losing their job. Employee motivation theories were focused on external incentives. While this kind of motivation may have been a sufficient explanation for employees completing simple or routine tasks, common in factory settings, the theory did not explore deeper social and psychological factors that drive behavior.2

As work tasks became more complex, our understanding of what motivates people evolved as well. In 1943, American psychologist Abraham Maslow published a paper titled “A Theory on Human Motivation,” in which he outlined a hierarchy of needs designed to help explain motivation. The theory proposes that people are motivated to fulfill basic needs, and once those are met, they can move on to more complex needs.

Based on Maslow’s pyramid, while employees may initially be motivated by an external reward, like financial compensation, to fulfill their basic physiological and safety needs, sustaining motivation beyond the two bottom stages requires a bigger carrot than just pay. Recognition and respect at work can be important motivators for meeting the higher levels of need.

In 1959, American psychologist Frederick Herzberg developed a similar theory of motivation. Herzberg’s Motivation-Hygiene Theory proposed that there are two distinct categories—hygiene and motivators— for factors that influence job satisfaction and motivation. The first category, “hygiene,” is similar to the lower stages of Maslow’s pyramid. Hygiene factors are conditions related to external forces, such as work conditions and salary. He argued that while these do not contribute to satisfaction, they prevent an employee from becoming dissatisfied. They still cause employee motivation, but only due to the promise of an external reward or fear of punishment. Motivating factors, alternatively, are elements related to intrinsic motivation. They include recognition, achievement, a sense of responsibility, and interest in the work, all of which contribute to employee motivation and satisfaction. 

Since the 1950s, there have been various other theories on employee motivation. In a society where there are many different career paths, and companies have to compete with many others to be successful, ensuring that employees are motivated to work is crucial. Some of the elements considered crucial for employee motivation today include giving employees autonomy, providing opportunities to develop personally and professionally, and ensuring that they have a sense of purpose.2 The COVID-19 pandemic also highlighted the value of flexibility and work-life balance, meaning that companies have to consider incentives outside the workplace as well.

Abraham Maslow

An American psychologist and philosopher best known for developing Maslow’s Hierarchy of Needs. Maslow felt that too often, therapy  focused on the causes of problematic behaviors and how to reduce them. Instead, he wanted to focus on how to increase positive aspects of behavior. He argued that the main goal of therapy should be to help people self-actualize—to become the most authentic version of themselves—which he designated as the top level of human needs.⁵

Frederick Herzberg

An American clinical psychologist who focused on management and motivational theories. He developed the Two-Factor Theory of motivation, which proposed that motivating factors can be divided into two distinct categories: hygiene factors (external motivators that fulfill basic needs) and motivators (intrinsic factors that lead to job satisfaction). Throughout his career, Herzberg consulted for many companies and governments on how to increase employee motivation.⁶ 

John Stacey Adams

An American psychologist who made contributions to psychological theories of motivation and organizational behavior. Adams developed the Equity Theory which suggests that employees are motivated when they feel there is a fair balance between inputs and outcomes. Additionally, the theory proposes that individuals compare their rewards and contributions to others’ in order to determine if the balance is fair. Equity Theory laid the foundation for organizational justice research.⁷

Employee motivation research has reshaped how organizations approach work, leadership, and innovation. By understanding what drives employees beyond pay, companies have been able to build cultures, practices, and strategies that boost engagement, creativity, and long-term success.

Happy employees lead to success

Motivated employees are not only happier, but also contribute to a more successful company. Motivation causes employees to be more engaged with their work, thus improving work quality, collaboration, and productivity. Ultimately, motivated employees lead to a more successful and profitable company. Intrinsically motivated employees also believe in the objectives of the company, and being committed to the vision makes them work harder and reduces turnover. A Glassdoor study revealed that motivated employees are 12% more productive, commit 23% fewer errors, and deliver 22% better customer service.⁸

While it’s difficult to measure a causal relationship between employee motivation and profitability, a 2023 study showed a correlation between Net Promoter Scores, which measures employees’ engagement and satisfaction, and business success. The study found that 56% of companies that had a fall in profitability also showed a fall in employee engagement in the year leading up to decline.⁹ 

Transforming workplace culture

Nowadays, work-life balance has become more important to employees. While previous generations bought into hustle culture as the key to success, millennials and Gen Z are prioritizing a healthier balance.¹⁰ Additionally, the notion that you have to be loyal to an employer has decreased, with many people switching roles and companies multiple times throughout their careers. ¹¹

As a result of these shifts in attitude, employers must go beyond a simple paycheck or benefits package to keep employees motivated. Leaders must prioritize employees’ growth and well-being to drive success. To remain motivated, employees are seeking mentorship, inspiration, and autonomy. They are seeking purpose-driven work, with 86% of Gen Zers seeing it as a pivotal component of their job satisfaction and overall well-being.¹² 

These changes are leading to new leadership and management practices, such as the adoption of servant leadership. Servant leadership encourages leaders to consider how they can better serve their employees, not the other way around. It prioritizes building trust, leading with empathy, and creating an environment where everyone can thrive.¹³ These principles contribute to motivating employees by aligning with modern-day employee expectations.

Boosting creativity and innovation

When employee motivation first began to be studied during the Industrial Revolution, many employees worked in factories and primarily completed routine tasks. However, today especially with technological advancements like artificial intelligence taking over automated tasks, a greater level of creativity is required for success.

Motivated employees think more critically and consider how they can innovate to help the company achieve its goals. One way to motivate employees is to give them more autonomy and freedom to be creative. This is a philosophy that Google, one of the most successful companies worldwide, has embraced, building a culture of excellence and innovation by empowering employees with autonomy. One Google employee was even quoted as saying, “the job doesn’t define us, we define the job.” Google emphasizes self-directed learning opportunities to help employees develop new skills, provides employees with flexible work arrangements, and discourages unnecessary meetings. Google fosters collaboration and innovation through cross-functional teams, encouraging employees to tackle problems from diverse perspectives. Google also allows employees to carve out 20% of their time for projects unrelated to their day-to-day activities, which has led to some of their most successful products, like Gmail and Google News.¹⁴

These initiatives have contributed to Google’s success. According to company data, 95% of employees stay with the company for at least three years, compared to an average of 1.5 years in the industry. Google constantly ranks high for employee satisfaction, with 90% reporting that they are proud to work there. Google employees also file over 100 patents daily, allowing them to constantly innovate and stay ahead of the curve.⁸ 

While employee motivation is essential for organizational success, the strategies to achieve it remain highly debated. From overreliance on financial incentives to questions about fairness and the risks of over-engineered recognition systems, experts continue to disagree on what truly drives employees to perform their best.

Are employers focused on the wrong factors?

Often, companies focus on external factors to boost employee motivation, such as base salaries, financial compensation, or promotions. While these may be effective in the short term, people may quickly get used to that level of reward and require something bigger to stay motivated. Instead, employers may choose to focus on intrinsic factors for more sustainable employee motivation. 

Being intrinsically motivated because you truly value the work you are doing can lead to greater ownership and accountability. You don’t feel the need for your boss’ recognition because you find the task meaningful. You may also have a better sense of how your work connects to a larger purpose, which can motivate you to complete even simple tasks.

However, it’s more difficult to find ways to intrinsically motivate employees, as it must come from within. Employers need to focus on individual needs and passions, which can take time and resources. Some ways to build intrinsic motivation include giving employees autonomy over their projects, allowing flexibility in the way they work, and having regular conversations about goal setting and desired professional development. 

On the other hand, some external factors are necessary for base motivation. People are unlikely to work without sufficient financial compensation and may want recognition in the form of promotions as they increase tenure with the company.¹⁵

Is equity important for employee motivation?

Most psychological theories on employee motivation recognize that there are both intrinsic and extrinsic factors that contribute to motivation. They also suggest that basic needs must be met first, and once they are, more complex incentives are required to keep employees motivated. However, one theory of motivation places another facet front and center: equity. ¹⁶

Developed in 1963 by John Stacey Adams, Equity Theory explores motivation through a lens of fairness. It suggests that employees are motivated when they feel that the outcomes they receive, such as pay and recognition, are fair compensation for their input (time, effort, and loyalty). It views motivation as a balance between the two: if someone feels they are being unfairly compensated, they will put in less effort at their job. Interestingly, if they feel they are being overcompensated, they may lack the motivation to go above and beyond. If they’re already cashing the check, what’s the point of trying to improve?

As the theory is based on the perception of fairness, not actual inputs and outcomes, it means that people will look to others’ inputs and outcomes as a way to check if their own ratio is fair. Imagine finding out that your coworker is receiving a bigger bonus, but you believe they performed worse. You’d feel enraged! That means that employers have to consider equity across the organization, which is why many employers have salary bands for specific roles, so that people in the same job level are making roughly the same amount. 

However, it’s difficult to build an incentive system based on equity. People’s perceptions are impacted by their culture, age, and even gender, making it a challenge for a company to determine what is “fair” for everyone. Some people may value work-life balance more than greater compensation, but having individual incentive structures for each employee is near impossible.

A careful balance to recognizing employees

While there is evidence that employee recognition increases motivation, it has to be done thoughtfully to produce positive effects. After the COVID-19 pandemic, many people realized they felt unfulfilled by their jobs, which led to what has been termed the “Great Resignation.” To address employee engagement, many companies sought ways to excite employees. Workplace gamification was seen as a way to solve the issue.

Workplace gamification seeks to build recognition and reward systems to motivate employees through features such as points, badges, leaderboards, and challenges. However, it’s easy to fall into overkill. Poorly designed gamification can undermine motivation by making employees feel micromanaged and eroding their autonomy, thereby decreasing intrinsic motivation. Employees might feel that they are being treated like children—receiving a gold star—or that there’s too much monitoring of their day-to-day progress. Tasks can lose their authenticity, and employees may lose a sense of purpose.¹⁷ A TalentLMS study showed that 79% of employees were dissatisfied because the gamification did not align with their intrinsic motivation.

Additionally, workplace gamification can create a culture of competition rather than collaboration, which may lead to a toxic workplace and harm employee motivation. The TalentLMS study showed that 75% of employees reported feeling stressed or burned out due to the sense of competition with their colleagues. While employee recognition is an important driver of motivation, organizations must find ways to authentically and meaningfully recognize employees, rather than turn everything into a “game.” ¹⁸

Feedback is crucial to Microsoft’s success

Previous generations typically expected feedback at regular, set intervals, like at midyear or end-of-year reviews. However, younger generations, like Millennials and Gen Zers, prefer more consistent feedback to remain motivated. Partly, this is driven by constantly evolving and changing markets, making it important for employees to be agile and respond quickly to feedback. Leaders who incorporate informal check-ins combined with structured reviews are often rewarded with more motivated and engaged employees.¹⁹ 

Microsoft is an example of a company that has prioritized feedback and recognition. According to a survey, Microsoft’s top-performing managers spend 25% of their workday providing feedback to their team members. Managers conduct regular one-on-ones to discuss progress and set clear goals, motivating employees to develop and hit their outcomes. Beyond recognizing direct performance, Microsoft also recognizes employees based on competencies, which motivates employees to develop new skills. Microsoft also uses a 360-degree feedback system, where employees can provide feedback on their managers and peers. 

Microsoft’s focus on feedback has had a profound impact on employee recognition. They conducted an internal study and found that employees who receive regular feedback stay with the company longer, with 64% of them staying with the company for over two years. Those who didn’t receive consistent feedback had a retention rate of only 42%. Microsoft has built a culture of transparency, with a focus on employee growth, increasing motivation and engagement, and helping make it one of the most successful tech companies.⁸

Servant leadership turned a healthcare institution around

In the 1990s, St Michael’s Hospital in Alberta was on its way to bankruptcy, struggling to support itself. Ultimately, this led to its closure. In an attempt to turn things around, the organization rebranded as St Michael’s Health Centre and appointed a new CEO, Kevin Cowan. 

Cowan had formerly been a registered nurse, giving him an appreciation for the importance of employee satisfaction and motivation for an organization’s success. Hospitals rely on non-profit and government funding, and Cowan knew that it was important to foster these relationships. At this time, Saint Michael’s Health Center was completely reliant on funding from the Chinook Health Region (CHR), which had had a tumultuous relationship with the previous hospital. Cowan adopted servant leadership, finding ways he could help the CHR rather than solely focus on what they could do for his organization. Cowan was known for asking in almost every meeting, “what can I do to make your life easier?”

Cowan also adopted servant leadership in how he treated employees. One example was by recognizing employees—he would credit his direct reports for their hard work, empowering them to do the same for their direct reports, which helped create a cultural change. In under seven years, Cowan had completely transformed St Michael’s Health Centre, from being an underperforming organization to one of the most innovative in Canada.²⁰

Employee Engagement Strategies

For employees to be motivated, they must be engaged with the work they do and the company they work for. In this article, our writer Isaac Koenig-Workman explores some of the most popular employee engagement strategies—recognition and rewards programs, career development and growth opportunities, regular and evidence-based feedback, work-life balance initiatives, and open communication—to discuss how these strategies psychologically boost motivation, satisfaction, and performance. 

How to Create Journey Maps to Improve EX (Employee Experience) 

Historically, leaders have focused on financial compensation to motivate employees. However, the COVID-19 pandemic led people to reevaluate their priorities, with money often proving not enough to keep them happy. While journey mapping is typically used to understand the customer journey, in this article, our writers Lindsey Turk and Dr. Sekoul Krastev explore how employee journey maps can help leaders identify areas for improvement in the employee journey. 

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