There are some basics to being an effective leader. As this interview reminds us, recognizing success is one of them. While financial rewards work well for some people and for some tasks, letting people know they are appreciated is an across-the-board motivator. But why?

The interaction between performance, intrinsic motivation (I work hard because I love the work) and extrinsic rewards (I work hard for the extra money) is complex. However, recent research and thinking indicates that the key issues surrounding the effectiveness of pay-for-performance (extrinsic rewards) are:

  • How equitable rewards are perceived and
  • Whether they reinforce a sense of competence.


The latter is important as it leads to intrinsic motivation. Saying “Thank you” and recognizing achievement also reinforces feelings of competence and people rarely get tired of hearing it (if it’s sincere).

What’s the best way to navigate these tricky motivational waters?

  • Use validated pre-employment tests to hire people who are intrinsically motivated to do the work at your company. Or, if you are convinced that extrinsic motivators are critical to your business success, hire people who thrive on them.
  • If using individual pay-for-performance, be sure that the rewards are directly linked to what that person does and that they perceive it as fair.
  • Regardless of whether you have pay-for-performance, recognize achievement whenever possible as this will increase intrinsic motivation.
  • Don’t take intrinsic motivation for granted! Make your workplace one where people who have passion for the work can pursue it.

Please contact Warren Bobrow if you like to discuss other ideas about increasing motivation at your company.