Essay Sample on Do Financial Incentives Influence Employees Intrinsic Motivation?

Published: 2023-05-18
Essay Sample on Do Financial Incentives Influence Employees Intrinsic Motivation?
Type of paper:  Thesis
Categories:  Human resources Motivation Money Leadership management
Pages: 6
Wordcount: 1617 words
14 min read

The provision of financial incentives provides the best example of strategies that managers and business leaders in contemporary organizations use to increase the performance of their employees at the workplace. Olafsen et al. (2015) defined financial incentives as money that an entrepreneur, a company, or an organization offers to its workers to encourage predefined behaviors as well as actions. Such practices are those that could not occur without the use of incentives as typical forms of motivation. A plethora of business managers use these incentives as an innovative strategy for gaining a competitive advantage over other firms working in the same industry (Bruno et al., 2017). As a result, different business leaders developed a wide range of financial incentive programs to not only increase higher productivity among employees but also raise their loyalty and trust in the organization. The most common forms of financial incentives include the provision of stock options, increasing the salaries of particular employees, as well as offering bonuses and commissions (Landry et al., 2017). Nonetheless, the use of profit-sharing in some organizations is increasingly becoming a unique form of financial incentive in organizations seeking to motivate their employees and increase their competitiveness.

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Many business leaders do not recognize the existence of different types of motivations impacted by financial incentives. Comparative studies indicate that provision of financial incentives has a direct impact on increasing the first type of motivation referred to as extrinsic motivation (Bruno et al., 2017). However, there is limited knowledge of whether the provision of financial incentives can impact intrinsic motivation, which is the second type. Extrinsic motivation is a typical form of behavior driven by rewards such as money, praise, fame, and grades. Therefore, this form of motivation arises from the external environment as opposed to intrinsic, which originates from one's inner side. The overall drive to engage in particular behavior under intrinsic motivation arises from within because it is naturally satisfying to the individual. Therefore, it remains questionable whether using financial incentives can have an impact on intrinsic motivation (Landry et al., 2017). As a result, this research aims to investigate the existence of such influence by conducting a detailed review of existing literature and presenting the corresponding findings.


The nature of this study was empirical research seeking to determine whether financial incentives influence the intrinsic motivation of employees. According to Greener (2011), empirical research is a typical form of study where researchers strictly draw their conclusions from concretely pragmatic evidence. Therefore, researchers can easily verify the results of their research when required. Researchers can analyze empirical evidences, which refers to the record of one's direct experiences and observations, either qualitatively or quantitatively. The process of quantifying evidence or making it sensible in the form of a qualitative approach allows researchers to answer empirical questions (Rahman, 2017). It is critical for researchers to clearly define such issues and explain them using the evidence collected from the study. Also, the research design and questions used in empirical studies varies from one field. As a result, a plethora of researchers prefer to combine both the qualitative and quantitative methods of data analysis to provide appropriate responses to questions that are impossible to answer in a typical laboratory setting (Cooper et al., 2017). Such problems exist mainly in the field of education, psychology, and social science, like determining whether financial incentives given by various entrepreneurs and business managers influence the intrinsic motivation of employees in their places of work.

The current empirical study relied exclusively on a qualitative review of data published in different research materials, including journals, articles, websites, and books. The qualitative analysis is ideal for studies seeking to put a particular phenomenon into context, especially when it incorporates the descriptive approach. Qualitative data are non-numeric and remains suitable for research aiming to express feelings and attitudes (Greener, 2011). This approach allowed researchers to conduct a thorough literature review of various secondary sources to investigate the topic of the study. Documentation and title searches are a vital requirement when researching to enhance the understanding of a predetermined phenomenon. The two approaches helped researchers to access a wide range of literature published on multiple online platforms, including peer-reviewed articles, periodic journals, books, and websites. The researchers required to access these materials to gather information critical to guiding the implementation of the study.

Moreover, literature review in this empirical study entailed the use of information published in different documents available in a wide range of libraries managed by learning institutions, such as the University of Phoenix. The researchers also obtained peer-reviewed articles from various platforms, including ProQuest and EBSCOhost. Using a wide range of sources played a vital role in increasing the validity and reliability of the study because one document compensated for the weaknesses associated with the other. Books published by a wide range of organizational management experts also formed a vital part of the literature reviewed (Rahman, 2017). Websites search in this study included those with a wide variety of information on employee motivation and organizational performance. Afterward, the research team began the study by developing a study question alongside a hypothesis on whether financial incentives influence the intrinsic motivation of employees. The decision to create a hypothesis was crucial because it provided the strategic direction that the research team used while investigating the study topic.


A comprehensive review of the literature revealed that a plethora of researchers acknowledge employee motivation as one of the most critical elements that help contemporary businesses to achieve their desired operational sustainability (Landry et al., 2017). As a result, many organizations remain committed to using a wide range of highly-innovative strategies to not only motivate but also empower their employees in ensuring that they increase their overall commitment at work. Most of these firms work with the perception that increasing employees' motivation is essential in improving their performance at work and hence, leading to improved organizational productivity. This organizational improvement appears in different ways, including an increase in annual sales volume, revenues, and profitability. A positive change in the company's reputation as analyzed through the quality of products and services offered to its customers is also a critical measure of enhanced productivity (Fang & Gerhart, 2012). Therefore, the management of contemporary firms must remain committed to ensuring that their workforce has the highest levels of motivation to achieve higher performance.

Novianty and Evita (2018) defined motivation as the amount of energy, commitment, and creativity that members of a typical company's workforce bring to their jobs. Therefore, financial incentives refer to an ideal form of bonus that an organization gives to its employees to not only motivate but also empower them to have improved performance. Novianty and Evita (2018) did a comparative analysis of 43 employees from various industries to understand the impact of financial incentives on employee performance. The results of their study indicated that financial incentives have a positive effect on employee motivation. However, one major limitation of this study was approaching motivation from a generalized perspective. Novianty and Evita (2018) failed to distinguish intrinsic from extrinsic motivation; hence their review cannot help in determining how financial incentives influence the intrinsic motivation of employees.

Fang and Gerhart (2012) tried to expound on the findings published in previous studies by assessing whether paying employees based on their performance contributed to the diminishing of intrinsic motivation. The two researchers believed that finding innovative strategies to motivate employees in a typical organization is crucial whether the economy is growing or shrinking. As a result, a wide range of theoretical models applicable in the area of organizational management emphasizes on the use of incentives as well as empowerment to motivate employees. The most common forms of incentives used in the contemporary business industry are finance. Fang and Gerhart (2012) identified the provision of stock prices, bonuses and commissions, salary increments, and profit-sharing as the best examples of financial incentives commonly used in modern businesses to motivate employees. However, the main focus of a plethora of researchers about organizational management remains the need to determine whether financial incentives impact the intrinsic motivation of employees.

According to Bareket-Bojmel et al. (2014), intrinsic motivation refers to the personal motif that pushes and inspires employees to behave in a certain way and remain committed to achieving their predetermined goals in a typical organization. It is often difficult to talk about intrinsic motivation while avoiding extrinsic, which is the outward drive to doing something that an employee obtains from various rewards. One critical challenge to understanding the relationship between financial incentives and employees' intrinsic motivation is that many researchers believe that such approaches are typical rewards that seek to increase extrinsic motivation over intrinsic. Cerasoli et al. (2014) found that a wide range of meta-analyses continuously focused on the undermining effect associated with the provision of extrinsic motivation on the intrinsic inspiration. Many people believe that using extrinsic incentives, such as financial rewards, has the overall impact of eroding the intrinsic motivation of employees in contemporary organizations (Cerasoli et al., 2014). Such individuals, therefore, believe that organizations need to set alternative approaches such as verbal rewards and recognitions to help in increasing the intrinsic motivation of their workers.


Bruno, B., Faggini, M., & Parziale, A. (2017). Motivation, incentives and performance: An interdisciplinary review. International Journal of Business and Management, 12(12), 29-52.

Cerasoli, C. P., Nicklin, J. M., & Ford, M. T. (2014). Intrinsic motivation and extrinsic incentives jointly predict performance: A 40-year meta-analysis. Psychological Bulletin, 140(4), 980-1008.

Cooper, C., Booth, A., Britten, N., & Garside, R. (2017). A comparison of results of empirical studies of supplementary search techniques and recommendations in review methodology handbooks: a methodological review. Systematic Reviews, 6(1), 234.

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