Carrot and Schtick: Which Is Best, Intrinsic or Extrinsic Motivation?

Written by Manoj Agarwal, Co-founder at Xoxoday

Peter in sales closes more deals every month than his peers. What do you think is the reason? Is it intrinsic motivation or extrinsic motivation, or is some other reason behind this?As his supervisor, you may think it’s the incentivethat’s doing the trick.

But Peter’s best friend, who often celebrates these wins over a beer with the rock-star after work hours, knows the real backstory. After all, they go back a long way—to the time when Peter’s stammer made him the butt of jokes in high school.

Determined to show them his true colors, Peter worked hard at his fault—not only overcoming it but going on to become a delightful speaker who regaled audiences with wit and eloquence onstage. A successful sales career was a natural progression, where Peter made full use of his new-found “gift of gab” to win over customers. Today, he is a top performer in his company.

Every time he wins a prize at an “R&R gala evening,” Peter secretly pumps his fist and ticks an invisible check box in his mind. It’s a validation of a personal triumph—a resounding victory over the guys who once made fun of his speech. Yes, that’s where Peter gets his real juice. 


Don’t tell this story to Peter’s supervisor, unless you want to confuse the living daylights out of the poor soul. After all, if his carefully planned roster of incentives—arrived at after months of dipstick and brainstorming, and meticulously mapped against achievement levels and performance tiers—has no effect on his biggest rock-star, that is cause for considerable concern. How does one plan in such a situation?

Worse, what if Peter isn’t an isolated case? What if all the sales team members are actors in a cosmic drama, in a script over which the supervisor has no control? The thought is enough to make most bosses lose sleep. 

What wakes us up in the morning: Intrinsic motivation or extrinsic motivation?  

Over the years, many supervisors have lost sleep. Over endless deliberations and research that have aimed to decode the exact nature and shape of the animal we know as MOTIVATION. That force that energizes and guides humans toward specific outcomes. In short, why we do what we do. The two principal characters of this hotly debated drama have been intrinsic (one that’s born inside us) and extrinsic (added from the external world) motivation.

Intrinsic vs extrinsic: Which is more powerful? Which is more useful, from the productivity point of view? In what ratio and proportion are they usually present? Do they have separate areas of function, or do their activities overlap? Are they both critical for achieving goals, or can we focus on sharpening just one (the one more relevant to us) and ignore the other?

Psychologists, philosophers, educationists, parents and students continue to throw theory and hypothesis at each other, but the ways of the mind remain mostly mysterious. At the same time, research has documented plenty. Plenty, that is, to provide Peter’s supervisor with some relief (the man had, after all, done what anyone in his position would—try to ensure maximized business outcomes through rewarding good performance). Here is what we need to know about the two types of motivation.

Intrinsic vs Extrinsic Motivation

Intrinsic vs Extrinsic Motivation

Extrinsic Motivation

There’s a school of thought that believes the human psyche is driven by a binary template, with Rewards and Punishment on either side of the coin. The stimulus (reason to act) here is largely tangible, that is, things that are visible to us and part of the external universe where we live. In the case of the Iceberg model, where the top half deals in manifested and measurable behavior and the bottom half dwell on deeper drivers and triggers that cause those behaviors, extrinsic motivation roughly maps to the visible portion of the ice.

Maslow's Hierarchy of Needs

Maslow's Hierarchy of Needs

If you consider Maslow’s Theory of Motivation, you will find extrinsic action roughly corresponding to the bottom half of the pyramid, which is where most of the existential and worldly things—glory, pleasure and security—live. In the context of the workplace, extrinsic motivation makes us do stuff like reaching targets before the deadline so that we don’t miss out on our allotted incentive, or learning a new course so that we get promoted faster, or following organizational policies so that we are not penalized for non-compliance. Now turn that same table around, and the mirror image you get is…

Variables influencing or affecting extrinsic motivation

Variables influencing or affecting extrinsic motivation

Intrinsic Motivation

If you are reaching targets faster because you love what you do (i.e., you live for the goosebumps that every successful pitch brings and are not consciously chasing KPI check boxes), learning a course or skill because you are dying to master that cool new tech and following your company’s rules and regulations because you cherish the culture (and therefore feel “naturally protective” about it), you are intrinsically motivated.

Intrinsic motivation is something that comes from your inner self or something you do as a reward for yourself. The activity is, in that sense, its justification and its reward. Intrinsic motivation roughly maps to the bottom, or invisible, half of the iceberg. From the perspective of Maslow’s Theory, intrinsic behavior roughly corresponds to the top half of the pyramid, which is where our higher needs—such self-esteem, sense of achievement, a feeling of belonging or a desire for self-development and improvement—reside.  

Variables influencing or affecting intrinsic motivation

Variables influencing or affecting intrinsic motivation

The Difference

The difference between intrinsic and extrinsic motivation is that extrinsic motivation is all about status, money, fame, power. Intrinsic motivation, on the other hand, is concerned with our sense of individuality, purpose in life and things that bring us joy and fulfillment. Extrinsic motivation tends to ‘force’ us to do something, be it to satisfy physical needs like hunger pangs or deal with threats to existence like eviction from a home.

Intrinsic motivation usually manifests in more voluntary and spontaneous forms of activities, such as learning to sing or helping out a co-worker who is sick. Loosely put, if extrinsic motivation makes us look good, intrinsic motivation makes us feel good. It is said that this kind of bucketing can be too simplistic or unidimensional, and extrinsic and intrinsic forms of impetus can at times be hard to tell apart. It is perhaps best to think of them as a combination that is constantly moving along a continuum, and it is only at the extreme ends of this spectrum that extrinsic and intrinsic forms of motivation can be said to be truly mutually exclusive.

Example of Intrinsic Motivation- Empuls Engagement Survey

Example of Intrinsic Motivation: Empuls Engagement Survey

For example, something that makes us look good may also be motivated from within, in the sense that someone may spend hours in front of a mirror dressing up for a party not to impress others but simply because s/he is a perfectionist. Similarly, something that makes us feel good—such as providing for the family or excelling at work—can at another level be extrinsically motivated. Because eating is also a basic/primal need (bottom of Maslow’s pyramid), that flawlessly executed job could have been linked to a rewards scheme. 

Extrinsic vs Intrinsic Motivation: Which Is Better?

It is easy to be idealistic when comparing the two forms of motivation and putting intrinsic on a higher pedestal. But a self-fulfilling society that runs on autopilot, where each of us is perfectly self-motivated, is an ideal. In a practical sense, both forms of motivation are required for the community to function properly. And while theories like that of Carol Dweck can tend to equate intrinsic motivation with a Growth Mindset and extrinsic motivation with a Fixed Mindset, there is much to be said for both. 

Extrinsic motivation—whether by the pull of incentive or the push of punishment—provides the tug and trigger we need to stick to deadlines, ensures order and consistency (by complying with set benchmarks) and ensures that clients are smiling. It is particularly useful in keeping productivity levels humming even when the task is unappetizing… which is often the case in real life.

Example of Extrinsic Motivation- Reward and Recognition

Example of Extrinsic Motivation: Reward and Recognition

An initial extrinsic push, such as an incentive, is one of the most effective ways (sometimes the only way) to make people overcome inertia, step outside their comfort zones and explore new skills or try new things. On the flip side, an extrinsically stimulated team may not have a sense of ownership for the task; they may do only as much as they must, give up easily if conditions change and lack the urge to innovate. 

Intrinsic motivation can help a business build a competitive edge that is near impossible to copy because the standards met here are within. When employees are fired up with a greater sense of purpose (that goes beyond HR-defined KPIs), they are far more likely to do the job satisfactorily. What’s more, they may not stop even after meeting the official quality benchmark, chipping and chiseling away at their masterpiece until it’s just perfect.

Conversely, when a goal is not met, intrinsically motivated teams will be quick to re-do, often without being asked.

Intrinsically driven employees usually are more committed to the task, more resilient in the face of hurdles and more innovative when it comes to cracking novel solutions.

Everything has a downside. Intrinsically motivated teams can be picky about choosing their tasks, indifferent to horizontal growth (that is, jumping careers or exploring new skills that don’t excite them) and quick to lose their mojo if conditions change.

The question founders, talent leaders and HR managers need to ask is not the difference between intrinsic and extrinsic motivation or which kind of motivation is better. The big question is which one does your organization need more? The answer is both, of course, but you still need to figure out the right ratio so that you can design your performance processes and workflow models.

This ratio depends on a few factors, like the nature of the activity or work (the product or service) your organization performs. The extrinsic-intrinsic ratio is also influenced by the goal/rewards model you design for your team. Most importantly, it must be in sync with the personality and psyche of your workers. 

Pivot Your Organizational Design around Your Team’s Motivation Levers

An organization is all about its people, which makes this the most important and trickiest part of your business. Get this right, and you will hit upon the proverbial Golden Goose: A ‘people system’  that runs on a happy loop and keeps delivering with consistency and quality. Botch this, and you enter a vicious cycle or subpar performance, iterations and blame games which only go from bad to worse, and take the business nowhere. 

Managers and supervisors need to remember while re/designing their workflow around a context of hunger and motive that everyone has different impulse buttons and motivational triggers. Some of us are extrinsically driven by habit, while others instinctively look inward for inspiration. Find out what moves who in your team and align your motivation triggers accordingly. The other thing to remember is that things are not always black and white, and one carrot doesn’t spur every stick.

Extrinsic and intrinsic motivation can co-exist. Sometimes, one may even be camouflaged as the other. It happens because humans can look at the same event through their unique lens, and may internalize or align the same situation with their distinct values—and no two prisms/lenses or ethos/values are quite the same. For one person, being Employee of the Month is essential because it comes with a dinner voucher at a fancy restaurant (extrinsic). For someone else—say, Peter in our opening example—it may hold special significance either as a thumbs-up to the self or as a thumbing-of-the-nose to the competition (intrinsic). How deftly you walk the grey areas of the impulse terrain decide how intuitive your “stimulus ecosystem” is. 

Elements to Add in Your Motivation Matrix

To get the best from your people (this includes remote teams), align them accurately with the crisscross of stimulus flowing across the workplace. As we have seen, it isn’t always easy to separate extrinsic motivation from intrinsic because it is the user who ultimately interprets and decides. You don’t have to create mutually exclusive spaces for your workers who sort into the two categories. The idea is to empathize, enable and empower—and let things fall in place. In other words, create the conditions and customize the environments so that the right motivation—be it extrinsic or intrinsic—is kindled in every situation.

Elements to add in your Motivation Matrix

Elements to add in your Motivation Matrix


Be it people who are motivated extrinsically or those who are more internally driven, nobody likes to do anything at gunpoint. Even subtle hints of control can break down morale. Barring the unsaid and clear rules of the game (such as core company policies), it’s good to step back and give your workers the space to do things their way.  


This is not just an external stimulus (a standard error); grey areas exist. An intrinsically motivated person can be equally motivated by the lure of a luxury vacation or fancy car if it aligns with his or her value systems, passions and journey. At the other extreme, recognition doesn’t always need to be “things”—it can be a warm pat on the back or a more public hat-tip on the company’s intranet page. The point is to be quick, genuine and appropriate in appreciating good work. 


Feedback is both an enabler and an incentive. At one end, it helps fine-tune performance by supplying vital inputs and direction. At the other end, a good word or two can add to the satisfaction of a job and involvement in the process, while boosting productivity simultaneously. No matter how one is motivated—extrinsically or intrinsically–feedback can act as a powerful trigger.

Sense of competence 

Make sure success is meaningful and leads to the personal growth of your employees. Design their curve in such a way that every target and every massive milestone instills a sense of achievement. While this is essentially an intrinsic stimulant, people who are externally stimulated won’t complain about the ego high this brings (which can, as a happy bonus, push them to raise their game).  


It refers to a sense of attachment and belonging to the workplace. An intrinsic motivator, in essence, relatedness starts with an inspiring and supportive culture your people can quickly identify with and are willing to spend the extra sweat for. A genuinely great culture can have a strong influence even on those who are extrinsically motivated, balancing the equation with a healthy mix of outside and inside catalysts.

Role-talent fit

This may be basic and obvious, but still worth mentioning. People caught in the wrong jobs have as much chance of staying motivated as our chances of spotting the Loch Ness Monster off Mumbai’s Juhu beach. If recruitment starts on the wrong foot, you can still turn the boat around by keeping opportunities of horizontal growth open, so that a “misfit” can find a more suitable role, one that lets them shine by aligning better with their motivational triggers.  


This one’s about how you dish it out. As leaders and department managers, it is important not to overdo it. Research shows that raising the stakes or incentives in an activity that someone already finds compelling (intrinsically engaging) will deliver return—but only up to a point, after which the tactic can backfire. For example, a coder who is passionate about programming may shine brighter when perks are linked to his performance. After a point, however, the perks may start defining the behavior, killing the natural spark and reducing the programmer to a bot who delivers just enough to tick his boxes, pocket his rewards and go home. 


XOXODAY offers unique and powerful ways to align your workforce with their motivation triggers—be they extrinsic or intrinsic.


Help your teams achieve their targets faster by providing instant feedback, nudging them to keep behavior aligned with KPIs and celebrating their wins with meaningful rewards that are both on time and in tune with their personas and natures of achievement. 


Build a close-knit culture that encourages communication, instill a sense of achievement via healthy competition with gamification and empower workers with coaching, insights and updates to optimize their true potential. 

7/15/2024 - 7/17/2024
IMA Summit 2024