Diagnose Incentive System

Generally, motivation can be divided into extrinsic and intrinsic motivation. The former describes an individuals’ desire to perform well in order to either obtain material benefits (i.e., pay), or to avoid punishment. In contrast, intrinsic motivation characterises that individuals perform well rather because they feel a sense of accomplishment and that they are doing something worthwhile, which they like, than because of external rewards. In the following, we will explain why employees might struggle to stay motivated, by referring to the, in our opinion, most relevant theories as discussed in class.

The first two theories are Daniel Pink’s AMP motivation trio and Vroom’s Expectancy Theory. The former proposes that in order for employees to become intrinsically motivated the three concepts of autonomy, mastery and purpose have to be existent. The latter states that an expected as well as desirable and achievable reward extrinsically motivates employees. By letting employees know that they might be terminated, not only the ambition to master their job reduces but also the sense of purpose dwindles away as they begin to question whether their efforts actually pay off. In addition, the expected outcomes for an employee are neither desirable (potential determination) nor can they precisely assess what they can expect, therefore negatively affecting motivation.

Moreover, Herzberg in his Hygiene Theory defines certain motivators (if provided) and certain de-motivators which are expected (hygiene criteria) and if not provided, negatively impact employee motivation. Pay and benefits as well as job security are listed under de-motivators and recognition among the motivators. The announcement of lay-offs endangers these requirements and thus leading to a reduction in motivation.