The underlying incentives that were disproportionate to their actual performance made them oblivious to risks and ethics. The point here is that though the bankers were performing well, the rewards were too high and this made them take unnecessary risks and not heed to the “inner voice” that guides us all in our daily life and career. The global economic crisis brought to the fore the system of flawed incentives that was in place in many banks. Unless leaders and employees are motivated from within, incentives and rewards can only help so much and unless high performers are rewarded appropriately, intrinsic motivation withers away. This is why it’s important for organisations to align their incentives with performance. Hence, the strategic fit between intrinsic motivation and extrinsic motivation has to be just right for organisations to get the best from their leaders and employees. “Leaders who are only motivated by external rewards do not normally make great leaders and conversely, leaders who are not rewarded for their performance stagnate and lose morale”. In childhood, bribery is used schools use grades, trophies and academic recognition based on good behaviour supermarkets use discount cards/coupons to save you money while shopping in their store, corporations use bonuses and commission scales to encourage growth and sales numbers. Trophies, medals, money, discounts, grades, entrance to programs or schools, higher commission percentages, new clothes and losing weight are all examples of extrinsic motivators. When you are motivated to behave, achieve, learn or do based on a highly regarded outcome, rather than for the fun, development or learning provided within an experience, you are being extrinsically motivated. This type of motivation is everywhere and frequently used within society throughout our lifetime. This means external or outside of yourself. If you write articles for the curiosity and fun of learning and sharing information or run because it relieves stress and makes you feel better or excites you to improve your personal time, you are intrinsically motivated. When you are motivated intrinsically, you have fun and look for skill development and competency, personal accomplishment and excitement. There is no external inducement when intrinsic motivation is the key to behaviour or outcome. This means internal or inside yourself. When you are intrinsically motivated, you enjoy an activity, course or skill development solely for the satisfaction of learning and having fun, and you are determined to strive inwardly in order to be competent. Every behaviour has an underlying cause, and understanding the cause of behaviour and motivating factors is key to changing or improving outcomes. If a leader understands the distinction between intrinsic and extrinsic motivational factors, then the leader has a greater probability of motivating himself/herself and others.
Personality and self-concept often determines whether or not a leader will be intrinsically or extrinsically motivated. In actuality, leaders are motivated by both internal and external factors, as there is always a mixture of reasons why leaders do, achieve, behave, learn and react.
There are many theories about what motivates leaders.