Valerie Good, PhD, Douglas E. Hughes, PhD, and Hao Wang, PhD
Most people think of extrinsic motivators like compensation when thinking about workplace motivation. Recruiters often emphasize salary, paid time off, and healthcare benefits with potential hires, and, while these factors may entice candidates to accept a position, most individuals also want to make a difference and contribute to society through their work. Contributing to something greater than themselves—or feeling a sense of purpose—is a huge motivator for employees, which can drastically impact the value individuals bring to a firm and to clients.
In our research, employees with a strong sense of purpose and other intrinsic motivators such as autonomy, competence, and relatedness expended greater effort and outperformed their peers who were more financially motivated. Moreover, managers who prioritize fostering intrinsic motivation in employees can save the firm money, ultimately improving the bottom line by avoiding overly investing in extrinsic motivators and short-term objectives. As a new generation is beginning to enter the workplace, it is important not to overlook the importance of intrinsic motivation when recruiting for entry-level positions. By doing so, a company can create a solid foundation that is primed for long-term success.
Intrinsic vs. Extrinsic Motivation
Extrinsic motivation is usually expressed as promises of increased base salary, commission, bonuses, contests and other incentives earned for performing at a high level. Companies commonly focus on extrinsic goals when determining the success of employees via sales quotas and other key performance metrics. While extrinsic motivation can and does motivate employees, it can also cause unintended side effects. Self-Determination Theory (SDT) suggests that extrinsic motivation can cause individuals to perceive their behavior as being controlled by others. This controlled motivation can make salespeople behave in ways they might not otherwise. For example, Wells Fargo incentivized employees by offering bonuses for every account secured. Rather than working harder to bring in more clients, employees created fake accounts, which ultimately led to the company losing millions. Even though this is a dramatic example of how extrinsic motivation can cost a firm, the result of providing financial rewards and putting systems in place to monitor employee behavior can lead to unintended negative results, even on a small scale.
Conversely, intrinsic motivation is a more cost-effective and longer-lasting form of motivating employees. Intrinsic motivation, in its simplest form, is when an individual is internally motivated. There are numerous ways in which intrinsic motivation can arise from a job: because the job is fun, it creates a sense of pride, or it gives the individual a sense of purpose. In fact, a sense of purpose—the belief that one is making a contribution to a cause greater than oneself—is found to be a significant motivator for employees and salespeople.
Autonomy, competence, and relatedness can also foster intrinsic motivation in employees, leading to a positive effect on the company’s bottom line. Autonomy simply means giving employees freedom of choice by allowing them to determine the nature of tasks/problems and arrive at a course of action on their own. Autonomy can be granted to employees gradually, allowing employees the opportunity to prove themselves capable of managing their positions. Another driver of intrinsic motivation is a sense of competence, or the skills, know-how, and ability to perform a job. Managers can improve an employee’s perceived competence through training, seminars, or other professional development opportunities. Managers can also foster intrinsic motivation through a sense of relatedness or belongingness. Relatedness is the notion that even when the work is not fascinating on its own, the employee is still willing to do the job because he or she is valued by others. Managers can improve employees’ sense of relatedness by showing genuine care and concern for employees and through team bonding exercises. Understanding these three factors can help firms attract and retain talent.
Attracting Talent Across Generations
As young adults enter the workforce, it is important to understand what best motivates this particular generation. Most may be under the impression that younger generations are less concerned with intrinsic motivation until they become more financially stable. However, modern society offers credit, which may give a (potentially false) sense of financial security that makes higher-level needs emerge as more important. Because of stable compensation and benefits, companies should focus more on creating intrinsic motivation for younger generations through autonomy, competence, relatedness, and most importantly, a sense of purpose.
Real Estate Implications
Intrinsic motivation is a significant predictor of effort and performance in employees and salespeople. Understanding how intrinsic motivation is generated can help real estate agencies build a solid foundation of long-term success. When compared to extrinsic motivation, fostering intrinsic motivation is less costly and leads to more effort from agents and employees. Intrinsic motivation is also longer-lasting than extrinsic motivation. Financial incentives and other rewards may boost productivity in the short-term, but the effects diminish over time. On the other hand, our research shows that when real estate agents have a sense of purpose – if they believe they are benefitting society by helping their clients find their homes – they will put in the extra effort to help their clients and outperform their peers who are focused more on the commissions from the home sale. Fostering intrinsic motivation and a sense of purpose on the part of agents will ultimately lead to happier and more satisfied real estate clients. This can increase repeat customers, positive word-of-mouth communication, and ultimately, the firm’s bottom line.
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Good, Valerie, Douglas E. Hughes, and Hao Wang (2022), “More than Money: Establishing the Importance of a Sense of Purpose for Salespeople,” Journal of the Academy of Marketing Science, 50, 272-295.
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About the Authors
Valerie Good, PhD
Assistant Professor of Marketing, Grand Valley State University
Dr. Valerie Good (PhD – Michigan State University) is a well-published researcher with an active pipeline. Her dissertation was distinguished as the top in the field of sales, earning her the American Marketing Association Sales SIG Dissertation Award in 2020. She also received the 2023 Distinguished Early Career Scholar Award from Grand Valley State University and the 2019 Taylor Research Award from Michigan State University in recognition of research excellence. Her research has been published in Harvard Business Review, Journal of the Academy of Marketing Science, International Journal of Research in Marketing, Journal of Business Research, Industrial Marketing Management, Journal of Business Ethics, Journal of Service Research, European Journal of Marketing, Journal of Personal Selling & Sales Management, and Marketing Letters, with several additional papers currently under advanced review in top-tier marketing journals. She is dedicated to research with practical impact, and media mentions of her research include Harvard Business Review, Forbes, Thrive Global, Selling with Noble Purpose, The Conversation, EconoTimes, the National Interest, Broad College of Business News, the Sales Scholar podcast, as well as additional newspaper and radio outlets.
Douglas E. Hughes, PhD
Director, School of Marketing and Innovation and Professor of Marketing, University of South Florida
Dr. Douglas E. Hughes’ (PhD – University of Houston) has a rich academic and professional background in marketing and sales. His well-cited research focuses on how firms may maximize performance through sales organization effectiveness and through the accompanying management of internal and external relationships. Hughes served as Editor-in-Chief of Journal of Personal Selling & Sales Management and Area Editor at Journal of the Academy of Marketing Science and has published articles in the Journal of Marketing, Journal of Marketing Research, Journal of the Academy of Marketing Science, Journal of Retailing, International Journal of Research in Marketing, Marketing Letters, Industrial Marketing Management, Journal of Personal Selling & Sales Management, and Journal of Service Research. He was honored for the best doctoral dissertation (2009) and best published articles on a sales topic by the American Marketing Association (2011, 2016) and is also the recipient of the 2013 Withrow Emerging Scholar Award, the 2016 Emerald Citation of Excellence Award, and the 2021 and 2016 James M. Comer Award for the Best Contribution to Selling and Sales Management Theory. He was featured on the cover of Top Sales Magazine in 2015 along with an article about his research on salesperson motivation. Prior to his academic career, Dr. Hughes served as CEO of a business services firm, as a senior executive in both marketing and sales at Fortune 100/500 consumer products firms, and as a consultant to a variety of companies across multiple industries.
Hao Wang, PhD
Assistant Professor of Marketing, Illinois State University
Dr. Hao Wang’s (PhD – University of South Florida) research interests focus on selling and sales management. He has interests in empirically accessing managerially oriented research on issues related to salesforce effectiveness and/or digital marketing. He has published research in the Journal of the Academy of Marketing Science and Journal of Personal Selling & Sales Management. His research has been selected as a finalist for the 2021 James M. Comer Award for the Best Contribution to Selling and Sales Management Theory. One of his dissertation essays received the Best Doctoral Paper Award at the National Conference in Sales Management 2021. He also has presented his research at major academic conferences such as the American Marketing Association Conference and the Academy of Management Annual Meeting.