Motivation is an important component of a manager's role in managing the performance of his or her subordinates. Motivation and ability (aptitude, training, and resources) are the two necessary factors for achieving individual, team or organizational goals. Motivation is what drives subordinates to want to work towards desired outcomes and, given the ability, is what will get them there.
There are two fundamental categories of motivation: intrinsic and extrinsic.
Intrinsic motivation means employees are motivated by the work itself. It comes when employees enjoy the work they are doing, enjoy the people they are working with, and/or are having fun while doing it. It also comes when employees believe the work they are doing is meaningful, and they feel a connection with the desired outcome (such as if they feel their goal is important or, even more so, if they feel they are the only ones able to achieve it). To be intrinsically motivated, employees must also feel that they are empowered with the resources, support, information and aptitude to achieve their goals. Intrinsic motivation is shown to increase job satisfaction.
Extrinsic motivation involves punishment or rewards based on the outcome of an employee's work. For example, bonuses or public recognition are seen as extrinsic motivators. Interestingly, the presence of extrinsic motivation tends to have an opposite effect on a person’s intrinsic motivation. For example, studies show that when a child is given a reward for painting a picture, they spend less time playing with their arts and crafts toys and enjoy painting less. Conversely, when a child is punished when they play with a certain toy, they view the toy as more desirable to play with.
In addition to these two broad categories, many comprehensive theories of motivation are applicable in business. These include Attribution Theory, Equity Theory, Maslow’s Hierarchy of Needs, Expectancy Theory and Herzberg’s Two-Factor Theory. Significant research in these areas suggests that employees do not look at work as merely a way to make money. Many view their jobs as fundamental to achieving higher needs such as esteem and self-actualization. As a result, relative factors, such as equality between employees, is important for job satisfaction. Similarly, this reinforces the notion that intrinsic motivation has a much more significant correlation with job satisfaction then extrinsic motivation.