As the job market fluctuates, companies and the managers within them pay more or less attention to motivating and rewarding their employees. In the case of IT projects, how well developers are motivated an rewarded has a direct impact on the outcome of the project. A recent research project by Robert C. Mahaney and Albert L. Lederer reveals that intrinsic rewards have a different effect than extrinsic rewards.
The research set out to answer the question, “How are intrinsic and extrinsic rewards related to project success?” For the complete details on how the research was conducted, you'll need to get a copy of the September 2006 issue of the Project Management Journal. However, I'm going to pull out some of the nuggets that I found interesting in the following paragraphs. First off, let me make sure we're on the same page about what intrinsic and extrinsic mean for the purposes of this research.
Intrinsic rewards are those that exist in the job itself. Examples of this include achievement, variety, challenge, autonomy, responsibility, professional growth, status, recognition, praise, and feels of self-esteem. The upside of intrinsic rewards is that they increase job satisfaction which is though to be a great motivator in having employees work hard and to produce quality results.
Extrinsic rewards are external to the job itself. They include such things as pay, fringe benefits, job security, promotions, private office space, merit bonuses, compensatory time off, and the social climate. The absence of these rewards is believed to have a negative effect on effort put forth by employees due to feelings of disappointment. Although not a factor in the study, extrinsic rewards are thought to be easier to provide than intrinsic ones.
Some of the results of the study were expected, while others were surprising to me:
- Intrinsic Rewards:
- Positively related to client satisfaction levels.
- Positively related to perceived quality.
- No affect on delivering projects on time or within budget.
- Extrinsic Rewards:
- Positively related to project success in terms of being on time and within budget.
- No affect on client satisfaction.
- No affect on perceived quality.
What does this mean for IT project managers and managers? The takeaways are that intrinsic rewards predicted client satisfaction and perceived quality while extrinsic rewards predicted implementation success. Depending on where the problem areas are, this guidance can be used to address them with the right kind of reward. The reward types are not interchangeable. That is, focusing on one type of reward at the expense of the other is likely to have a negative impact on the project.