Employee Motivation – Definition & Relevance

Employee motivation has become increasingly important in recent years. Especially in times of the "War for talents" it is indispensable to create a pleasant and motivating working environment for the employee. Extrinsic factors such as financial compensation are no longer the only motivation for Millennials to commit to an employer in the long-term.

This article looks at the basic terminology and explains why companies should have this topic on their agenda.

Definitions related to employee motivation

The lexicon from Gabler (which focuses on business topics) describes the term "motivation" as follows:

"A state of mind of a person which causes him to choose a certain action in order to achieve a certain result and which ensures that this person maintains his behaviour in terms of direction and intensity."1

Translated into the corporate world, a motivated employee is a colleague who strives to achieve a defined goal (a goal set by the company or a goal developed together with the company). From a company’s perspective, it is therefore important to have motivated employees in the team to develop the company economically. Thereby, companies can actively influence the level of employee motivation. Gabler describes the corresponding term "employee motivation" as follows:

"Influencing an employee by the manager or company to motivate him/her to maintain, develop or (fundamentally) change his/her performance and/or performance results".2

The process of influencing the employee’s motivation can happen in two areas – extrinsic and intrinsic.

If an employee is extrinsically motivated, the course of action is driven by external reasons. These include, for example, financial incentives (salary and bonuses), company cars and the prospect of promotions. In addition, the threat of negative consequences is also part of extrinsic motivation.

If an employee is intrinsically motivated, the course of action is based on inner incentives. These include, for example, fun at work, personal fulfilment in performing the job or the importance of the role people have (e.g. doctors).

Relevance of motivated employees

As mentioned in the introduction, employee recognition is becoming increasingly relevant in the working environment. Gallup also came to this conclusion in the context of their "Engagement Index 2018"3. As a result, motivated and emotionally attached employees are more likely to stay longer in the company and recommend the company outside of the company’s boundaries than employees without emotional ties. In addition, the economic costs in Germany due to internal resignations are estimated to be 77 - 103 billion € per year.


From a company's point of view, it is important to fully understand the topic of "employee recognition" and to actively integrate it into the corporate culture. As Gallup's results show, a lack of motivation at work leads to high costs for companies. To avoid this, approaching an increase of intrinsic motivation of employees is equally important as providing an adequate level of extrinsic motivation. As an example, intrinsic motivation methods include regular praise and recognition, an open approach to mistakes and a flexible working environment. We have summarised further possibilities of how to positively influence the intrinsic motivation of employees in the article "Work motivation – Tips & tricks for CEOs, managers and team leads".
  1. Source: „Gabler Wirtschaftslexikon“ (see here)
  2. Source: „Gabler Wirtschaftslexikon“ (see here)
  3. Source: „Engagement Index Deutschland 2018“, Gallup (see here)