Business Leadership Today

Employee Motivation and Its Impact on Productivity


Matt Tenney, Author of Inspire Greatness: How to Motivate Employees with a Simple, Repeatable, Scalable Process

There are many reasons (including a healthier bottom line) organizations need highly motivated employees. Highly motivated employees are highly engaged employees, and engagement is essential for sustainable success.

Highly motivated employees are also more likely to stay at an organization, which helps organizations avoid the high costs associated with turnover.

One of the most important ways highly motivated employees support a healthy bottom line is by being more productive than their disengaged co-workers.

Employee motivation impacts productivity because motivated employees perform better and consistently produce quality work. Leaders can boost productivity in their organizations with strategies that help employees stay engaged in their jobs, committed to the vision, and motivated to do great work. 

This article will discuss the link between employee motivation and productivity and how organizations can implement strategies that boost both motivation and productivity. 

Employee Motivation Defined

Employee motivation is the level of energy, commitment, and creativity that employees bring to their jobs and describes how invested they are in the work they do, how engaged they are with the organization’s goals, and how empowered they feel in their daily work to achieve those goals and reach their full potential. 

Motivated employees are inspired to adhere to certain behaviors and engage in actions that result in positive rewards and satisfy human needs. They find satisfaction in going above and beyond because they like what they do and are invested in doing it well. 

There are two types of motivation: extrinsic and intrinsic. 

Extrinsic motivation is motivation to participate in an activity based on meeting an external goal, earning praise or approval, winning a contest or competition, or receiving an award or payment. In the workplace salary and benefits are the biggest extrinsic motivators. 

Intrinsic motivation is defined as doing an activity for its inherent rewards rather than for a separable consequence.

Benefits of High Employee Motivation

Motivation drives employee success and plays a vital role in employee satisfaction. Employee satisfaction drives performance, which, in turn, has a positive impact on customer satisfaction. 

When employees are motivated, they are better at adapting to change, better at collaborating, more willing to go above and beyond for a project, customer, or co-worker, and maintain a positive attitude at work. Having a team of highly motivated employees can also reduce turnover and absenteeism. 

Often, managers do not realize how necessary motivation is to lead well and ensure the organization’s future success. Or they mistakenly think that extrinsic motivators like compensation are enough to motivate team members to consistently perform well. 

While both kinds of motivation are essential, intrinsic motivation is particularly important because intrinsically motivated employees are happier in their roles and more productive. They will continue to work at an organization because they love the work they do, not just because of the paycheck.

How Employee Motivation Impacts Productivity

To unpack how employee motivation impacts productivity, we can look at how it is related to engagement and retention, and how those two factors influence productivity.

According to Gallup’s State of the Global Workplace: 2022 Report, employees who are not engaged or actively disengaged cost the world $7.8 trillion in lost productivity, which is equal to 11% of global GDP.

Lack of engagement also hurts retention. U.S. businesses are losing a trillion dollars annually due to voluntary turnover and face many challenges in retaining great employees, including employee dissatisfaction with compensation, ineffective leadership, no or few advancement opportunities, lack of recognition, failure to provide job clarity, the need for more autonomy, and toxic work environments.

When employees aren’t engaged and turnover is high, it creates a domino effect that can cripple productivity and significantly impact profitability in an organization. 

When employees become disengaged, productivity decreases. Disengaged employees are less motivated to work hard or meet job expectations. They can cause 60% more errors and drag morale down, creating toxic work environments that then fuel turnover, causing more productivity decreases. 

When employees are highly engaged, teams see many benefits and have several advantages over teams with disengaged employees, including 17% more productivity, 41% lower absenteeism, 21% greater profitability, and an increased annual profit yield of $2,400 per employee when organizations increase their investment in employee engagement by just 10%.

How To Improve Motivation and Productivity

Good leaders motivate employees to follow them because employees want to follow them, not because they have to follow them. It works the same way with motivation. When employees like their jobs, they want to be productive, so leaders who want more productive team members foster intrinsic motivation. 

Strategies that are aimed at improving engagement and retention and practices that support a positive employee experience can also improve productivity because of the positive impact they have on motivation.  

Here are a few factors that can increase productivity and help employees stay engaged in their jobs, committed to the vision for the long haul, and motivated to do great work.

Career Advancement Opportunities

One of the keys to motivating and engaging employees is helping them fulfill their need for growth. Employees need to feel that they are improving at something that is important to them. They will be more engaged in jobs where they feel they are growing professionally and developing their skills and intellectual capabilities. 

Learning a new skill that can help employees advance within the organization or within their field boosts motivation, and it’s also great for building a succession pipeline of highly motivated employees in an organization. 

Providing training, tuition reimbursement, leadership development, career-pathing, or coaching helps employees grow and yields results that benefit both the employee and employer.

Research compiled by LinkedIn has shown that when employees spend time learning on the job, they are 47% less likely to be stressed, 39% more likely to feel productive and successful, 23% more able to take on additional responsibilities, and 21% more likely to feel confident and happy.


Whether through words or actions, recognizing employees’ achievements has a profound impact on employee motivation. Recognition ties an employee’s achievements to the company’s success and creates a ripple effect throughout the organization where employees recognize each other’s achievements.

Recognition can be private (including bonuses and verbal or written praise) or public (recognition in a company newsletter, employee-of-the-month awards, company award ceremonies, and social media posts). Peer-to-peer employee recognition can be a highly effective way of embedding recognition in the day-to-day culture of the organization.

Recognition has a positive effect on productivity, with research showing that 69% of employees say they’d work harder if their efforts are recognized at their workplace. 

When employees’ contributions are recognized, they are up to 10 times as likely to strongly agree that they belong with the organization. According to the O. C. Tanner 2023 Global Culture Report, recognition can decrease the odds of attrition by 29% and employee burnout by 80%. These effects are conducive to high motivation and result in improved productivity. 

Incentives and Rewards Programs

Organizations can step up the recognition game by implementing incentives and rewards programs. 

Employee incentives and rewards programs are designed to promote positive behaviors in the organization and reward employees for contributions and performance, align employees’ behaviors with core values and business objectives, and foster a positive work environment where employees feel valued and appreciated.

Employee incentives and rewards programs come in many varieties. They can include monetary incentives, such as bonuses, raises, profit sharing, tuition reimbursement, and gift cards, and non-monetary incentives, such as additional PTO, work schedule flexibility, referral programs, and experiential rewards.

Incentive and rewards programs boost motivation because they reward the behaviors that underlie achievement and can improve values alignment, increasing productivity

Incentive programs can increase employee performance by as much as 44% and motivate up to 66% of employees to stay with their organization. 


Offering flexibility in work schedules, whether it’s remote or hybrid work options that increase autonomy or additional PTO, can be a great motivator for employees.

Offering flexibility in work schedules helps employees achieve a healthy work/life balance and take better care of their families and personal needs, leading to better overall well-being and greater motivation at work. 

According to a 2021 Jabra report on hybrid work, 59% of survey respondents said flexibility is more important to them than salary or other benefits, and 75% said they’d rather work for a company that gives them the flexibility to work from anywhere. 

Flexibility is an incentive that can benefit both employees and employers. In the Gartner 2021 Digital Worker Experience Survey, 43% of respondents said that flexible working hours helped them be more productive, and 30% of respondents said that less or no time commuting allowed them to be more productive.


Good communication can provide the job clarity employees need to stay motivated and create a culture of improvement through regular feedback that helps them stay productive and perform well. 

Job Clarity

When employees are unsure about what is expected of them in their roles, it creates a situation where they experience conflict on a daily basis about their duties and responsibilities. 

It’s hard for employees to stay motivated when there is confusion about expectations and goals. This confusion hurts productivity.  

It’s essential for employees to know what is expected of them, have new duties and areas of responsibility clarified for them as situations change, and to be made aware that the work they do is seen by leadership.

Clearly communicating expectations, through regular one-to-one conversations for example, can be a great way to clarify job duties and keep teams productive.


Good communication between employees and leadership is an essential component of engagement, and establishing a system of feedback in your organization is a good way to hone those communication skills.

One of the ways feedback boosts employee motivation is that it creates a safe, trust-based environment where employees feel that their opinions are valued and help drive decision-making. It helps them identify ways to improve productivity and keeps them motivated to keep improving.

In organizations that emphasize feedback as an important part of their culture, employees receive regular, helpful feedback from direct supervisors and are empowered and encouraged to provide meaningful feedback to co-workers and leadership. 

This helps both employees and management know when to course correct or where improvements can be made. 

This feedback habit can create a high-performance environment where employees have an improvement mindset and think about creative and innovative ways to help the company succeed.


Safety isn’t just about creating a work environment where employees are physically safe, it’s also about creating a work environment where all employees feel psychologically safe. 

Psychological safety refers to the belief that one will not be punished for asking questions, raising concerns, or voicing ideas. When a work environment is psychologically safe, employees are encouraged to contribute, participate in decision-making, and build authentic connections with each other.

Psychological safety supports a healthy work environment that is positive, inclusive, and collaborative. Maintaining a positive, psychologically safe work environment provides the ideal conditions for employees to do their best work and gives employees a sense of belonging that keeps them motivated and productive. 

In fact, companies that provide a high level of psychological safety see 50% more productivity.


To really tap into the kind of intrinsic motivation that leads to high productivity, organizations should let employees know that their work has a positive impact beyond just generating revenue.

Effective leaders set achievable goals that will grow the team’s impact. They use impact, rather than quotas or profits, as a measure of success, and help employees see the connection between their day-to-day activities and the larger mission and vision of the organization. 

I recently sat down with Brandi Olson, author of Real Flow: Break the Burnout Cycle and Unlock High Performance in the New World of Work, to discuss why individual performance should be measured with impact instead of perceived productivity.

YouTube video

Showing employees the impact they make on a daily basis not only makes them more aware of the progress they’ve made on the journey to achieving the vision but also makes them more dedicated to the vision and motivated to continue working toward the vision. 

It gives employees a sense of purpose that helps them see meaning in their work, which leads naturally to increased productivity.

Matt Tenney has been working to help organizations develop leaders who improve employee engagement and performance since 2012. He is the author of three leadership books, including the groundbreaking, highly acclaimed book Inspire Greatness: How to Motivate Employees with a Simple, Repeatable, Scalable Process.

Matt’s ideas have been featured in major media outlets and his clients include numerous national associations and Fortune 500 companies.

He is often invited to deliver keynote speeches at conferences and leadership meetings, and is known for delivering valuable, actionable insights in a way that is memorable and deeply inspiring.

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