Flawed assumptions about what motivates people to work can lead to counterproductive management tactics, argues new research from MIT Sloan Management Review.  Psychology research has established that individuals are naturally intrinsically motivated and thrive when their needs for autonomy, competence, and relatedness are satisfied, but most managers are still operating under old assumptions, drawn from economic theory, that humans are chiefly self-interested and need to be controlled and motivated through external mechanisms such as rules, monitoring, and rewards.

In "What Leaders Get Wrong About Employee Motivation," Marylène Gagné, a John Curtin Distinguished Professor at the Future of Work Institute at Curtin University, and Rebecca Hewett, associate professor in the Department of Organisation and Personnel Management at Rotterdam School of Management at Erasmus University, detail how an approach to motivation based on self-determination theory can be put into practice and have identified almost 400 organizations around the world operating in this way, across commercial sectors, government organizations, and nonprofits.

"Leaders want employees to be self-motivated, engaged, and proactive, but they manage as if they are none of these things," argues Gagné. "Most managers have outdated ideas about motivation; we are asking leaders to challenge their assumptions about employee motivation — to examine and evaluate — and then to change behaviors."

The most effective leaders communicate a clear vision and organizational goals, allow employees to decide how to organize their work while providing guidelines to ensure alignment and coordination, and provide fair and stable pay that is not contingent on meeting targets. These practices are synonymous with trust and respect, in contrast with the mutual distrust and misalignment that agency theory presumes.

Shifting toward this management philosophy doesn't have to mean fully committing to a new organizational structure. Individual managers can explore and experiment with this approach:

• If your organization is very hierarchical with a strict chain of command, consider where it might be flatter.
• Review how policies and procedures are organized and implemented in your organization.
• Take a comprehensive look at your performance appraisal processes.
• Watch for old habits of mind that persist.

"Give employees a clear understanding of their goals (why), with guidance and direction (what) of these goals, but give them the autonomy (how) to reach these goals," adds Hewett. "Most employees have the skills to do this, but they need to be allowed the flexibility to prove they can and to perhaps even do it better."

Employees whose psychological needs are met are intrinsically motivated by finding meaning and enjoyment in their work, which leads to not only better performance but also improved well-being. Using self-determination theory to manage employees can promote ethical behavior, innovation, and long-term commitment.

Read the full article with data and statistics in the MIT Sloan Management Review article "What Leaders Get Wrong About Employee Motivation," which publishes at 1 p.m. ET on Feb. 18, 2025.