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228 PART 4: THE LEADER AS A RELATIONSHIP BUILDER
On the job, people may always have to perform some activities they don’t
particularly like, but leaders try to match followers with jobs and tasks that
provide individual intrinsic rewards. They also strive to create an environ-
ment where people feel valued and feel that they are contributing to something
worthwhile, helping followers achieve systemwide intrinsic rewards. In Fortune
magazine’s annual list of “100 Best Companies to Work For,” one of the primary
characteristics shared by best companies is that they are purpose-driven; that
is, people have a sense that what they do matters and makes a
Action Memo
9
positive difference in the world. One example is Les Schwab Tire
Centers, where employees feel like partners united toward a goal
As a leader, you can provide extrinsic
of making people’s lives easier. Stores fi x fl ats for free, and some
rewards, such as promotions, pay raises,
have been known to install tires hours before opening time for an
and praise, but also help followers achieve
emergency trip. Employees frequently stop to help stranded motor-
intrinsic rewards and meet their higher-
ists. Schwab rewards people with a generous profi t-sharing plan for
and fulfi llment.
level needs for accomplishment, growth,
everyone and promotes store managers solely from within. These ex-
ternal rewards supplement the intrinsic rewards people get from their
work, leading to extremely high motivation. 10
Higher Versus Lower Needs
Intrinsic rewards appeal to the “higher” needs of individuals, such as for accomp-

lishment, competence, fulfillment, and self-determination. Extrinsic rewards appeal
to the “lower” needs of individuals, such as for material comfort and basic safety and
security. Exhibit 8.3 outlines the distinction between conventional management
and leadership approaches to motivation based on people’s needs. Conventional

Exhibit 8.3 Needs of People and Motivation Methods

Needs of people

Conventional Leadership
management

Lower needs Higher needs

Carrot & stick Empowerment
(Extrinsic) (Intrinsic)

Control Growth &
people fulfillment

Adequate Best effort
effort

Source: Adapted from William D. Hitt, The Leader-Manager: Guidelines for Action (Columbus, OH: Battelle
Press, 1988), p. 153.