Motivation Crisis: What Companies need to know about Incentives and Measures

The world of work is changing rapidly – new technologies, hybrid work models, and shifting employee expectations are presenting companies with major challenges. A recent EY study (2024/2025) reveals that employee motivation is declining, directly impacting companies’ competitiveness. "Not even every second employee in Germany (48 percent) currently states that they are giving their best at work. The international average is 54%" (EY, 2025).

But what exactly is motivation, how does it differ from engagement and commitment, and what measures can help organizations emerge from the motivation crisis?

Motivation, Engagement, and Commitment – A Crucial Distinction

The terms motivation, engagement, and commitment are often used interchangeably, but they describe different aspects of the workplace:

• Motivation refers to the internal drive to complete a task or achieve a goal. It can be extrinsic (e.g., through salary or bonuses) or intrinsic (e.g., through personal development or enjoyment of work) (Deci & Ryan, 2000).

• Engagement refers to a person’s emotional connection to their work. Engaged employees often show high levels of effort and willingness to go beyond what is required (Schaufeli & Bakker, 2010).

• Commitment means long-term identification with a company. While engagement can be project- or task-related, commitment describes a general attachment to the employer (Meyer & Allen, 1991).

Motivation can drive engagement, but without the feeling of contributing to something meaningful, it often remains a short-term effect. Commitment, on the other hand, requires not only motivation but also cultural factors such as corporate values and leadership.

How Does Motivation Relate to Performance?

A frequently cited model explaining the relationship between motivation and performance is Vroom’s Expectancy Theory (1964). It states that performance depends on three factors:

1. Expectancy: Employees must believe that their effort will lead to good performance.

2. Instrumentality: They must be convinced that good performance will lead to desired outcomes.

3. Valence: The outcome must be personally valuable to them.

If any of these factors are missing, motivation and thus performance decline. Motivation is not a guarantee of performance – it can be a crucial driver, but without clear structures, fair recognition, and development opportunities, it often remains ineffective. 

The Limits of Motivation

There are clear limits to employee motivation that companies often underestimate:

• Sustained motivation through extrinsic incentives is limited. A salary increase only motivates in the short term before employees get used to it (Hedonic Adaptation) (Kahneman & Deaton, 2010).

• Intrinsic motivation can be destroyed by poor leadership. Micromanagement, lack of autonomy, or meaningless tasks lead to long-term demotivation (Pink, 2009).

• Burnout and overload are stronger than motivation. Even highly motivated employees lose productivity when they are chronically overworked (Maslach & Leiter, 2016).

Motivation is not infinitely scalable. Companies must create the right conditions to ensure sustainable motivation.

Why Motivation Declines: The Most Common Causes

According to the EY 2025 study, there are several reasons why employee motivation decreases:

1. Lack of development opportunities: Without career prospects, intrinsic motivation declines.

2. Weak leadership: Leaders who fail to inspire or support employees cause motivation loss.

3. Lack of recognition: Missing feedback or appreciation drastically reduces motivation (Gallup, 2023).

4. Lack of meaning: Employees who see no purpose in their work quickly lose interest.

5. Dysfunctional company culture: If a company’s values do not align with employees’ values, motivation drops in the long run.

These causes show that motivation cannot be improved solely through individual measures but also requires structural improvements.

Individual and Cultural Measures to Enhance Motivation

Motivation is not a static state – it can be strengthened through targeted actions or unconsciously destroyed. Companies that want to ensure high motivation in the long run must leverage both individual and cultural factors.

Individual Measures: Strengthening Each Employee’s Motivation

Individual measures focus on the needs, expectations, and working styles of employees. These approaches help to foster both intrinsic and extrinsic motivation effectively:

1. Expanding Autonomy and Decision-Making Power

- Recommendation: Encourage employees to make their own decisions rather than prescribing solutions. This can be achieved through autonomous project work or decentralized decision-making processes.

- Example: Instead of rigid work instructions, companies should allow employees to find their own ways to achieve goals. This increases accountability and enhances motivation.

2. Creating Clear Career Development Opportunities

- Recommendation: Develop individual career paths and offer targeted training opportunities. Employees need to feel that their growth is supported by the company.

- Example: Companies can implement regular development meetings to discuss career goals and the necessary skills with employees.

3. Implementing Meaningful Incentives (Beyond Salary)

- Recommendation: In addition to financial incentives, recognition, praise, and non-monetary benefits play a crucial role.

- Examples of effective incentives:

• Flexible working hours and remote work options for better work-life balance.

• Additional leave days for long-tenured employees.

• Personalized training opportunities beyond their current role.

• Public recognition within the team for outstanding performance.

4. Establishing Regular Feedback and Recognition Systems

- Recommendation: Leaders should not only evaluate performance but also actively provide positive feedback.

- Example: Instead of an annual review, companies can implement monthly check-ins or peer-to-peer recognition systems to boost morale and motivation.

5. Prioritizing Employee Well-Being and Health

- Recommendation: Physical and mental well-being are fundamental to motivation. Companies should identify stress factors and reduce workload accordingly.

- Examples:

• Regular risk assessments for psychological stress at the workplace.

• Burnout prevention through a healthy organizational culture, supported by initiatives such as:

  • Quiet zones in the workplace.

  • Corporate health programs covering fitness activities, nutritional guidance, and mental health support.

Cultural Measures: Embedding Motivation as a Core Organizational Principle

While individual measures focus on employees directly, cultural measures help create a motivating overall atmosphere. A strong company culture plays a crucial role in sustaining employee motivation – even during challenging times.

1. Empowering Leaders as Motivators

- Recommendation: Train leaders to motivate employees effectively. This means less control, more trust, clear vision, and genuine support.

- Example: Leaders should regularly ask, "What do you need to perform your best work?" and adjust their support accordingly. Empowering leadership strengthens employees' competencies and encourages independent decision-making.

2. Establishing a Purpose-Driven Company Culture

- Recommendation: Companies need a clear vision and values that employees can identify with.

- Example: A company that values sustainability can actively involve employees in developing green initiatives. Employee participation in translating and integrating corporate values ensures that company culture and sense of purpose go beyond mere slogans.

3. Fostering Psychological Safety

- Recommendation: Employees should feel safe to express themselves without fear of negative consequences. Teams with high psychological safety show greater innovation and engagement (Edmondson, 1999).

- Examples of Psychological Safety Measures:

• Encouraging a culture of learning from mistakes: Leaders should openly demonstrate that mistakes are part of the learning process.

• Creating open dialogue formats: Regular “Open Talks” where feedback and ideas can be shared without hierarchical barriers, fostering collaborative learning.

4. Strengthening Team Cohesion and Social Motivation

- Recommendation: Motivation often stems not just from individual goals but from a strong sense of belonging within a team. Companies should promote collaborative work culture.

- Examples of Team-Building Initiatives:

• Cross-functional projects that encourage collaboration across departments.

• Celebrating shared successes, e.g., through team retrospectives or informal team events.

• Mentorship programs where experienced employees share their knowledge with newer team members.

5. Leveraging Cultural Diversity and Inclusion as a Motivational Factor

- Recommendation: Companies should actively create a culturally diverse and inclusive work environment, where everyone feels valued.

- Examples of Inclusive Practices:

• Addressing unconscious bias through leadership training.

• Diversity programs, such as the promotion of Employee Resource Groups (ERGs).

• Flexibility for religious and cultural holidays, allowing employees to celebrate traditions important to them.

Conclusion

The EY 2025 study highlights that motivation is not automatic but requires deliberate action. Companies that consider both individual and cultural aspects benefit from higher productivity, stronger employee retention, and a resilient company culture.

Ultimately, motivation is not a short-term project but a strategic investment in an organization’s future. Companies that focus on leadership, values, autonomy, and well-being will create a motivating work environment that lasts.

Further Readings

Deci, E. L., & Ryan, R. M. (2000). The "what" and "why" of goal pursuits: Human needs and the self-determination of behavior. Psychological Inquiry, 11(4), 227–268.

Edmondson, A. (1999). Psychological safety and learning behavior in work teams. Administrative Science Quarterly, 44(2), 350–383.

EY. (2025). EY Work Reimagined Survey 2024/2025. Ernst & Young Global Limited. Abgerufen am 30. Januar 2025 von https://www.ey.com/de_de/newsroom/2025/01/ey-work-reimagined-2024-2025

Gallup. (2023). State of the Global Workplace 2023. Gallup, Inc. Abgerufen am 30. Januar 2025 von https://www.gallup.com/workplace/349484/state-of-the-global-workplace.aspx

Herzberg, F. (1959). The motivation to work. John Wiley & Sons.

Kahneman, D., & Deaton, A. (2010). High income improves evaluation of life but not emotional well-being. Proceedings of the National Academy of Sciences, 107(38), 16489–16493. 

Maslach, C., & Leiter, M. P. (2016). Burnout: The cost of caring. Los Altos, CA: Malor Books

Meyer, J. P., & Allen, N. J. (1991). A three-component conceptualization of organizational commitment. Human Resource Management Review, 1(1), 61–89.

Pink, D. H. (2009). Drive: The surprising truth about what motivates us. Riverhead Books.

Schaufeli, W. B., & Bakker, A. B. (2010). Defining and measuring work engagement: Bringing clarity to the concept. In A. B. Bakker (Ed.) & M. P. Leiter, Work engagement: A handbook of essential theory and research (pp. 10–24). Psychology Press.

Vroom, V. H. (1964). Work and motivation. John Wiley & Sons.