Impact of Employee Motivation On Company Performance

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Employee motivation refers to the employee’s energy, enthusiasm, commitment, and innovation level during a project, task, or working day. Positive motivation means employees have a good working environment and enjoy their work.

Employee motivation is what separates good, average, and poor performers. However, employee motivation is more important to establish than it is difficult to track, which is why many companies find maintaining and improving employee motivation in the workplace a challenge.

Factors That Influence Employee Motivation

The employee motivation concept relates to various desires, drives, and needs. For the sake of the company’s performance, there needs to be an environment in the company that motivates the employees to perform to their optimal. The factors that influence employee motivation include:

  • Work environment
  • Training and development
  • Employee satisfaction
  • Incentives and rewards
  • Compensation
  • Teamwork
  • Performance appraisals
  • Job security

These organizational factors are important to create positive employee motivation and performance. You can hire business advisors in Sydney to advise on employee motivation and business taxation.

Components of Employee Motivation

Employee motivation is driven by an organization’s internal and not external elements. This means employees need continuous effort for improvement.  Generally, employee motivation is a psychological process resulting from employees’ interaction with the work environment.

Employee motivation is characterized by the employees’ willingness to increase their work effort to achieve specific work or tasks. Employee motivation consists of mainly three components:

  • Direction: What the organization expects from the employees.
  • Effort: How much effort an employee puts into their work to achieve the results.
  • Persistence: How long employees keep on trying to achieve the result.

How Employee Motivation Impacts Company Performance

There are six key impacts of employee motivation on a company’s performance:

Employee Productivity

Motivated employees are generally more productive than non-motivated staff. They’re loyal to the organization because they are happy and satisfied with their work and find value, a sense of belonging, and social status in their work. This moves them to give their best to the company, and be creative and more productive in their work. Unmotivated employees are more likely to not be bothered and give little to no effort in their work.

Increased Trust in the Company

Motivation increases employees’ trust in the company and healthy, safe workplace practices. When motivated, employees feel appreciated, resulting in enthusiasm for work. They concentrate on their work and waste no time on unproductive activities. This results in better employee loyalty, productivity, and higher attention towards their work, leading to improved output and work quality.

Reduced Employee Turnover

Employee turnover often costs a company a lot of money. There is a need for recruiting and hiring new employees, orientation, training, and overall employee development. Constant employee turnover results in increased company expenses.  Companies that keep their staff motivated reduce employee turnover and turnover costs.

Increased Employee Work-Life Balance

A good work-life balance is a key interest and consideration for many employees. Approximately 87% of employees expect their employer to give them a balance between their work and personal obligations.

Giving employees a good work-life balance can keep them motivated and improve their productivity. For example, allowing employees to separate work from personal life to spend time on their personal development can help them stay motivated. This opportunity allows employees to deal with personal issues without affecting their work.

Product or Service Quality

Employee motivation drives work quality and boosts an organization’s overall performance. Companies that keep their staff motivated get uninterrupted production or service delivery. This implies great harmony in an organization’s workflow, influencing its productivity positively and encourages better company performance. There is also a decreased error margin.

Whenever employees are motivated, their skills and aptitude increases significantly. They deliver a better quality product or service, and they are involved in the whole production process.

Improved Customer Satisfaction

Any company strives to achieve customer satisfaction to build loyal audiences and improve the business’s brand. The employees also put their best effort into solving service or product problems in the company’s markets. Employees who directly interact with customers and do their best to serve the customer and influence customer satisfaction with the product or service. This increases the company’s brand recognition and reputation.

Employee Recognition Increases Motivation

Employee recognition drives motivation remarkably. Companies that recognize the efforts and achievements of their staff achieve high productivity. Recognition makes employees feel more valued and gives them the willingness and confidence to welcome new challenges.


Employee motivation is vital for any company. It improves employee productivity, trust in the company, work-life balance, and improved product quality, and customer satisfaction. Companies need to try their best to keep their employees motivated and engaged at all times.

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