Motivation is the study of the reasons behind people's behavior. Need-based and cognitive-based theories are among important motivation theories. While they approach the issue differently, they are both concerned with the same ultimate goal of inspiring employees for better performance. Motivated employees are the cornerstone of small businesses. A good grasp of motivation theories can help small business managers align employee efforts with business goals.

Need-Based Motivation

According to need-based theories, people's efforts go toward fulfilling their most urgent needs. Maslow’s hierarchy of needs is perhaps the best-known theory in this category. It suggests that needs drive behavior. Managers can motivate employees by identifying their needs and helping satisfy them. There are five need categories: physiological, safety, love, esteem and self-actualization. Basic needs must be met before the individual will be motivated to seek higher order activities such as creative work. Frederick Herzberg’s motivation-hygiene theory is another need-based theory. According to him, people are driven by two sets of factors. Hygiene factors are part of the job context and prevent dissatisfaction but do not motivate people. Working conditions, salary and safety are among these factors. Motivators such as achievement and recognition are intrinsic to the job. These factors encourage employees to work harder.

Cognitive-Based Motivation

Cognitive theories of motivation suggest that behavior is determined by beliefs, expectations, values and other mental conditions. For example, the expectancy-value theory proposes that the amount of effort employees will expend on a task is the product of their expectation of success at the task and the value they attach to it. Attribution theory is another cognitive-based theory that explains how individuals interpret events. People attribute causes to others’ behavior to understand why they behave in a certain way. There are two types of attributions. An internal attribution suggests that a person behaves in a certain way because of something about the person such as attitude or personality. An external attribution suggests that the person behaves that way because of something about the situation.

Intrinsic and Extrinsic Motivation

Intrinsically motivated people engage in an activity because they are interested in and enjoy the activity. Extrinsically motivated individuals get involved in an activity because of external reasons such as a reward. Some theories of motivation emphasize these differences. For example, according to self-determination theory, extrinsic incentives may even undermine performance at an inherently interesting activity. This is because humans have a basic need for competence and self-determination. People seek challenging activities and find these activities intrinsically motivating. Unnecessary external control and negative competence feedback may harm this tendency.


Need-based theories try to motivate employees by helping fulfill their unmet needs. A serious flaw with this approach is that it views the glass half-empty. Two problems arise from this perspective. Firstly, organizational motivators do not always help fulfill an employee’s needs, because work life is only one aspect of an employee’s life. Secondly, the half-empty approach of motivation ignores the employee’s strengths. External motivators may lead to the mentality that professional satisfaction is all there is to well-being. This may have a negative effect on other domains of an employee’s life such as family life. On the other hand, critics of the cognitive-based theories contend that motivation is need-based. They argue that people mostly behave in response to urgent needs rather than cognitive factors.