A colleague recently told me that his supervisor had recognized and rewarded his job performance in two ways in the past year. First, he had extended an extremely large salary increase. Next, at year-end, he sent a bottle of wine and a handwritten note, expressing his appreciation for all that my friend had accomplished professionally during the year. For this employee, when I asked which gesture meant the most to him, the wine and the note were far and away more significant than the salary adjustment. His boss took the time in a thoughtful, personal and unforgettable way, to call out his outstanding work. This outcome may seem counterintuitive to many leaders because, unfortunately, many leaders have a misconception about what motivates their people.

In her book, An Honest Day's Work, author Twyla Dell writes, "The heart of motivation is to give people what they really want most from work. The more you are able to provide what they want, the more you should expect what you really want, namely: productivity, quality, and service." How do managers face the understandable difficulty in giving people “what they want” when individual employees are motivated in different ways and by different things? While adequate pay matters- most people are unwilling to work for nothing- it is a mistake to assume that economic gain is the only factor that motivates people to do good work.

Indeed, a significant body of research indicates that what motivates people to do high-quality work revolves much more directly around intrinsic factors, rather than rewards or punishment. Those companies that build a culture in which motivation just naturally happens will outperform those that still rely on an outmoded "carrot- and- stick" approach.

In his seminal 2003 book, The Motivation to Work, scholar Frederick Herzberg (along with co-authors Bernard Mausner and Barbara Bloch Snyderman) makes the simple but compelling point that human beings are motivated from within, not by any policy imposed by their company. Herzberg significantly influenced human resource management by conducting an extensive series of interviews that explored employee attitudes and attempted to get at the question "What motivates employees?"

Herzberg identifies two critical sets of factors that influence motivation. The first set that he calls hygiene factors include basic needs such as working conditions, benefits, job security and company policies. Poor hygiene factors can lead to employee dissatisfaction. Improvement in hygiene factors represents a step in the right direction, but will not in itself inspire motivation.

The second set, called motivation factors, go beyond foundational working conditions and to the heart of what energizes people: a sense of achievement, opportunities to develop, and recognition, all of which lead to improved job satisfaction. Ultimately, argues Herzberg, companies succeed by motivating people through job enrichment rather than reward or pressure.

In his recent bestseller, Drive: The Surprising Truth About What Motivates Us, author Dan Pink describes his own list of the key factors that motivate people: autonomy, mastery, and purpose. Pink says, "The baseline rewards must be sufficient. That is, the team's basic compensation must be adequate and fair… Your [organization] must be a congenial place to work. And the people on your team must have autonomy, they must have ample opportunity to pursue mastery, and their daily routines must relate to a higher purpose. If these elements are in place, the best strategy is to provide a sense of urgency and significance- and then get out of the talent's way."

During World War II, the Lockheed Aircraft Corporation established what became the first "skunk works" (a project team that is provided great autonomy to work on high priority tasks), to develop the first U.S. jet fighter. The experiment was a great success. The team of 53 engineers and support staff worked in secrecy in a remote location. The culture was characterized by equal treatment, informality, limited bureaucracy, and open and honest exchange of ideas. Leadership guru Warren Bennis describes the lead designer on the project as "a visionary on at least two fronts: designing airplanes and organizing genius. [He] seemed to know intuitively what talented people needed to do their best work, how to motivate them, and how to make sure the desired product was created as quickly and cheaply as possible."

What can your organization do to create an environment in which motivation is the natural outcome of a healthy culture and not a matter of following a rewards and punishment dynamic?

• Ask people what they want. Talk to your folks and listen to what they tell you. Find out what motivates each individual on your team and (within reason) work to meet those needs. Treat people with respect.

• Make sure that your people are paid fairly, especially in comparison to those who are doing similar work in other organizations. If working conditions are not up to an acceptable standard, fix them.

• Encourage an open and vigorous exchange of ideas. Evaluate mistakes honestly to learn from them, without assigning blame.

• If you are considering financial or other extrinsic rewards, know that research indicates (as author Dan Pink reminds us) "Any extrinsic reward should be unexpected and offered only after the task is complete. Holding out a prize at the beginning of a project- and offering it as a contingency- will inevitably focus people's attention on obtaining the reward rather than attacking the problem."

• Appreciate the power of a small gesture of gratitude, such as a handwritten note or a pat on the back. Sometimes the simplest recognition, as long as it's timely, specific and sincere, can have a hugely motivating effect (just ask my friend about the note he received from his boss).

Human beings are complicated, and each of us experiences motivation differently. But we all have a basic and inherent need to feel that we have control of our lives, that we are learning and growing, and that our work has a larger meaning beyond a mere paycheck. Organizations that recognize these fundamental truths will do well on the shoulders of a highly motivated workforce.