The Cornerstones of Ongoing Employee Engagement – And Compensation isn’t One of Them

As CEOs and executive leaders, we can often sense when employee engagement is high. We can feel the energy—moods are better, collaboration flows seamlessly, and results exceed expectations. Employees seem “all in” on their work, driven by a passion for what they do. However, this level of engagement rarely lasts forever. Over time, the enthusiasm wanes, leaving organizations grappling with disengagement and diminished performance.

The question many leaders ask is:  What happened?  More importantly, the question they should be asking is: How do we prevent it from happening again?

The Myth of Compensation as a Solution

Some leaders believe that increasing salaries or offering more benefits will sustain employee engagement. While these extrinsic motivators may provide short-term boosts, they fail to address the deeper psychological needs that drive long-term passion and commitment. Moreover, relying on compensation-based solutions is costly and unsustainable.

Instead, the key lies in understanding Self-Determination Theory (SDT)—a framework developed in the 1970s that emphasizes intrinsic motivation as the foundation for sustained engagement. SDT identifies that for anyone, or any organization, to have sustainable passion about what they do, that three core psychological needs must be met on an ongoing basis.  In absence of one or all of those being met, high engagement is simply unsustainable.

The Three Drivers of Passion

To foster ongoing passion within your organization, you must integrate these three components into your roles, systems, and culture:

1. Competence – Employees need to feel they are skilled at their work or improving consistently. Competence builds confidence and fuels intrinsic motivation. When people see themselves mastering their roles or developing new skills, their sense of pride and engagement grows exponentially.
2. Autonomy – People thrive when they have control over their work and can make meaningful decisions. Autonomy fosters ownership, creativity, and innovation while reducing feelings of micromanagement. Employees who feel empowered are more likely to take initiative and contribute at higher levels.
3. Relatedness – Feeling connected to colleagues or aligned with an organization’s mission is essential for sustained engagement. Relatedness creates a sense of belonging and shared purpose. Employees who feel part of a cohesive team or are inspired by a compelling mission are far more invested in their work than those who lack these connections.

How Leaders Can Apply SDT Principles

To sustain passion across your organization, leaders must actively cultivate competence, autonomy, and relatedness:

• Enhancing Competence – Evaluate your current employee development programs—are they effective? Make a commitment to invest in training resources, coaching initiatives, and mentorship opportunities that help employees grow professionally.
• Increasing Autonomy – First assess whether your current processes allow employees enough freedom to make decisions independently.  Strive to reduce unnecessary approvals or overly rigid workflows that stifle creativity and innovation.  Additionally, encourage employees to take ownership of projects and explore new ways of solving problems within their roles. Empowerment drives engagement and results.
• Fostering Relatedness – There are two aspects of relatedness – it is important to focus on both.  
  • Shared experiences – Focus in strengthening team connections through shared experiences: These can and should include social activities (i.e. offsite lunches, spontaneously going to coffee), as well as a regular flow of new, collaborative projects that are tackling important opportunities or issues.
  • Mission alignment: If your company lacks a compelling vision or purpose, develop one that resonates with employees—even if your business focuses on seemingly mundane products or services. A meaningful mission inspires alignment across the organization.

Why SDT Matters Now More Than Ever

In today’s competitive landscape, fostering intrinsic motivation is critical for retaining top talent and driving organizational success. Employees increasingly seek roles that provide personal fulfillment alongside professional growth—and organizations that fail to meet these needs risk losing their most valuable contributors. By addressing the psychological drivers of passion through SDT principles, companies can create environments where people feel valued, engaged, and motivated to perform at their best every day.