Employees who feel little opportunity for growth and no reward for their hard work usually don't feel motivated to continue to perform to the best of their abilities. Employers who don't recognize employee talent and performance through promotion may risk losing a hard-working employee, says author Lauren Cannon in an article for Inc.com, a magazine and website for business owners and entrepreneurs. The psychology of motivation is complex, but understanding how employees are motivated by promotions can help business owners and managers understand their significance.

Pay Raises

Increases in pay are one of the most tangible and appreciated rewards of promotions. When employees receive a pay raise, they feel that they are being compensated for a job well done and may feel more motivated to continue their efforts. Many employers mistakenly feel that pay is not an effective motivator, but the opposite is likely true, say authors Sara L. Rynes, Barry Gerhart and Kathleen A. Minette in an article for the Winter 2004 issue of the journal, "Human Resource Management." In their article, the authors report that while pay isn't the only motivator, monetary rewards are one of the most powerful incentives for employees to achieve goals and perform their best.

Responsibility

Many people are motivated by the chance to assume greater responsibility in their jobs, says Frederick Herzberg, professor of management at the University of Utah, in an article for the January 2003 issue of the "Harvard Business Review." Employees who are motivated by increased responsibility may feel more accountable or as though they are an important part of the bigger picture. Increased responsibility helps employees rise to and meet the challenges of their new position or role within the company.

Challenges

The opportunity to meet challenges often goes hand in hand with increased responsibility. Increased responsibility from promotions exposes employees to more difficult or challenging situations. And many employees are motivated simply by the chance to conquer tougher or more complex challenges, says author Anne Field in an article for the September 2003 "Harvard Management Communication Letter." Challenges provide opportunities for personal and professional growth. Employees also obtain a sense of accomplishment and pride when the challenge has been met.

Autonomy

Increased autonomy is often linked with promotions, as employees promoted to higher positions of responsibility usually gain the chance to work more independently, with less supervision and with more authority. Employees who value autonomy appreciate having more input into what they do and having more control over their work. According to executive coach Maureen Moriarty in an article for her website, the clients she coaches who seek to leave their jobs are often experiencing a lack of autonomy and feel as though their talents are being underutilized.