Self-Determination Theory and Business – Understanding the Cost of Deplete Human Energy Capital
Your Content Goes Here
How much does your loss of Human Energy Capital cost you?
The modern workplace is often characterised by a paradox: organisations invest heavily in technology, infrastructure, and financial capital, yet they frequently overlook the most critical engine of sustainable success—Human Energy Capital. This asset, rooted in the intrinsic motivation and psychological well-being of employees and their interaction with all aspects of the organisation, is the wellspring of innovation, productivity, and resilience. When traditional management, leadership, and HR practices fail to align with fundamental human psychological needs, this energy is not just underutilised; it is actively depleted, leading to a costly global crisis of disengagement.
This article explores the profound misalignment between conventional business models and the principles of Self-Determination Theory (SDT), revealing the true cost of this disconnect and outlining a clear path for organisations to cultivate, rather than consume, their Human Energy Capital.
The Foundation: Self-Determination Theory (SDT)
Self-Determination Theory, developed by psychologists Edward Deci and Richard Ryan, is a macro theory of human motivation and personality that posits that all individuals possess three innate Basic Psychological Needs (BPNs) [4]:
- Autonomy: The need to experience choice and feel like the initiator of one’s own actions, rather than a pawn controlled by external forces.
- Competence: The need to feel effective in one’s interactions with the social environment and to experience opportunities for mastery and growth.
- Relatedness: The need to feel connected to others, to care for and be cared for, and to feel a sense of belonging and security within a group.
SDT distinguishes between different types of motivation, arguing that intrinsic motivation (doing something because it is inherently interesting or enjoyable) and identified regulation (doing something because one personally values the outcome) lead to higher quality performance, greater persistence, and enhanced well-being. Conversely, motivation driven by external rewards or pressures (extrinsic motivation) often leads to mere compliance and lower-quality outcomes [5].
The Misalignment: Traditional Practices vs. SDT
Traditional business management, largely a product of the industrial age, is fundamentally built on principles that prioritise control, compliance, and extrinsic reward systems. This model, while effective for routine, low-complexity tasks, creates a direct and costly misalignment with the BPNs identified by SDT.
| Traditional Practice | SDT Need Undermined | Impact on Human Energy Capital |
| Micromanagement & Rigid Policies | Autonomy | Fosters a sense of being controlled, leading to passive compliance, reduced ownership, and learned helplessness. |
| Performance-Based Pay & Bonuses | Autonomy & Relatedness | Can shift focus from the intrinsic value of work to the reward, potentially undermining intrinsic motivation and fostering internal competition. |
| Top-Down, Directive Leadership | Autonomy & Competence | Limits opportunities for employees to contribute ideas or solve problems creatively, stifling initiative and skill development. |
| Lack of Meaningful Feedback | Competence | Leaves employees unsure of their effectiveness, hindering mastery and growth, and leading to self-doubt and stagnation. |
| Siloed Departments & Internal Competition | Relatedness | Creates a fragmented, distrustful environment where the need for belonging and collaboration is unmet, leading to isolation and stress. |
The core issue is that many conventional practices—such as excessive monitoring, reliance on fear of punishment, and the exclusive use of financial incentives—are perceived as controlling [6]. These practices satisfy the organisation’s need for predictability but thwart the employee’s innate need for autonomy, shifting their motivation from self-determined (intrinsic) to controlled (extrinsic).
The Cost of Depletion: Human Energy Capital
When the Basic Psychological Needs are thwarted, Human Energy Capital—the collective well-being, engagement, and intrinsic drive of the workforce—is depleted. This depletion manifests as widespread disengagement, which has a staggering, quantifiable impact on the global economy.
According to recent studies by Gallup, employees who are not engaged or are actively disengaged cost the world an estimated $8.8 trillion annually in lost productivity [1] [2]. This figure is the direct financial consequence of a workforce operating in a state of psychological deficit.
The cost of misalignment is not merely an abstract concept; it is visible in key organisational metrics:
- High Turnover: Employees leave organisations where their psychological needs are unmet, leading to significant recruitment, training, and lost productivity costs [7].
- Low Productivity: Disengaged employees perform at a lower level, make more errors, and are less likely to go the “extra mile” (organisational citizenship behaviour).
- Burnout and Absenteeism: The constant struggle against a controlling environment leads to chronic stress, poor health outcomes, and increased sick leave.
- Stifled Innovation: Creativity and problem-solving, which require high levels of intrinsic motivation and psychological safety, are suppressed in environments of control.
The concept of Human Energy Capital thus serves as a powerful lens: it is the return on investment in satisfying the BPNs. When the needs for Autonomy, Competence, and Relatedness are met, this capital is renewed and amplified; when they are thwarted, the capital is consumed and organisations pays the price in trillions.
The Path to Alignment: Cultivating Human Energy Capital
The good news is that aligning business practices with SDT does not require a radical overhaul of organisational structure, however it would help, but rather a fundamental shift in the mindset of leadership and the design of HR systems. The goal is to move from a controlling environment to a need-supportive one.
1) Leadership: Shifting from Control to Support (Autonomy)
Leaders must transition from being directors to being facilitators and servants.
- Offer Choice, Not Commands: Instead of dictating how a task must be done, leaders should define the what and the why, allowing employees to determine the how. This includes giving employees control over their work schedules, methods, and even team composition where feasible.
- Acknowledge Perspectives: When policies or constraints must be imposed, leaders should acknowledge the employee’s feelings and perspective (“I know this deadline is tight, but…”) before providing the rationale. This simple act reduces the perception of control.
- Encourage Initiative: Create psychological safety where employees feel comfortable proposing new ideas or challenging the status quo without fear of retribution.
2) HR Practices: Designing for Intrinsic Motivation (Competence)
HR systems should be redesigned to support mastery and meaningful contribution, rather than just compliance.
- Meaningful Performance Reviews: Shift from annual, punitive reviews to continuous, developmental feedback focused on skill acquisition and growth. Performance discussions should be framed around competence—helping the employee master their domain—rather than solely on extrinsic rewards.
- Job Crafting: Allow employees to redefine their roles and tasks to better align with their personal interests and strengths. This increases the intrinsic enjoyment of the work itself.
- Invest in Mastery: Provide dedicated time and resources for training, mentorship, and cross-functional projects that allow employees to genuinely feel effective and grow their capabilities.
3) Organisational Culture: Fostering a Community (Relatedness)
The organisational environment must be one where employees feel safe, valued, and connected.
- Prioritise Collaboration over Competition: Design team structures and reward systems that emphasise collective success and shared goals, minimising internal zero-sum competition.
- Inclusive Environments: Actively cultivate a culture of respect and inclusion where all employees feel a genuine sense of belonging. This is foundational to satisfying the need for relatedness. Include the whole organisation in the goal setting process, by upwards flowing OKRs (Objectives and Key Results), for example.
- Shared Purpose: Clearly articulate the organisation’s mission and values, and consistently link employees’ daily tasks to this larger, meaningful purpose. This provides a shared identity that strengthens the bonds of relatedness.
Conclusion
The misalignment between traditional business practices and the Basic Psychological Needs of Autonomy, Competence, and Relatedness is not a soft HR problem; it is a trillion-dollar strategic liability. By continuing to rely on controlling, extrinsic motivators, organisations are systematically depleting their Human Energy Capital, leading to massive losses in productivity, engagement, and innovation.
The path forward is clear: organisations must embrace a need-supportive culture, redesigning leadership and HR practices to cultivate intrinsic motivation. By satisfying the innate human drive for self-determination, businesses can unlock the full potential of their workforce, transforming a costly misalignment into a powerful, sustainable competitive advantage.
References
[1] Gallup. (2023). State of the Global Workplace Report.
[2] Dennison, K. (2024).Gallup Says $8.8 Trillion Is The True Cost Of Low…. Forbes.Â
[3] ActivTrak. (2024).Exploring the True Cost of Disengaged Employees.
[5] Proaction International. (2025).Self-Determination Theory and Work Motivation.
[6] HR Reporter. (2025).Too much control? Why HR should be adopting self-determination theory.
[7] Work Institute. (2025).The True Cost of Employee Turnover (and How to Reduce…).
