Exactly that. If it's some "policy" and not something objective you will sound clueless. Many people just sit in corporate environments waiting for the clock to hit 6, and do nothing until they leave. You don't want this kind of behavior.
In case his work is time sensitive, it's a different problem.
That's the challenge I am facing. We are very flexible with the timings. It usually works for us. We seldom find people misusing this freedom. But then, once in a while we come across this situation. I am not sure asking the person to stretch a little more will help the coarse. I want him to be motivated intrinsically.
Then you need to clearly communicate expectations. You said elsewhere that you don't expect a full 8 hours, but are unhappy with 4-5. What is the quantity of work you want done? And it can't just be accomplishing tasks on deadline, because your scheduling process is based on a certain number of man hours per week.
I want him to be motivated intrinsically.
Intrinsically? OK, how much of the company does he own?
None? LOL. The biggest con perpetrated against programmers is that they can be made to care so much about something that isn't theirs for reasons that aren't money. If this guy is outside of that, it's a more healthy mental state to have about a job. So what do you offer that another employer won't do the same/better on?
Ask yourself a question: if she'd stay 9-to-5 and delivered the same result, would have you been happy? If so, don't bother that person, she does her job.
On the other hand, you might think that making her stay longer hours will deliver more result - but that's not always true. In fact, she might even lose her productivity and deliver significantly less than now.
I think you just answered your own question. You want the person to be something other than what they are. Maybe they are valuable to you in other ways, hence your struggle over what to do. Do those benefits outweigh the potential costs to the team? Perceived inequity has a life of its own in a group setting.
In case his work is time sensitive, it's a different problem.