How carrot and stick motivation approaches are ruining your creativity

When I first read Drive: The Surprising Truth About What Motivates UsDrive: The Surprising Truth About What Motivates Us [AF] from Daniel Pink, I was blown away. I hadn’t heard very much about the content so I didn’t know what to expect. I just thought it was a book on motivation. I’ve worked with managers who love to create “incentive bonuses” and have had employees who even—get this—asked for bonuses when completing their assigned work on time. I’ve also worked with personal development workshops that suggest you create personal incentives as a reward for achieving a goal. If that goal is to get to 100 pushups in a single shot, that sort of incentive system seems to work fine, but I’ve always had this uneasy feeling about doing such things when creativity and problem solving is on the line.

Imagine how blown away I was to find out that a Nobel Prize in Economics was awarded in 2002 to psychologist Daniel Kahneman. His research, along with studies backed by MIT, the University of Chicago, Carnegie Mellon and the Federal Reserve, along with other studies from psychologists, sociologists and economists show that larger rewards led to poorer performance in tasks that called for anything beyond rudimentary cognitive skill.

It’s easy to miss some of the important details here. This does not say that compensation isn’t important. A person should be compensated in such a way that they are not “worried” about money and therefore can relax into the creative and problem solving tasks. In doing freelance writing, I find that getting a sufficient retainer to start seems to increase my productivity whereas having the compensation “held hostage” actually seems to lead to my mind wandering to other ways to generate cash flow.

Which is to say if you don’t pay people enough, they won’t be motivated. After that point has been reached, “bonuses” do not enhance performance in creative and problem solving jobs.

For some more info, watch this video from RSA Animate. The content from Daniel Pink would be great on its own, but is really enhanced with this creative video accompaniment.

This video from TED is also worth watching.

“This is one of the most robust findings in social science, and it’s also one of the most ignored.” –Daniel Pink

Here are some additional links to studies cited by Daniel Pink in his talks and his book.

What do you think? Is this a surprise to you? Don’t believe it? Any personal experiences? Leave a comment below.

25 Comments

  1. Louise Edington on July 19, 2010 at 4:25 pm

    Wow! This is mind blowing and something a lot of companies could learn from. I shall be sharing this on my FB and twitter – very, very interesting.

  2. blissconnection on July 19, 2010 at 5:41 pm

    Coming from the HIGH TECH Corporate world, I am WAY TOO familiar with the Corporate Bonus structure. I never found that the big bonuses really motivated me. It would be more like a NICE thing or I just considered it to be part of my payroll structure. I mean, I guess I am an overachiever. I knew I would ALWAYS make and surpass my goals. For me, I felt better when I felt like I was appreciated, recognized and acknowledged for my committment to the company – not because I was going to get a 10K carrot at the end of the project. Interesting stuff.

  3. Heidi Alberti & Atticus on July 19, 2010 at 5:58 pm

    Daniel Pink speaking at TED was fascinating! I completely believe that the intense pressure that incentives can bring, especially in a creative field, completely stifle the creative process. Thanks for sharing this video.

  4. Donna McCord on July 19, 2010 at 8:29 pm

    Super! I have seen how the carrot and stick process has not been successful in our own business, and this so eloquently explains why. Thank you so much for sharing this! I am going to direct others to your blog to read and see this, too.

  5. Darcie Newton on July 19, 2010 at 8:31 pm

    In the end it is no surprise that money is not a motivator for significant change. We are motivated by ideas, feelings and sometimes by what that money can buy…but seldom just by money. Thanks for this engaging post. I really was fascinated by the simplicity and creativity of the animated speech.

  6. Jennifer Duchene on July 20, 2010 at 6:28 am

    Dave, what a fascinating study. Which actually makes perfect sense. If you do things only for money, you are too busy thinking about the money, or hating what you are doing, to concentrate on being creative. Growing up in third world country I was always astonished at how inventive people were, with very little. It is true that purpose and striving for mastery is a natural part of the human condition. Greed is not creative. Giving people enough money to live comfortably and allowing them the freedom to think and create is the greatest gift of all. We value wealth for the freedom it brings. Many periods in history Inventors & Artists did create masterpieces because they had patrons who enabled them.

  7. Jean Bentley on July 20, 2010 at 12:14 pm

    Very interesting study and it does make sense. Having a purpose and feeling like you're contributing is a great motivator.

    • Dave Saunders on July 20, 2010 at 6:24 pm

      Hey Jean, thanks for the comment. Purpose is a great thing, eh? Money is nothing more than an instrument of trade, but the things we build and create with our minds are true miracles. I think people love to create and to help others on a very deep level so it's great to see affirmations of how real that is when it comes to giving people an environment of freedom to do such things.

  8. Ron Britton on July 20, 2010 at 7:53 pm

    Some times it takes someone to actually tell you the obvious before you realize you already knew it. This post was like this for me. Working in the high tech arena for many years I have been offered and received many a bonus but never have really been motivated to work more or better for such bonuses. I always work beyond what is expected, just how I was taught to be. Thanks for the insight Dave.

    -Ron-
    Follow the Quest – MyWisdomQuest.com

  9. CAROLYN on July 20, 2010 at 6:05 pm

    Hmmm. Very interesting. I was especially surprised to hear that “rewards led to poorer performance in tasks that called for anything beyond rudimentary cognitive skill.” I liked the explanation of that in the first video. In fact, I liked that video a great deal, as it explained things in a way that enhanced what the blog said. There is hope! People do a good job for its own sake without the need for money.

    • Dave Saunders on July 20, 2010 at 6:16 pm

      Thanks for the comments Carolyn. Daniel also points out, in the book, that being under paid is also a great way to kill productivity. But when a level of compensation is met so the person doesn't have money on their mind, you're in the sweet spot. Creativity happens. But when you put the carrot out there–or the stick of losing money over performance–that's when the creativity capacities are killed.

      Not many people are building widgets in factories, where such incentives are proven to be very effective, so I hope people will update their management style–and self management style–to really support and enhance what it takes to motivate people.

      • CAROLYN on July 20, 2010 at 7:13 pm

        It WOULD be nice to see this incentive return to “widget-making” jobs. Heaven knows, the workers probably deserve more! I like that the sweet spot is when one doesn't have to worry about the money and, thus, creativity flows. Have to keep that in mind. Again, great blog. I like your writing style.

  10. amy donovan on July 20, 2010 at 9:47 pm

    so interesting. so many companies could benefit from this information – that if you pay people enough so they don't have to worry about money + allow them to self-direct, you can really inspire creativity + success!

  11. Bill Browning on July 20, 2010 at 11:38 pm

    Interesting findings and it bears true to what I've learned from serving as President of several organizations – intrinsic rewards are often much more powerful than external rewards.

    Thanks Dave

  12. ChrisLWagner on July 21, 2010 at 2:37 am

    Interesting report. It seems as though if employers can find that sweet spot that gives the employee enough money to relax, but not too little that they are looking for other ways to make money would be the perfect balance. I'm sure that's not an easy thing to accomplish. I know that I'm not that motivated by money, but by accomplishment and what I perceive to be success. Don't get me wrong, money to me symbolizes freedom by what it can give me and my family.

  13. KathyAlice on July 21, 2010 at 8:13 pm

    To answer your question, I wasn't surprised because I had read about these findings before. But I hadn't thought about it in the context of *what* people do want, self-direction, mastery, nor had linked it to the crowd sourcing phenomenon. That in itself was very interesting to me. I really don't care for the performance ranking systems that big companies employ, partly because it rewards individuals rather than teams. How much better would it be to give a team more autonomy as a reward for a job well done.

  14. julialindsey on July 21, 2010 at 8:51 pm

    I worked in organizations that gave bonuses for production. I was surprised that professionals would cut corners, lie and cheat to get the bonus. Basically we were rewarded for unethical behavior. I lasted about 2 months because my productivity was not what it should be. It was the best thing that happened to me. In my next job I was the top performer and my pay was the same as everyone else. In general bonuses may encourage people to work but it does not encourage quality work.

  15. Brandy Mychals on July 21, 2010 at 9:19 pm

    Wow! Just loved this, very insightful, the cartoon drawing was my favorite (who does that?) and I'm sharing this on FB and directly with many colleagues. It makes so much sense! When you work for yourself, challege comes from get the “enough money' part out of the way so you can move on the creating great things with all that autonomy 🙂
    Brandy Mychals
    Jewelry for Your Target Market
    http://www.BrandyMychals.com

    • Dave Saunders on July 21, 2010 at 9:31 pm

      Hey Brandy–I'm glad you liked it and thanks for sharing my blog post with others.

      The white board animation from RSA Animate. If you visit YouTube and search for that, you'll find a few more interesting videos done in the same style. In fact, I plan to reference another one for a blog post I'm writing right now. 🙂

  16. Bruce Barone on July 22, 2010 at 11:54 am

    GREAT video! Mastery. Purpose. I just love this. When I worked for a corporation I found my drive (and happiness) came from having autonomy—this was, for example, as a marketing person at Hearst Magazines, and later, sales person at a major printing company.

  17. Fred Buse on August 19, 2010 at 8:04 pm

    I work for a corporation, in a job that allows me to have Autonomy and Mastery. They aren’t so great on Purpose but not so bad either. I and my colleagues should be fairly happy. Not so, we have horrible morale.
    Why? Over the last decade there have been multiple rounds of layoffs, compensation has been stagnant (actually declining in constant dollar terms) and there have been massive ‘restructuring’ of benefits (read that as ending Defined Benefit Retirement plan and health care ) . These circumstances are not unique to this company and exist in many others.

    We now have employees who are, over worked because we over downsized and have much more financial risk in their lives than before.

    They can’t “relax about money” and focus on being creative. What they can do is worry.
    Worry about when the next layoff will hit.
    Worry about having to manage their 401k themselves. (the defined benefit plan didn’t require them to make investment decisions)
    Worry about if they will outlive their their savings (the defined benefit plan was a lifetime annuity)
    Worry if a health emergency will wipe them out ( the defined benefit plan had retiree health insurance)

    The corporation jettisoned it’s collective pool risk and cost of running the defined benefit plan onto individual employees. The cost and risk to individuals is greater than the cost and risk of the entire pool (that is the basis of insurance).

    This impact was not considered (or was ignored) when the bean counters told management about the savings that would come from disbanding the defined benefit plans.
    If you wanted to make employees feel as safe, secure and able to “relax about money” as they used to be they would need to be paid far more than the cost of providing the defined benefit plan.

    Somewhere along the way management got the idea that you could transfer tons of risk onto the backs of employees and that it would not affect morale or performance. Somehow, magically, a 3% match of 401k contributions would somehow make up for all that increased risk and uncertainty in their lives. It just is not so.

    • Dave Saunders on August 19, 2010 at 8:12 pm

      Thanks for the thoughtful comment Fred. I used to work at a big teleco technology company and remember something similar to what you describe. Every other Thursday was “layoff day.” It went on for years. It was amazing how oppressive that atmosphere felt.

    • Nathan on July 7, 2011 at 11:00 pm

      A painful story Fred, but seems to affirm Dan’s point? Money is now a factor back on the table (defined benefits vs. 401K) and you don’t have autonomy/mastery (= the company is being managed absent from employee leadership/vision)?

  18. Tired of hearing this... on February 26, 2011 at 11:24 pm

    PLEASE STOP SPREADING CONCLUSIONS DRAWN FROM WEAK STUDIES!!

    I had a look at some of these studies including the one by James Heyman and Dan Ariely.

    These studies are scientifically POORLY designed!!!

    1- For a study to be statistically solid it needs to be carried out over a very large population.

    Please see this article for examples illustrating this:

    http://www.newyorker.com/reporting/2010/12/13/101213fa_fact_lehrer?currentPage=all

    2- These results can very easily be explained by performance anxiety since these tests are realized under short time constraints.

    Last but not least, THESE STUDIES DO NOT REFLECT REAL-WORLD WORK CONDITIONS!!

    It would be smarter to analyze and compare how people doing the exact same job but with different salaries perform!

    • Dave Saunders on February 27, 2011 at 4:51 pm

      Daniel Pink, in his book, cites several studies. Can you cite one and offer
      specifics on how it is flawed in its analysis and does the original paper
      fail to identify its own weaknesses if they exist? Simply writing your
      opinions in CAPS doesn’t make them more true but if you would like to offer
      specific points, using any of the content referenced in this post as
      reference, this is certainly the place to share them.

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