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Motivating through Fear of Loss

Motivation through a carrot and stick

The latest evidence confirms that Herzberg hit the nail on the head when he theorized that money does not motivate people. (Lack of adequate compensation, however, demotivates and demoralizes.) Over the course of the last several years, neuroscientists have learned a lot about how the reward systems embedded in American companies actually work against us. For instance, rewards:

  • Improve performance for tasks people do by rote, but…
  • Decrease performance for tasks that require critical thinking
  • Demotivate when awarded for natural behaviors
  • Reduce the pleasure associated with the things people do for enjoyment
  • Become “entitlements” when awarded on a predictable basis

When expectations turn into feelings of entitlement people generally adopt a carrot and stick mentality and turn away from doing the things they would do naturally to the things for which they will get rewards. The mental shift causes people to focus on the reward rather than activity itself. People lose the jolt of pleasure they get from doing something they enjoy.

It follows that internal motivators are closely linked with personal values and therefore, the more carrots and sticks used to moderate employee behaviors, the more easily they stray from being guided by what they think is right.

Loss Aversion As A Motivator

Results from an experimental study by the University of Chicago indicate that front-loading bonuses has a positive effect on performance. The research looked for ways to improve standardized test scores in the classroom. Teachers slated to receive end-of-year bonuses had no change in student outcomes. Teachers that received front-loaded bonuses improved student test scores by as much as 10%.  Apparently fear of loss leads to performance improvements in the work environment. But is it sustainable… or even effective long-term?

My guess is that future studies will show that fear of loss is once again not a strong motivator for the long haul. While fear itself is one of the most powerful human motivators, it’s also one of the most damaging. Furthermore, using bonuses like sticks rather than carrots smacks of manipulation. Like other external motivators, organizations that front-load bonuses will establish a set of expectations.  Entitlement will kick in and the motivational effect will wear off.

What about Leadership?

So if neither the carrot nor the stick work, what will? Let’s add leadership to the equation. High performance begins with a sense of purpose, which exudes a strong motivational effect. Leaders who share a compelling vision attract people who want to help fulfill the company’s mission. Those who hire well balanced teams and nurture a culture of inclusion, fairness, teamwork, and growth inspire their teams to reach beyond what is believed to be possible. And that’s the key.

Inspiration always comes from within. It cannot be replicated or forced by something outside of oneself.

Personal Drive and Fulfillment

For a great read on carrots vs. sticks, check out Drive: The Surprising Truth About What Motivates Us by Daniel H. Pink. Or, for the CliffNotes version, check out this video by RSA Animate. You just might be surprised at what drives us to do the things we do.

© 2012. All rights reserved.

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