Going Beyond Carrots and Sticks

Theories about human motivation tell us that it comes in two flavours — intrinsic and extrinsic. Intrinsic motivation is one’s self-desire to behave in a particular way, and is driven by the enjoyment of the task itself. Extrinsic motivation relates to influences from outside that push a person to carry out tasks that she doesn’t inherently enjoy. The most common understanding of extrinsic motivators comes in the form of rewards (carrots) and punishments (sticks). Indeed, it is this simplistic understanding of extrinsic motivation that drives employers (and employees) around the world to be obsessive about year-end bonuses and salary increments.

Experiments in the emerging field of Behavioural Economics (BE), however, tell us that the story of extrinsic motivation isn’t straightforward, particularly with respect to what motivates people at work. Dan Ariely, Professor of Psychology and Behavioural Economics at the Duke University, points out in his new book Payoff: “Seemingly odd and irrational motivations get us to do things that are complex, difficult, and unpleasant.”

In Payoff, Ariely sets about studying this complex nature of motivation. As is the case with all his other books, he does this through a series of interesting experiments where the participants are asked to perform simple tasks under different control conditions. For instance, through one experiment with Intel employees, Ariely demonstrates that gratitude and compliments are better at improving employee productivity than the usual suspects — monetary and in-kind bonuses. Money, he finds out, only results in temporary improvements in worker productivity. In fact, Ariely concludes that money is not a great motivator and sometimes can even be a disincentive.

What then is the recipe for keeping people motivated? Ariely’s formula: “[T]he need to be recognized and to feel ownership; to feel a sense of accomplishment, to find the security of a long-term commitment and a sense of shared purpose.”

Payoff is a must-read for people working in human resource departments, as also for those who aspire to be good managers. The book is a short, easy and fun read, and can act as a great introduction for those who are not yet exposed to the field of behavioural economics. However, for those familiar with other books by Ariely, Payoff will come across as low on insights and novelty. While in his other books such as Predictably Irrational, Ariely covers a lot of ground, Payoff will leave his fans wanting for more.

About the author

Nidhi Gupta

Nidhi Gupta is Head, Post-Graduate Programmes at the Takshashila Institution. She is a graduate of the London School of Economics and Political Science. Her research interests lie in behavioural economics and in origins of public opinion.