A recent email got my attention. It highlighted a blog post on the MIT Technology Review website about a video from RSA Animate (copied below) illustrating a lecture by Dan Pink (@danielpink on Twitter): "The Surprising Truth About What Motivates Us," based on his book of the same name.
What got my attention? We need to stop rewarding with a carrot and threatening with a stick. The video highlights multiple research findings that suggest knowledge workers are more motivated by autonomy, mastery and purpose than by financial reward. Pink suggests that financial incentives may actually have a detrimental impact on performance under certain circumstances. (The research suggests money is a motivator for purely mechanical tasks but as soon as some level of cognitive processing is required to complete the task, money is secondary to other factors.)
I have to say this was a little hard to swallow at first. But then I almost missed a key point: this is only true when minimum financial rewards are met, i.e. when employees are paid a large enough base salary, financial incentives to deliver high performance may be detrimental when compared to other motivators such as the desire for: autonomy, mastery of skills, and a sense of purpose.