Carrot or Stick: The rules of rewards

Four rules to remember when using rewards to improve motivation.

5 min read

Across every society, culture and business, there is a fundamental behaviourist idea that if you reward certain behaviours you will get more of them, and if you punish certain behaviours, you will get less of them. However, according to many recent headlines, rewards do not work nearly as well as people think when it comes to changing behaviour.

For managers, extrinsic motivators such as money, prizes, praise, and recognition, as well as negative things such as criticism and punishment, are the key tools at our disposal. The question is how – but best to use them. Here are four basic rules.

Rule #1: Praise First, Money Last

When we think of rewards, we tend to think of tangible things like money and prizes. Yet when thinking about which rewards to give, we are better of starting with the intangibles: praise and recognition. They are free to give and can be just as powerful as financial rewards. Indeed, there is some evidence that they can be more effective than money. And if you are going to use financial rewards, try using non-cash prizes wherever possible, since they can be more effective than cash in many situations. As a rule, money should be a last resort.

Rule #2: Punishments Should Be Rare, Collaborative, and Predictable

Punishments are dangerous motivators to use, because they can have all sorts of negative unintended consequences. Handled poorly, they can impact confidence, trust, and intrinsic motivation. As a rule, you should always try a reward first. Sometimes, though, punishments are necessary.

Take an example of a company where administrative paperwork was repeatedly not being completed. The business first tried rewarding those who did it with praise and public recognition, publicly naming and thanking those who had done it. But a large proportion of people still did not complete the forms, so punishment was the last resort.

The first thing the business did was to involve its staff in deciding what the punishment should be. They set it as a problem that needed solving and then asked people for suggestions: “What punishment can we use that will make a difference?” Then, to make sure the chosen punishment of a fine worked, the business ensured that everyone understood when forms needed to be completed, why the forms were important, what the punishment for non-completion would be, and that there would be no exceptions so the punishment would always be applied.

Finally, to ensure the punishment was seen as fair, the business followed through, and always applied the same punishment for everyone, consistently, whenever the rules were broken. By involving people in selecting the punishment and explaining the reasons for it, the business was effectively trying to improve people’s intrinsic motivation for the task. They were appealing to people’s sense of autonomy by giving them ownership of the punishment and emphasizing that they had a choice and a chance to avoid it. So in order to use punishments effectively and possibly even to boost intrinsic motivation, think rare, collaborative, and predictable

Rule #3: Align Solutions to the Situation

This one is less obvious and involves the use of the promotion versus prevention focus we mentioned earlier. Not only can you think of people in terms of whether they are promotion or prevention focused but you can also think about behaviours that way, too. For instance, behaviors such as creativity and sales can be thought of as promotion focused, while behaviours that improve health and safety can be thought of as prevention focused.

To illustrate the importance of this, consider a firm that specializes in the design and manufacture of aircraft. In a continuing effort to improve safety, the management team decided to offer a bonus to everybody if a particular safety target was reached. To their surprise, however, the bonus offer did not seem to make much difference to safety rates. The reason for this, they realized, was that whereas preventing accidents is a prevention-focused task, bonuses are a promotion-based motivator. What they needed instead was a motivator that would put people into a prevention-focused mindset. So they repositioned the bonus as something to be lost if safety standards were not met, rather than as something to be gained if standards were met. And sure enough, safety rates improved.

It is important, then, to consider not only whether the individual trying to change their behaviour is promotion or prevention focused, but also the nature of the behaviour they are trying to change.

Rule #4: Be Fair and Consistent

A number of years ago, one of your authors worked as a psychotherapist in prisons. To his surprise, he discovered that the prison officers who were disliked the most were not the harsh or even brutal ones, but the inconsistent ones—the ones who were not seen as treating people fairly. And in the same vein, no one likes an unfair reward or punishment. So one final basic rule is to make sure that whatever extrinsic reward you offer is fair. Now obviously what people see as fair varies, but we can do a few things to help ensure that what we do is considered as equitable as possible:

· Give evidence: Explain what you are doing, showing why a reward or punishment is warranted. Make sure people understand why you are doing it.

· Be consistent: Whether it is rewards or punishments, make sure you provide them consistently, treating all people the same.

· Make sure the behavior is controllable: If you are going to reward or punish a behavior, ensure that it is something that the individual feels able to control.

Beyond Motivation

It is true that if we wind the clock back ten years, the focus tended to be predominantly on extrinsic motivators, at the expense of promoting people’s intrinsic motivation. So we have much to thank people like Dan Pink and Dan Ariely for, with their passionate support for the power of intrinsic motivators. But we must not let the pendulum swing too far.

Extrinsic motivators can help to motivate people in the short term

Is intrinsic motivation more powerful than the use of extrinsic factors? Over the long run, yes it probably is, and as a source of motivation it is almost always longer lasting. But extrinsic motivators can help to motivate people in the short term—something that is particularly important when people are trying to change behaviour. Sometimes they just need help to get started and during the early days of trying out a new behaviour, until it becomes a habit or a standard part of their routine. So the longevity of the motivation is not always so important.

Moreover, whatever your thoughts about extrinsic motivators, whether you are a committed sceptic or an ardent fan that uses them wherever possible, the fact is that they are a tool that managers have at their disposal. To ignore them seems unwise. Behaviour change is a tough business and frankly we need every tool we can get our hands on.

Motivation is a critical part of the context for change, and, if you get it wrong, it can cause any behaviour change initiative to fail. The old adage is true: one way or another—through intrinsic interests or extrinsic rewards—people have to want to change.

Yet motivation is only the first piece of the puzzle. No matter how powerful motivators are, they can only help so much, and this is why research shows that they work best as part of a broader package designed to support behaviour change.

© Nik Kinley, 2024

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