02. Carrots and Sticks in the Workplace

Carrots and Sticks in the Workplace

It must have surely been known to man prior, but the carrot and stick approach to people management became a popular management practice following the efforts of a gentleman named Fredrick Winslow Taylor, a Mechanical Engineer, and one of the earliest management consultants, in the late 1880s.

Winslow believed that the carrot and the stick needed to be used to make workers increase output. The more they produced the more they should get rewarded; fail to meet these exacting standards and the repercussions should be severe. Inherent to his management practices was the belief that human beings are intrinsically unmotivated to work hard, nor intelligent enough to find the best way to work.

Importantly, in the context of our discussions today, his methods worked! For example, at Midvale Steel, his methods doubled output. At Bethlehem Steel, where he worked later, he reduced the number of workers by 72%, without any dip on output. By the time of his passing, Taylorism as his theory named, became the dominant management philosophy and was embraced by organisations worldwide.

However, somewhere along the line, organisations across the world failed to notice something: Taylorism stopped working.

Huh, Why Would it Stop Working Suddenly?

In short, the nature of work and the economy changed. Since the early 1900’s to today, we have moved away from a manufacturing economy to what is known as the knowledge economy, where work is less manual in nature, like in factories, and more cerebral or mental in its constitution.

The jobs that we do today are also a lot more complex than the jobs that the workers at the organisations where Taylor worked, performed.

What Dan Ariely Found

In the Year 2009, a team of researchers led by Dan Ariely a Psychologist and Behavioural Economist, ran some experiments – in India, interestingly – to test one of Taylor’s theories, namely a higher pay leads to greater the output. The team broke the volunteers into three groups. One group was promised an incentive equivalent to one day’s pay for good performance. He called this is the ‘low bonus group’. A second team was promised one weeks’ pay for good performance. He called this the medium incentive group. A third team was promised five months’ salary, that’s 150 times what those in the lowest incentive group would be paid, for good performance

What the team found was that the teams in low and medium incentive groups performed fairly well. However, the group that was offered the highest salary performed the worst.

In a subsequent experiment, the team ran two tests, one which involved a simple mental job and the other that involved a more complex mental task. When the job was simple, they found awarding people money works. But when the job is harder, interestingly – and this might run counterintuitive to what we might believe in – higher rewards do not improve work output but rather lead to decreased work output, instead.

So, is Money not Motivation at all?

Most of us may think that this is utter nonsense; that money is important to everyone. And you would be right if you felt that way. However, what studies on money and its effect on job satisfaction have shown is that while everyone does love a pay hike, the effect of that hike does not last long. It is like driving a new car. After a while, the novelty of the car fades. You kinda get used to it. We adapt to the higher pay and soon it becomes background. It no longer motivates us the way it did the first few days that it did.

So, what about the Fear of Punishment as a Motivator?

Using fear to drive performance, that is threatening team members with some sort of punishment in the event that some act is not carried out or if a defined goal is not achieved, is what science calls ‘Fear Appeal’ messages.

Fear Appeal works. Sometimes.

The fear of punishment is a great tool to ensure compliance with a task or in meeting a goal. Scientists say this an evolutionary instinct that we humans possess: our brain is hardwired to ensure that we protect our self from danger, harm or loss.

So, the fear of punishment is effective in getting team members to do as we ask them to. So, in that sense, it can be an effective motivator.

However, if used for long periods of time or in other words, if people are exposed to fear for lengthy periods of time, it leads to negative reactions. This, in part, is due to how the human body responds to fear: it secretes cortisol, the stress hormone, which is short doses, is helpful, but in large sustained doses, leads to physical and mental harm.

Also, Fear Appeal Messages only work under two conditions if at the end of hearing the threat people know how exactly they are to do and are fully capable of doing what is expected of them.

In the absence of an inability to deal with the fear, people freeze up and become unable to perform at their best. Or, they tend to find means of running away from the fear.

So, fear used with someone who is fully capable of dealing with the threat – a completely skilled and confident individual can work, as this individual has the requisite skills and belief to do what is expected of them. With everyone else, fear will lead to them freezing up and underperforming.

Bottom line: used in brief doses and with the right people, fear motivates people, but used as a primary means of motivation, even with the right people, it is counterproductive in the long run.

So, what then?

The carrot and stick are what we call extrinsic motivation tools. They have limited effectiveness. What one needs is a more effective and lasting means of engaging and motivating people, something more intrinsic. That is what we will cover in subsequent lessons.