The Carrot and Stick method of motivating people is widely espoused in management circles in the corporate world. However, how effective are these really in ensuring sustained engagement and, consequently, productivity?
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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.
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.
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.
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.
Using fear to drive performance, that is threatening team members with some sort of punishment in the event that some act is not