Insights Blog

Rewards – are they demotivating your team?

“Drive, The Surprising Truth About What Motivates Us” by Daniel Pink was first published in 2009. If you haven’t read the book and are responsible for another’s performance or if you’re faced with the challenge of motivating and incentivizing employees, it’s well worth a read.

Pink’s basic premise is that using extrinsic motivation characterized by external rewards such as bonuses to impact behavior, is ultimately detrimental to intrinsic motivation where the reward is the activity itself. Pink presents compelling evidence that extrinsically rewarding people for intrinsically satisfying work such as creative, generative, and problem solving activities, diminishes performance over time – the opposite of the result intended. “People use rewards expecting to gain the benefit of increasing another person’s motivation and behavior, but in so doing, they often incur the unintentional and hidden cost of undermining a person’s intrinsic motivation toward the activity.”

Given that most of the people I have worked with in organizations over the years, myself included, have jobs with a high potential for intrinsic motivation and are more often than not extrinsically rewarded, I found this assertion thought provoking.

Could we really be undermining performance by rewarding it?

In particular, I find myself looking at one client in a new light. A start up bio tech firm was coming off four years of record breaking sales. The sales of its one drug, forecast to be in the millions, had topped one billion much to everyone’s delight. However, in the third year sales plateaued and in the fourth, sales were declining.  The Vice President of Sales and Marketing called us in to get our view and see what he could do to impact results having “tried everything”.  Their analysis and conclusions told them three things – the market was saturated, the drug was over- priced and the sales people were demotivated because they were no longer getting big bonuses (cash, cars, trips).

My colleague and I concluded that the current relationship to “selling vials” was insufficient for the creative and dynamic thinking required for the future. And so we set about working with the Senior Team to generate a more compelling reason for coming to work than simply “selling vials”. The call to action—which I won’t share out of respect for client confidentiality—had nothing to do with goals or vials or sales, but had to do with the impact the drug made in the lives of patients, in this instance children. The result was nothing short of transformational. The conversation shifted from the number of vials to numbers of children who were not receiving the drug and how to bridge the barriers. Relationships were built with heretofore alienated associations, new strategies were developed, children and parents were invited to the next national sales event to share their stories and the sales force spent the afternoon doing charitable work in the local community. This transformation was further evidenced by a turn-around in sales.

I find it illuminating to view this example in light of Pink’s assertion that giving extrinsic rewards for intrinsically rewarding work ultimately diminishes the intrinsic value of an activity and hence performance. The sales force had been offered substantial extrinsic rewards for a number of years. All the talk in the organization was about “vials” and hitting vial targets. Even the receptionist knew how many vials had been sold that day!  The total focus on results and their rewards had pretty much reduced what should have been the powerful intrinsic motivation of a life-altering drug for children to a tag line. Pink might say the shift from showcasing extrinsic rewards to restoring the power of the intrinsic rewards produced a breakthrough in culture and in results. From JMW’s view, the team had altered the way they viewed the challenge so that new thinking and actions became possible and resulted in a breakthrough in performance. While Pink’s view and JMW’s approach are rooted in different disciplines, there is nonetheless a powerful harmonic that in my view enriches both.

So what’s the lesson? Should we not reward people for performance? Or, do we do so at our own risk? Pink throws down the gauntlet in no uncertain terms to challenge our common notions and practices: “The problem is that most businesses haven’t caught up with this new understanding of what motivates us. Too many organizations still operate from assumptions that are outdated, unexamined and rooted more in folklore than in science. They continue to pursue practices such as short-term incentive plans and pay-for-performance schemes in the face of mounting evidence that such measures usually don’t work and often do harm.” Pg. 9

I’ve only presented a small segment of Pink’s thinking in this piece. There’s so much more thought-provoking content. I invite you to read Drive and see what opens up for you.