Motivation and Reward

Debunking the myth that you can increase the performance of creative workers with carrot and stick.

Executive Summary

For creative tasks, the quality of performance strongly correllates with intrinsic motivation: Being interested in the task itself.

This article will only talk about that.

The main factors which are commonly associated with intrinsic motivation are:

  • Positive verbal feedback which increases intrinsic motivation.
  • Payment independent of performance which actually has no effect.
  • Payment dependent on performance which reduces the motivation on the long term.
  • Negative verbal feedback which directly reduces intrinsic motivation.
  • Threatening someone with punishment which strongly reduces intrinsic motivation.

To make it short: Anything which diverts the focus from the task at hand towards some external matter (either positive or negative) reduces the intrinsic motivation and that in turn reduces work performance.

If you want to help people perform well, make sure that they don’t have to worry about other stuff besides their work and give them positive verbal feedback about the work they do.


Since this claim goes pretty much against the standard ideology of market-trusting economists, I want to back it with solid scientific background.

The easiest way to do that is going to google scholar and searching for research on motivation and rewards. It gives a meta-analysis of experiments on the effects of extrinsic rewards on intrinsic motivation:

A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation.
— E.L. Deci, R Koestner, R.M. Ryan - Psychological bulletin, 1999 -

This paper is cited by 2324 other papers Google knows about, which is an indicator of being accepted by the psychological community (except if it should have 2324 rebuttals) - an indicator which even those can understand who are not really versed in that community (for example me).

I dug into the paper to find solid scientific research on the effects of payment on motivation. And that led me to this older paper from Edward L. Deci:

The Effects of Contingent and Noncontingent Rewards and Controls on Intrinsic Motivation
— Edward L. Deci, University of Rochester, Organizational Behavior and Human Performance, 1972

Their research question was trying to find out if money paid unconditionally weakens intrinsic motivation like money paid for good performance:

» Two recent papers (Deci, 1971, 1972) have presented evidence that when money was paid to subjects for performing intrinsically motivated activities, and when that money was made contingent on their performance, they were less intrinsically motivated after the experience with money than were subjects who performed the same activity for no pay.«

This is about intrinsic motivation: The kind of motivation which fuels artists and other creative people and allows them to do great deeds.

It’s the kind of motivation, a company should try to inspire in every employee who does anything remotely creative or complex.

What reduces intrinsic motivation

There was previous research which showed a reduction of intrinsic motivation due to payment. To make their research solid, the first thing E.L. Deci and his group did was a replication to ensure that the basic theory is correct.

In another experiment using the one-session paradigm, Deci and Cascio (1972) showed that negative feedback resulting from bad performance on an intrinsically motivated activity caused a decrease in intrinsic motivation.

In my words: Tell people that they do bad work and you reduce their motivation - not surprisingly.

“Your performance sucks” → intrinsic motivation decreases.

Further, Deci and Caseio (1972) reported that when subjects were threatened with punishment for poor performance, their intrinsic motivation also decreased.

Threaten people, and their motivation gets reduced, too.

“If you fail, you’re fired” → intrinsic motivation decreases.

[…]Deci (1972) replicated the finding that subjects who were paid one dollar per puzzle solved showed a decrease in intrinsic motivation.

Pay people for good performance and you reduce their motivation.

“For each housing loan you sell, you get 20€” → intrinsic motivation decreases.

This is the result which actually marks all the performance-based payment schemes which are so popular with the administration folks as utter nonsense - at least for creative and complex jobs.

For those jobs your employees enjoy doing, bonusses actually decrease performance on the long run. These are the kinds of jobs in which people can work overnight and concentrated for hours and lose track of time while they work on systems which are too complex for most people to even pretend to understand. The kind of jobs where some people get into the flow and do more work in an hour than other people do in a week. Jobs in science, in programming and actually in any other topic in which you do not just follow prescribed rules but actually solve problems.

The kind of jobs which is more and more common, because jobs with prescribed rules can just as well be done by machines.

And social jobs, the other kind of jobs for which you need people, because people doing social jobs work with people and anything involving people is a complex problem by definition. At least if you want really good results.

Or, seen from a different perspective: If two companies compete in a segment of the market and one has motivated people and the other doesn’t - and other factors are mostly equal - then the company with motivated people wins.

So you want motivated people. And in creative, complex or social jobs, you want them intrinsically motivated. You want them to do a good job for the sake of doing a good job.

Which means, you want to avoid

  • giving them negative feedback,
  • threatening them and
  • paying them based on their performance.

With that in mind, let us go on: How can we actually motivate people?

What enhances motivation

To answer that, let’s listen to research again:

On the other hand, Deei (1971, 1972) has reported that verbal reinforcements do not decrease intrinsic motivation; in fact, they appear to enhance it.

So, to increase motivation, tell people that they do good work.

„I like that plan! Go for it!“ → intrinsic motivation increases.

That’s all you can do. Tell them that they do good work. Encourage them.

But isn’t there a paradox? How can we actually employ people, if paying them money for good work decreases their motivation?

How to pay motivated people?

That’s the real question, the paper from Edward L. Deci tackled:

While extrinsic rewards such as money can certainly motivate behavior, they appear to be doing so at the expense of intrinsic motivation. […but…] when payments were not contingent upon performance, intrinsic motivation did not decrease.

So the answer is pretty simple: Just pay them money independent of how well they do.

„You get 3000€ a month. Flat. That’s enough to lead a good life.“1 → intrinsic motivation stays stable.

The real trick is to just give them money, independent of how well they do. If motivated people work for you, ensure that they do not have to worry about money. Do all you can to take money concerns off their mind.

And tell them what they do well.

At least that’s what you should do if you want to base your actions on research instead of on the broken intuition of people who get paid for their performance in convincing you of their ideology (and consequently often do so in blatant, uncreative ways).

If you do that already: That’s great! Likely it’s really cool to work with you.


A very illustrative experiment on losing intrinsic interest due to external reward was done by Lepper, Mark R.; Greene, David; Nisbett, Richard E..2

They observed three groups of pre-school children. The first group was told that they would get a “certificate with a gold seal and ribbon” if they would draw something. The second group wasn’t told that they would get a reward, but got it after drawing, too. The third group did not get any reward and did not expect any.

Before the start of the experiment, their intrinsic interest in drawing was measured by observing how much time they spent drawing when they had the chance.

One to two weeks after the experiment, the intrinsic interest of the children was measured again by observing them through a one-way mirror.

In that subsequent measurement, the children who had been told that they would get the reward for drawing (and had gotten the reward) used half as much time for drawing as those who had not gotten any reward or those who had gotten an unexpected reward.

And even when the pictures which they had drawn during the initial test were compared, the pictures from the group who expected a reward were of significantly lower quality than the pictures from the two other groups. the difference between expected extrinsic reward and no reward was 2.18 vs. 2.69 on an independently judged quality scale between 1 (very poor) and 5 (very good).

So offering children a reward for drawing not only reduces their intrinsic interest in drawing, but also reduces the quality of the pictures they draw.

And this is perfectly in line with the results from the paper from Edward L. Deci on intrinsic motivation of adults.


To increase the motivation of people, DO

  • Pay them a good monthly income, so they don’t have to worry about money, and
  • Give them positive verbal feedback on the things they do well.

Update: Good fixed income and long term contracts are a tool to allow people to work full-time without reducing their motivation. They avoid the harmful effect performance-based payment can have on performance while enabling people to work full-time on a project. An empirical study found, that the source and intensity of motivation of free software developers does not differ significantly between people who work for hire and people who work without payment, so many companies employing free software developers seem to do it right (or only the companies who do it right can keep their free software programmers).3

And should you happen to be interested in helping a free software project with money, just employ some of the people hacking on the project - and give them a good, longterm contract with enough freedom of choice, so they don’t have to worry about money or what they are allowed to do, but can instead focus on working to make the project succeed - like they did before you employed them, but now with more time at their disposal. And, as with anything else, give them positive feedback on the things they do well.

In the paper »Why Hackers Do What They Do: Understanding Motivation and Effort in Free/Open Source Software Projects« from 2005, Karim R. Lakhani and Robert G Wolf showed empirically that the payment people get to work in free software projects has no detrimental effect on their intrinsic motivation. In their sample 40% of the developers were paid for their work on free software projects and their intrinsic motivation was as high as the motivation of unpaid developers.

Key Takeaway:

If you want to help people perform well, make sure that they don’t have to worry about other stuff besides their work and give them positive verbal feedback about the work they do.

  1. Actually the ideal yearly income would be 60.000€, but only few people earn that much. Which might be a societal problem in itself which limits the performance we could have as society. If that’s something you want to tackle: Head into politics and change the world - or found a company and do it right from the start. There’s a lot which even a small group of motivated people can achieve. 

  2. Undermining children's intrinsic interest with extrinsic reward by Mark R. Lepper and David Greene from Stanford University and Richard E. Nisbett from the University of Michigan, Journal of Personality and Social Psychology, Vol 28(1), Oct 1973, 129-137. doi: 10.1037/h0035519 

  3. We find […], that enjoyment-based intrinsic motivation, namely how creative a person feels when working on the project, is the strongest and most pervasive driver. The source and intensity of motivation of free software developers does not differ significantly between people who work for hire and people who work without payment. From Why Hackers Do What They Do: Understanding Motivation and Effort in Free/Open Source Software Projects by Karim R. Lakhani* and Robert G Wolf** from the * MIT Sloan School of Management | The Boston Consulting Group and ** The Boston Consulting Group. 

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