Monday, August 17, 2009

The power of ‘carrot and stick’

It seems rather ‘regressive’ for someone who calls himself an ‘Organization Development Professional’ to write a post on ‘the power of carrot and stick’. Haven’t we transcended the ‘carrot and stick’ method of motivating employees a long time ago (at least after Frederick Herzberg came up with the ‘two-factor'/'motivation - hygiene’ theory almost 50 years ago)?

The objective of this post is not to recommend or to praise the ‘carrot and stick method’. It is just to examine the actual situation in this domain (in terms of both theory and practice) and to explore the possible reasons for the 'power of carrot and stick'. We will also look at possible responses to this situation - from both the employee's and the employer's points of view.

While today's organizations are unlikely to talk about the 'carrot and stick method', if we analyze the methods that are actually being used by organizations to 'motivate' their employees, we are likely to find a high amount of ‘carrot and stick’ element in them. Of course, the ‘carrots’ and ‘sticks’ have become more sophisticated. But, in time of ‘organization stress’ (e.g. the recent economic downturn) some of this sophistication often disappears and more crude forms of ‘carrot and stick’ (that were thought to have become extinct) reappear!

Let us come back to Herzberg. Technically speaking, the ‘two factor’ theory of Herzberg is primarily about ‘satisfaction and dissatisfaction’ – and not exactly about motivation (as job satisfaction might not necessarily lead to motivation or productivity). So it seems possible that the ‘carrot and stick’ method of 'motivation' might be very much alive – both ‘in theory' (more about this later in this post) and ‘in practice'.

Now, let us examine why the 'carrot and stick method' works so well. I think that the power of ‘carrot and stick’ emanates mainly from the fact that it takes advantage of two of the most basic human emotions -‘desire’ and ‘fear’. To be more explicit, ‘carrot’ scores a direct hit on ‘desire’ and ‘stick’ does the same on ‘fear’. It can be argued that if we use the terms ‘desire’ and ‘fear’ in a broad sense, most of the human emotions (and hence most of the human behavior and motivation!) can be ‘modeled’ in terms of these two (and the human responses to them).

If we push the above argument a little further, it can be deduced that the so called ‘content theories’ of motivation (especially those that talk about fulfillment of ‘needs’ – e.g. Maslow’s hierarchy of needs, ERG theory, McClelland’s theory of needs etc.) can’t distance themselves too much from ‘desire’ element (and hence from ‘carrot and stick’). Similarly, if we take a close look at some of the ‘process theories’ of motivation (e.g. Expectancy theory) we might be able to detect elements of ‘carrot and stick' in them also (e.g. especially in the 'valance' part of the 'expectancy - instrumentality - valance' chain/of the cognitive process that leads to motivation, as per the Expectancy theory).

If we consider motivation as a 'state of mind' (i.e. something that happens in the mind of a person), 'carrot and stick' (or anything external to that person, like what the manager/ employer does) can't directly cause motivation to occur - it can only create a situation where motivation is likely to be 'triggered'. Again, the method for applying carrots and/or sticks for maximum effectiveness (especially if we take the sustainability of the effectiveness account), can become quite complex. There have been quite a few studies on the effectiveness of various types of positive and/or negative reinforcement strategies to elicit desired responses. So the 'power' of 'carrot and stick' does not imply that the application (of 'carrot and stick') is always easy!

Now, let us look at this situation from the other side – from the point of view of the employee who is at the ‘receiving end’ of these motivation strategies. From the above discussion, it can be seen that if an employee wants to be immune from the power of ‘carrot and stick’, he/she should develop immunity from ‘desire and fear’ – at least those types of desires and fears that can be leveraged/manipulated by the employer. Easier said than done – I must admit - for most of the 'real' people in 'real' organizations! By the way, in the novel 'Siddartha' by Hermann Hesse, there is a beautiful description of how this method of motivation (implemented through an incentive scheme - with a significant upside and downside for the employee) attempted by an employer (Kamaswami, the rich merchant) fails to have any impact on an employee (Siddartha) who had transcended 'desire and fear' ("Siddartha can think, Siddartha can wait, Siddartha can fast"). It is also interesting to note that this novel was first published in 1922 - much before 'HRD' (in the current sense of the term) came into existence.

My point is not that most of the human beings are nothing more than bundles of ‘desires and fears’. We are capable of other emotions (like love, sense of pride, sense of duty, quest for purpose/meaning etc.) that might go beyond ‘fear and desire’. So it should be possible to find ways of motivation based on these 'higher' emotions. However, these higher emotions might not be very easy to ‘manipulate’ in an organization setting. Please see 'Passion for work and anasakti' for a more detailed discussion on this.

Now, let me tell you a little bit about incident that triggered the thought process that resulted in this post. One of my friends asked me to comment on an article which argued that ‘Leaders should inspire people as opposed to motivating them’. When I thought about this, I felt that the situation was a bit more complex than what it appeared to be – when we look at what really happens in many organizations. Most of the organizations have an essentially top-down goal setting/goal cascade process. While individuals might have some degree of freedom to shape their roles/deliverables, individual goals must add up to the corporate goals. Also, organizations usually hire people to do a particular job (which might even have a formal job description that details the job responsibilities). These factors can lead to a situation where a large part of what needs to be done by a particular employee has been 'fixed'/‘mandated’ or even 'imposed'. If what you need to do is fixed, then whether the leader ‘inspires you’ or ‘motivates you’ to get the same thing done can become essentially a matter of semantics!

I also feel that ‘inspiring someone’ (creating a situation where someone might become inspired- to be precise) is a more unpredictable process (in terms of outcomes) as compared to 'motivating someone' (to do a particular task – say through carefully applied positive and/or negative reinforcement - including the promise/threat of applying/withdrawing positive and negative reinforcement or ‘carrots and sticks’ !). No, I am not endorsing the 'morality' of these 'motivation' techniques. I am just saying that they are possible. I must also mention that there could be situations where these techniques might fail. For example, it is easy to create 'incentives' (financial and non financial) for someone to write a book. But, whether this can result in a 'great book' (if the author is not really inspired to write the book) is debatable. However, the fact still remains that 'inspiration' is often a complex (and elusive!) phenomenon.

While, your manager can 'inspire' you, what you will end up doing based on (triggered by) that inspiration can’t always be predicted accurately. So, if the objective is to get you to do a particular task, I am not sure if the pure inspiration route will always work. Any attempt to make the inspiration more controlled, will bring in the element of manipulation that this inspiration approach is trying to avoid. Of course, if we are talking about a community with no predefined goals (as opposed to organizations that usually have predefined/ mandated goals) then this inspiration approach might work – though no one can predict what will exactly will the outcome be (at the individual and at the community level – considering ‘interaction effects’ and ‘emergence’)!!

Well, it can be seen that the post that I ended up writing (based on the above trigger) went much beyond a response to the immediate ‘provocation’. May be I was inspired (as opposed to just being motivated)!!!

Now, over to you for your comments!

Note 1: It might be possible to make a distinction between actions that we take because of some sort of compulsion and those we take because we really want to do so (e.g. between compliance and commitment). The problem here is that compulsion does not necessarily mean coercion (at least not in the usual meaning of the term 'coercion') - any sort of 'inducement' can also imply compulsion. In a way, all we can observe is the action and the reason behind the action is some thing that we infer - especially in the case of other people. Even if we are talking about our own actions and the reasons for those actions there is the problem of rationalization (e.g. we can attribute the 'good' actions to intrinsic motivation and the 'not so good' actions to external compulsions). Hence the distinction between the two types of actions can get blurred.

Note 2: In this post, the term 'desire' has been used in a broad sense. This makes it easy to link 'needs' and 'carrots' to this term. But it can also be argued that if we use broad definitions for fear and desire, even the 'higher order' emotions mentioned above (like love, sense of pride/ duty/ purpose/ meaning etc.) can be mapped to/'reduced to' (at least, in the 'factor analysis' sense) the core emotions of fear and desire. To deal with this, we need to define these terms (terms like desire, fear, love, sense of purpose and of course the terms action/ motion/ movement, motivation, and inspiration) more precisely and in a manner that has internally consistency/ coherence (at least 'arbitrary coherence' -as Dan Ariely says in his book 'Predictably Irrational') . But that involves too much work (may be even a lifetime of work!) which is beyond the scope of this post.

Note 3: Now, that I have mentioned the name of Dan Ariely, I must also say that I am fascinated by the work that behavioral economists (like Daniel Kahneman, Richard Thaler & Dan Ariely) have done in exploring the domain of human motivation and decision-making - and the predictable irrationalities in the same. Their studies have also shown that 'relational rewards' work better than 'monetary rewards' in many circumstances, though relational rewards have the disadvantage of raising relational expectations. Please note that this does not negate the 'power of carrot and stick' . We can always say that while relational rewards ('relational carrots') and different from 'monetary/transactional rewards' ('transactional carrots') - they are still 'carrots' - carrots that appeal to higher order needs (say in Maslow's hierarchy of needs). Again, it has been suggested that monetary incentives work best in the case of simple tasks (tasks involving straight forward physical or mental activity; i.e. tasks that don't require creativity) where higher performance is just a matter of trying harder and where the performance can be measured accurately. This also need not necessarily create problems for the 'power of carrot and stick theory' as this is more about the relative effectiveness of carrots. We must also note that there is an intense debate going in between 'rational choice economists' and 'behavioral economists' - regarding the applicability of the findings from behavioral economics experiments. It has been argued that we are quite rational in most circumstances (i.e. in our natural habitat/ in familiar situations) and these predictable irrationalities surface mainly in in unfamiliar circumstances and that the conditions created in some of the behavioral economics experiments are quite unnatural (i.e. not representative of the conditions faced by most people most of time in the real world). Even the very definition of rationality is open to debate (e.g. rationality can be defined narrowly - just as a consistent system of preferences/consistent response to incentives - even if these preferences might not be 'good' for the decision maker - as judged by the society)!

Note 4: It can be argued that all the leadership/management actions involve influencing and hence some element of manipulation (as it involves getting a person to do something that he/she would not have done otherwise). Now, whether this manipulation is for a ‘good’ cause (and for whose ‘good’) will bring us close to the domain of ethics (and the tricky terrains of situational ethics vs. code ethics, individual good vs. collective good, good of one collective vs. good of another collective etc.). For example, if my manager gives me some information that opens my mind (e.g. by enabling me to see some possibilities that I was not able to see before), I might get inspired (and do something that I might not have done otherwise). But if my manger gives me the additional information selectively, so that I will see only those new possibilities that he/she wants me to see (e.g. so that I will take some particular action) then the element of manipulation creeps in. Yes, the line between 'management and manipulation' or that between 'influencing and manipulation' can be a very fuzzy one!


Anonymous said...

Dear Mr.Kurian,

Your blog on the power of 'Carrot and Stick' is interesting and precise.

While I acknowledge that motivating is easier and perhaps a more direct way of encouraging employees to perform, inspriation is more esoteric and less directive. In an age when we are encouraging people to challenge the obvious it is important to model behaviour and demonstrate through action and not prescription. When I as a leader acknowledge my humanness and yet rise above what is petty and ordinary and this through my being and not 'my saying' I allow the other person the freedom to choose. As an employee when I know I have choice and I am not being coerced or compelled I will respond from a position of freedom and liberty. All change happens when I feel inspired and therefore it behoves the leader to simply be and not perform, thus giving me the employee the opportunity to experiment if I so desire.


Prasad Kurian said...

Dear Mr. Srinath,

Thank you very much for your comment. Yes, I agree that a prescriptive approach might not work when we are attempting to foster innovation & to enable creative responses to a fast changing and complex environment. I am all for the Zen ideal of appropriate ‘action’ emanating spontaneously from a state of ‘being’ – like a ripe fruit falling from a tree. As you said, inspiration is less ‘directive’. This makes it more difficult to ‘manage’ (in the usual sense of the term) and that is where its application becomes complex – in many organization contexts.



Unknown said...

I see that a large amount of support for 'carrot and stick' comes from the assumption - "most of the human beings are mere bundle of fears and desires".

Not negating the assumption, I would still like to believe in something which is more unstructured and also abstract. It is my belief in the possibility of 'unbundling' the human being and touching the 'spirit' (inspire!) for 'Karma' that speaks in favor of 'Inspiration'. But unfortunately such stuff has no place in management sciences (for that matter any science :-))

Prasad Kurian said...

Thanks Tarun.

I feel that ‘inspiration’ can be studied ‘scientifically’ – if we use a slightly broader/inclusive definition of science/scientific research. Yes, if the objective of this ‘scientific study’ is to predict and control inspiration (that too in an algorithmic and repeatable manner) then ‘inspiration’ might elude the analytical knife of the scientist/researcher!

(Best Show)Watch said...


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Prasad Kurian said...

@ (Best Show)Watch

Thanks for reading my blog. Please feel free to reprint my post on your blog (with a link to the source).



Unknown said...

Thanks! a complex post and a lot of food for thought!
will take time to structure a response but my mind threw these terms while reading:
1. Cognitive Dissonance
2. Extent of commonness between Organisational and Individual Values (assuming these to be more or less established in practice/behavior)
3. Employee Productivity/Exploiting Human Potential
4. Excellence v/s Meeting Predefined Goals
5. Dynamic Strategy

Anonymous said...

Your blog keeps getting better and better! Your older articles are not as good as newer ones you have a lot more creativity and originality now keep it up!

Anonymous said...

It seems to me that more thought should be given to what exactly this does to an employee. I work in a call center where carrot and stick is the primary motivator. The first time that I experienced the negative part of this, I found myself looking for new employment the very same day, which, by the way, is the opposite of what an employer wants the result to be. The employer is hoping that your work becomes better so that you do not experience this anymore, but to be honest, I almost left the company. After a few weeks I came to the realization that if I was going to take a pay cut, they were going to have to fire me so that I could collect unemployment and severance pay and I've been working for them ever since. Before I experienced such a horrible result from my employer, I was loyal and would not have thought of working for anyone else ever because my employer was a great place to work, my stats were great and I was what would be called a "model employee." Now I am eating up my benefits by taking advantage of their college reimbursement program and have two "business related degrees," working on a third, at the same time, I take my max time off for FMLA under the pretenses of "stress related health issues," I have zero motivation to do better than average, and if not a little below average, and their punishment means nothing to me now, they could write me up, review me for termination, and threaten me as much as they want, first of all, it's been four years since this happened the first time, and it's happened just about every month since, and hate my job to an extent because of it. Eventually I figure that they will work up the audacity to fire me and I will get unemployment and my fully vested pension, and once that runs out, I will go work for another company with all the college experience that my current employer has paid for.
This is where I feel that carrot on stick falls short, you can punish an employee within their first six months to a year, but quite frankly, after that, an employer is simply hurting themselves by continuing with these methods. Long term employees come from feeling like a valued member of a team, feeling like the company is relying on you, not from being punished like a three year old throwing a temper tantrum. Had I been approached in the beginning as if I was an adult who made a mistake, I would have responded like an adult who make a mistake, instead, the company that I work for will be stuck with the bill for my education, my unemployment and probably one of their competitors will get all of the benefits from it.

Unknown said...

I must tell you.. I am a freelancer and had read many articles till now but this is the 1st article on which I am commenting because I got the urge to comment.
I really want to tell you that you are an awesome writer and this article was really very very very good. I wish you all the best for rest of your life and write well.

Anonymous said...

Another Anonymous person wrote of their experience with their call centre employer and the impact and results of their employer choose of using of the stick method. I have been for the last several years in the similar situation with my employer and as a result have actively made the chose to get all of the benefits I can from my current employer, including a vested pension, benefits and company paid for schooling, I am now nearing completion of my first degree and will be taking my knowledge and qualification else where. In the mean time the company can continue to foot my bills and deal with the medical leave of absences for stress related health issues. Do I feel bad about the choice I've made? No, Should they rethink how they treat and manage people? Yes!