Drive by Daniel PinkAre people more, or less motivated when they are offered a reward for completing something well? If you’re like most people you will probably have said ‘more’ – but there’s a wealth of research dating back 45 years showing the opposite.

In fact, the research shows that while external incentives like cash bonuses or performance related pay may produce a temporary improvement, longer-term they make people less interested in doing a job well for its own sake.

Why is this? It seems that when people are engaged in a task that interests them but then are offered ‘extrinsic’ rewards such as bonuses, prizes or performance-related pay, these rewards undermine their intrinsic motivation – especially when the rewards are dependent on how well they do the task. Extrinsic incentives like this are experienced as controlling or threatening to the person’s autonomy. This is known as the ‘undermining effect’.

And yet, we see incentives, bonuses, and PRP regularly used by employers in an attempt to motivate people, even though they have the opposite effect (for an entertaining description of how counterproductive extrinsic incentives at work are, read  Daniel Pink’s Drive: The surprising truth about what motivates us). Similarly, parents and schools offer rewards and prizes to try to motivate students to study.

Why are external rewards so widely used, when they don’t work? Recent research by Dr Kou Murayama and researchers at the University of Reading showed hundreds of participants a description of one of their previous studies , which looked at whether people given a performance-based reward for playing a game would be more likely to play again than a group given no incentive.

More than half of the participants believed that incentives would make it more likely that people would play again (in fact, the previous study had demonstrated the opposite). Interestingly, they were also significantly more confident in their belief than the people who correctly predicted that the incentives wouldn’t work.

So before we as parents, employers, educators and as a society can motivate people effectively, we have to change our mistaken and often counterproductive beliefs about how motivation works.

Dr Murayama’s paper, People’s Naiveté About How Extrinsic Rewards Influence Intrinsic Motivation, includes a summary of research into the undermining effect going all the way back to 1971. As usual with academic research, it’s hidden behind a paywall. However, you can download this and many other papers directly from the Motivation Science Lab here.


Performance Related Pay And Bonuses Don’t Work – But People Still Believe They Do

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One thought on “Performance Related Pay And Bonuses Don’t Work – But People Still Believe They Do

  • Well I don’t agree with this at all because as always there is more to it than there appears to be. It is a fact as revealed in a recent survey that more than 70% of people actually dislike their jobs and their employers. I believe this is because many people feel used and abused.

    Using and abusing right across the income range has been growing in the last 40 or 50 years. The first attitude that needs to change is how people are treated, how much they are paid in the first place and how much they are valued. If people are offered bonuses etc but their starting pay is not right then they will react exactly as you say. But if they are valued and treated with respect from the start so that anything on top becomes a reward for a job well done and not what they should have been paid anyway well then performance can rise through the roof!

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