Moving Management Away From Incentive Plans and Towards Intrinsic Motivation
Pihl, Kari M.
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A popular practice in management is to offer rewards to employees. The promise of rewards is supposed to be an effective motivating force but rarely examined are the cognitive effects that incentives have on employees. While productivity may be temporarily boosted and employee satisfaction will rise for a period of time, incentives are powerful modifiers of behavior and the effects are both fleeting and misunderstood. It has been discovered that rewards act as bribes and can cause employees to form bad habits in order to receive the rewards. This calls for a reevaluation of the premise behind why incentive plans fail (Kohn 1993). A majority of previous research neglects to examine the cognitive effects of employees who have incentive plans but instead only examines incentive effectiveness via productivity measures. Recent literature takes into account measures of job satisfaction in the workplace and reveals· that while employees like the rewards, they become more committed to the rewards and less to their work. For factory workers and employees with repetitive task work, financial incentives are effective while intrinsic motivation proves to be a more important aspect in employee satisfaction . and productivity in a corporate setting. An important finding in recent research is that when rewards are contingent on productivity, this diminishes intrinsic motivation. This paper offers a way to re-design management systems to promote intrinsic motivation while also offering rewards and also suggests a way for management to measure intrinsic motivation. This will have important implications in productivity in corporate America.