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Employee Motivation; Six Leadership Themes

Technical Report · February 2017

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Six Leadership Themes

Human Development &

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 Emp
Employee Motiva
Motivation
Six Leadership Themes

Brooks Carder, PhD

Copyright Brooks Carder, 2017

Introduction
What follows are beliefs and experiences from over 50 years in the study of motivation, beginning
in academia and proceeding through a career as a business leader and more recently as a
consultant. I very much hope that this will bring some understanding to a difficult but critical topic.

Motivation is a set of processes that generate responsive action. Life forms such as animals and
plants take action to provide
rovide themselves with the necessities of life. Each species has a specific set
of actions that enable them to get food, reproduce, and achieve (relative) safety. For example, the
experience of a condition of nutritional deprivation (hunger) causes
animals and plants to seek nutrients (food). Some life forms have
very narrow niches. For example, the koala bear hangs from a tree
limb and eats only eucalyptus leaves. Some life forms — such as
humans — have very broad niches and environmentally conditioned
responses. If the available food tastes “bad”, they may choose to
remain deprived of food for a considerable time until “better” tasting
food is available. So with people,, the processes that generate
responsive action can be very nuanced and complicated.

Human motivation involves a complicated set of interactions between physical, emotional,

cognitive, and spiritual (value-system) dimensions — resulting in a significant challenge
hallenge for leaders in
the cultivation of employee motivation. This primer discusses six themes that leaders can use for
achieving motivated employees:

1. Incentives & Engagement:

Engagement
a. The behaviorist theory that is the basis for incentive compensation is not
correct.
b. Avoid incentive compensation and/or pay-for-performance
performance.
c. Pay a fair and competitive wage.
2. Intrinsic Motivation versus Incentive Motivation:
Motivation:
a. Intrinsic motivation is superior to incentive motivation.
b. Intrinsic motivation relates to inherited behaviors.
3. Interesting Work--
Work--Autonomy
--Autonomy — Mastery — Meaningfulness:
Meaningfulness
a. Intrinsic motivation is most effective with work that involves a challenge — work
which is more engaging than work that does not.
b. Give employees the autonomy to have flexibility about how they do the job.
job
c. Provide the resources that will enable them to master the task, such as
education, training, and design of the work.
d. Make sure they understand the purpose of their work and that they feel the
purpose is positive.
4. Recognition:
Recognition
a. Recognize progress with a genuine
nuine thank you from leadership.

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 Carder, Employee Motivation-Six Leadership Themes

b. Make it clear that leadership understands what has been accomplished and
appreciates the accomplishment.
5. Well Being:
a. Consider the physical and social work environment.
b. Understand what conditions support individual and organizational well being.
c. Drive out fear in the culture.

6. Cognitive Psychology & Motivation:

a. Kahneman (2011) has provided important insight into the relationship between
cognition and motivation.
b. System 1 is unconscious but controls much of our behavior.
c. System 2 is the conscious system that we experience in daily life.

1. Incentives & Engagement

Avoiding incentive compensation and pay for performance; the folly of behaviorism

In business, it is widely assumed that employees are motivated by money. To a certain extent that is
correct. Most people need an income from a job in order to live. But the assumption that more
money leads to more motivation is not necessarily correct. The notion that the performance of
employees can be enhanced by manipulation of financial incentives is based on a trust in the
behaviorist concepts of B.F. Skinner. These concepts are largely discredited in psychology, but
hold sway in business. Consider the following quotes from websites devoted to management
education.

Carrot and stick approach should be implemented to motivate both efficient and
inefficient employees. The employees should treat negative consequences (such as fear
of punishment) as stick, an outside push and move away from it. They should take
positive consequences (such as reward) as carrot, an inner pull and move towards it.
http://managementstudyguide.com/good-motivation-system.htm

Encouraging Desirable Behaviors

Most managers want to encourage positive employee behavior such as punctuality, strong
teamwork and quality production. According to reinforcement theory, choosing one
positive attribute to target at a time and applying positive reinforcement techniques with a
focus on extinction of the negative behavior, can help you turn desirable traits into strong
work habits over time. According to Skinner, extinction of undesired behavior results
from the absence of positive reinforcement, not from punishment. This means offering
an incentive when work exceeds expectations, positive reinforcement, and focusing on
extinction by withholding it or withholding additional privileges when targets are not met.
For example, you might offer a bonus for sales in excess of your weekly target, a long
lunch for meeting the target and a standard lunch, withholding both the bonus and the

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 Carder, Employee Motivation-Six Leadership Themes

long lunch, for failing to meet it. http://smallbusiness.chron.com/can-managers-use-

reinforcement-theory-motivate-employees-18559.html

There are a number of incentives that I’ve found to be helpful. Here are five:
1. Bonuses: Employees usually respond to bonuses and other financial incentives
as a way to reward great performances.
2. Perks: I saw good responses to perks that weren’t simply financial, such as
casual days at the office, half days, office parties, and social activities outside of
the office.
3. Amenities: Workplace amenities – like a gym, cafeteria, or daycare center –
are nice incentives for employees to come to work and to stay focused on their
projects.
4. Education: I believe that people respond to educational incentives and a
number of companies offer incentives that pay for additional education.
They’re great because your workforce can become more skilled and you’re
creating loyalty.
5. Positive recognition: Recognizing someone in public for a job well done can
make a big difference. I think it’s important to provide positive reinforcement.
Programs that recognize employees can go a long way toward motivating
someone. I’ve found that the right combination of incentives/motivation and a
positive work environment can keep employees happy and more productive.
http://www.forbes.com/sites/patrickhull/2013/05/23/motivation-mystery-how-to-
keep-employees-productive/#5be4ce2e2f52

Each of the above examples represents the unquestioned assumption that incentives are
fundamental to enhancing the engagement and productivity of employees. Virtually all companies
attempt to motivate their employees by using the proper incentives administered according to
behaviorist theory. So why did the Gallup (2015) organization find in 2015 that only 32% of
employees in the US were engaged?

Some of what follows may seem to be quite a distance from compensation in business. However, as
Dr. W. Edwards Deming frequently pointed out, there is no knowledge without theory (Carder and
Monda, 2013). To understand the theory, I feel it is very important that you understand some of
the evidence about the failures of behaviorism since it is so deeply entrenched in the traditions of
American business.

The purest form of behaviorism is represented by the work of B. F. Skinner. I once spent an
evening with Professor Skinner. I was a young Assistant Professor at
UCLA and Skinner had given a colloquium that day. We spent over an
hour, just the two of us, talking at the cocktail party that evening. He
was a thoroughly charming man. We agreed that neither of us was
smart enough to understand Noam Chomsky’s work. Charming as he
was, it is very unfortunate that his work has been influential and
misleading to managers for more than half a century. Chomsky’s work,
incidentally, remains monumentally important as we shall explain later.

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In the behaviorist tradition, motivation is very simple. Things that meet a need, such as food for a
deprived animal are said to be reinforcers. Behaviors that are closely followed by reinforcers are
strengthened. Using this paradigm Skinner trained pigeons to play ping-pong. One needs to set up
the proper contingencies, apply positive reinforcement and you can shape whatever behavior is
desired. In pigeons the reinforcer would be a pellet of food for a food deprived pigeon, and
contingency is the relationship between action and the delivery of reinforcement. For example to
be effective with pigeons the food needs to be delivered within a second or so of the pigeon’s act.
Finally shaping is a process where reinforcers are applied to successive approximations of the
behavior, requiring increasingly complete approximation of the behavior in a series of steps until
the final behavior is reached. You could start with reinforcing wing movement, move to striking the
ball, then to striking the ball in the direction of the other pigeon, and finally to striking the ball over
the net. That is essentially how pigeons were trained to play ping-pong, although I have specified
fewer steps than would actually be required. Since it would interrupt the game for the pigeon to eat
after every stroke, the pigeons were on a schedule of partial reinforcement, meaning that not every
stroke was rewarded. Sometimes you would use secondary reinforcers. These are stimuli that are
associated with reinforcers. You might use a Halloween clicker and associate that with the delivery
of food. Then you could use the clicks to reinforce the pigeon’s movements, as long as the clicks
were occasionally followed by food.

John Watson, the father of modern behaviorism, insisted "Give me a dozen healthy infants, well-
formed, and my own specified world to bring them up in and I'll guarantee to take any one at
random and train him to become any type of specialist I might select--doctor, lawyer, artist,
merchant-chief, and, yes, even beggar man and thief, regardless of his talents, penchants,
tendencies, abilities, vocations, and race of his ancestors." (Simpson, 2000) Somehow, this was
credible. I assume that Watson was very charismatic. Forced to leave his Professorship at Johns
Hopkins over the discovery of his affair with a graduate student, he became an important figure in
the advertising industry.

I’m going to describe a study that is very important. At the outset few people understood it, and it
was rejected by several journals. When it was finally published, in a journal that did not do peer
reviews, its author became a full professor at an elite university overnight. The author, John Garcia
was the son of farm workers, and had earned a PhD in Psychology at Berkeley. I knew John in
later years when both of us were on the psychology faculty UCLA, and we published a paper
together. At the time of the study I’m describing, (Garcia and Koelling, 1966). John was working in
a government laboratory, studying radiation sickness. He found that radiation sickness would
motivate rats to avoid tastes, but not to avoid the places they got sick or to avoid auditory or visual
stimuli associated with the sickness. He exposed a rat to a novel taste and made the rat sick. The rat
would not consume anything with that taste, but it would readily return to the location where the
sickness occurred. On the other hand painful shock would motivate rats to avoid places where they
were shocked, but not to avoid tastes that they experienced right before the shock. This makes
biological sense, since radiation sickness causes stomach distress which would logically be
associated with eating something. But the study must lead to the conclusion that the effectiveness of
a reinforcer depends upon the behavior that you are trying to reinforce. Could this be a special case
and only applies to illness? Unfortunately that is not the case.

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By the way, many of us have had the experience of getting sick after experiencing a particular taste
and then finding that taste unpleasant even when we knew that the thing we ate had nothing to do
with the illness. In my college days I ate a Chinese meal and then took a drug that had the side
effect of making me very nauseous. For years I could not eat Chinese food, even though I knew
full well that it had nothing to do with my upset stomach. (Fortunately, the condition went away by
the time I began visiting China 20 years later.)

Suffice it to say, there is a great deal of genetic programming underlying our behavior, including
defining the dimensions of our learning process.

Perhaps the most important example of genetic programming in human learning is the learning of
language. The first cue that language is programmed is Chomsky’s observation that the grammar of
all human languages is the same. The notion that language is learned in the behaviorist fashion
doesn’t work. There is insufficient input to accomplish it. Pinker (2007) explains Chomsky’s
reasoning:

First, virtually every sentence that a person utters or understands is a brand-new

combination of words, appearing for the first time in the history of the universe.
Therefore a language cannot be a repertoire of responses; the brain must contain a
recipe or program that can build an unlimited set of sentences out of a finite list of words.
That program may be called a mental grammar (not to be confused with pedagogical or
stylistic “grammars,” which are just guides to the etiquette of written prose). The second
fundamental fact is that children develop these complex grammars rapidly and without
formal instruction and grow up to give consistent interpretations to novel sentence
constructions that they have never before encountered. Therefore, he argued, children
must innately be equipped with a plan common to the grammars of all languages, a
Universal Grammar, that tells them how to distill the syntactic patterns out of the speech
of their parents.

Consider the following sentence: The happy happy candy likes the tall ice cream. It may be
nonsense, but the meaning is clear. What possible conditioning could have prepared you to
understand such a sentence? (Pinker, 2007)

All of this means that we need to consider what behaviors might be associated with the incentives
we use. If we use punishment, for example, the behavior released will be the surest way to avoid the
punishment, which may not be what you want. Freakonomics (Levit and Dubner, 2005) is a clever
book which describes the use of statistical analysis to uncover cheating. One chapter describes the
behavior of school teachers in Chicago threatened with the loss of their jobs if their students did not
perform well on standardized tests. Statistical analysis revealed that many teachers had cheated on
tests. This was a predictable result of the conditions that were established. While it does not excuse
the cheating, it is an excellent example of the danger of powerful incentives. In a more recent
example, Wells Fargo employees were incentivized to produce more new accounts to get bigger
bonuses. This was combined with little oversight of just how these numbers were being produced.
Many employees simply gave customers accounts that were not requested and often not noticed by
the customer. When this came to light Wells Fargo was a big loser, both in money and in
reputation.

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Powerful incentives, like large amounts of money, work very much like punishment because if you
fail to get the incentive you’ve lost a great deal of money. Punishment and large incentives
encourage cheating, gaming the system, or any other behavior that will obtain the incentive. It is
very difficult to ensure that the only way to get the incentive is to do exactly what the company
intended.

Let us return to the question of why the Gallup organization found in 2015 that only 32% of
employees in the US were engaged. There seem to be two possible answers to that question:

1) Companies do not have sufficient knowledge of behaviorist theory to apply the incentives
correctly.
2) Behaviorist theory is inadequate.

While there are consultants who will argue reason number one and offer to fix the problem in your
company, I would be inclined to vote for some of both, but most importantly, the theory is
inadequate. I would be skeptical of a consultant who was married to the behaviorist theory.

In humans fear is an effective motivator for well-learned behaviors. I always say that it is a good
motivator for a galley slave as long as you are certain that the galley slave cannot escape. However, if
the task requires creative thought, and the employee is not confident of success, then fear will be a
lousy motivator, and is most certainly going to induce the individual to look for a different job or
cause them to freeze in their current task. Many managers recognize that fear is a strong motivator
but most of them fail to recognize the limitations on what kinds of behavior are effectively
motivated by fear, as well as what behaviors are suppressed by fear. But it is not just fear that
impairs creative efforts.

For a thorough catalog of the dangers of incentives I recommend Alfie Kohn’s Punished by
Rewards (1993), a book often cited by Deming. The book contains 500 references, most of them
studies showing how rewards actually diminish performance. An extreme example was a study by
Teresa Amabile where just thinking about the rewards they might obtain from their craft interfered
with the performance of young writers. Kohn argues that there are no data to support the notion
that pay for performance plans actually increase performance, in spite of scores of studies on the
matter. While incentives sometimes enhance performance on routine tasks, they universally
interfere with creativity and problem-solving. Giving persons a reward for solving a difficult
problem increases the time required to solve it. The bigger the reward, the greater is the
impairment.

More on flaws of incentives

A good summary is the seven flaws of incentives, from Pink (2009)

1. They can extinguish intrinsic motivation.

2. They can diminish performance
3. They can crush creativity
4. They can crowd out good behavior
5. They can encourage cheating, shortcuts, and unethical behavior

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6. They can become addictive. When this happens, withdrawing them is seen as
punishment
7. They can foster short-term thinking

An opinion stated by Deming many years earlier and quoted by Kohn, focuses on the effects on
people. According to Deming, pay for performance is:

The most powerful inhibitor to quality and productivity in the Western world…nourishes
short-term performance, annihilates long-term planning, builds fear, nourishes rivalry
and…leaves people bitter.

Kohn reports an extensive search for any study that shows a benefit from incentive pay. He is able
to find a few, but it turns out they were “mostly clerical work or physical work.” This is analogous to
the positive effect of fear o the galley slave. Pay for performance can have a positive effect on well-
learned behaviors.

I was personally involved in a dramatic demonstration of the weakness of pay for performance. An
occasional client of mine was a man named Jim McIngvale who owns a company in Houston called
Gallery Furniture. The company had the highest sales per square foot of any retail establishment in
the United States. Mattress Mac, as he was known, was a prominent figure in Houston due to his
frequent television commercials.

When I met Mac he had spent years trying to improve his sales process. He was able to close sales
with 49% of the people who entered the store, but he couldn't raise the figure. He felt he needed
more high performers. I did assure him that improving the process was what he needed. The
opportunity came from his devotion to Deming’s teaching. His salespersons were on commission,
the ultimate version of pay for performance. In addition to his condemnation of pay for
performance, Deming pointed out that commissions motivate salespersons to do things that are not
in the interest of the customer.

Mac called me one day and asked me to come to Houston, as he was going to put all of his
salespersons on salary. In fact I came and he went forward, giving each sales person a wage equal to
the best two of the person’s last four quarters of commissions. The result was dramatic. They were
soon closing over 60% of persons who entered the store. Salespersons were cooperating rather than
competing. The customer experience was improved dramatically. And his cost of sales was lower.

2. Intrinsic Motivation versus Incentive Motivation

Intrinsic motivation is superior to incentive motivation

Deming, showing considerable wisdom about psychology, pointed out that intrinsic motivation is
preferable to incentives. Intrinsic motivation is the motivating power of the task itself. My own
research has some relevance to this. In 1970 Ken Berkowitz and I (Carder and Berkowitz, 1970)
published an article in Science demonstrating that rats would continue to press a lever to obtain
food even when an open dish of the same food was available in the cage with no effort required. I
believe it is no accident that many studies were conducted with rats pressing levers, as it’s fairly high
on the scale of innate behaviors for the hungry rat, and seems to have a power to motivate them
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beyond merely achieving the reinforcer. But the “laws ” of operant conditioning were largely
1

developed through the observation of hungry rats pressing levers for food.

Intrinsic motivation appears to begin with instinctive behaviors. People pay lots of money to play
golf and tennis for example, and they spend long hours doing it with a high level of engagement.
Another example is problem solving, ranging from card games like bridge and poker, to solitary
efforts like crossword puzzles and Rubik’s cubes. The bulk of this activity comes with no pay. In all
of these cases, the goal seems to be mastery. It would not be too farfetched to assert that problem-
solving has its origins in human instinct. I would say it is part of curiosity, a general desire to
understand the environment. This has considerable adaptive value. You want to make sure the
nearby cave does not contain a saber tooth tiger.

In America’s behaviorist tradition, instinct has been largely ignored. Even Maslow (1954), certainly
not a radical behaviorist, asserted that there were no human instincts because any expression of
what might be an instinct could be overridden. So he preferred to classify innate tendencies as
strong drives. Whether curiosity is a strong drive or an instinct makes no difference to me. It is a
behavior that is widely expressed, emerges without any training, and pesists without any incentives.

Interesting Work,
Work, Autonomy,
utonomy, Mastery,
Mastery, Meaningfulness
The first requirement for establishing intrinsic motivation is the requirement that the work includes
some challenge. Simply putting in time is not enough. The amount of challenge can be small but it
must be there. With routine tasks, accuracy or productivity might provide that challenge. For many
workers, the challenge makes work engaging, so long as it is not impossibly difficult. And problem-
solving itself, for many people, appears to be intrinsically motivating. Of course, there are some
workers who just want the day to end without any challenge. It is my suspicion that they were badly
managed early in their career, but that is a topic for future research.

An historic example of establishing intrinsic motivation is Mark Twain’s story of Huck Finn
whitewashing a fence. Huck made the process seem so interesting and attractive that his friends
gave things to him to gain an opportunity to do the work. While this is not scientific data, the story
has sufficient credibility to be very funny.

Daniel Pink (2009) has provided an extensive discussion of conditions to establish intrinsic
motivation in the workplace. His theory is that the employee has to have autonomy, mastery, and
purpose. With autonomy the employee has to have some control over exactly how she performs
the work. Mastery means she must be capable of successfully completing the work. Based on many
years of experience with golf, a source of powerful intrinsic motivation for many, I would modify
mastery to “hope of mastery.” The weekend golfer never masters the game, but every time he goes
out, he hopes that this will be the time. If he could play a round where every shot was his best
mastery would be his. Of course, that is less probable than throwing 70 heads in a row in a coin
toss. Finally, purpose requires that she understand the connection between her work and the
organization’s success. In place of purpose we would use the concept of meaningfulness. Is the
work congruent with the employee’s values? For instance, the work might advance “the company’s

1
Skinner (1950) did not believe that theories of behavior were useful. He argued that the patterns of
response in his experiments constituted laws of behavior.
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success” in a way that’s not congruent with the employees values. This will not generate intrinsic
motivation.

Pink (2009) reports a study of 320 small businesses, half of which granted workers autonomy, the
other half relying on top-down direction. The businesses that offered autonomy grew at four times
the rate of the control-oriented firms and had one-third the turnover.

What Pink says about compensation for work that involves creativity or problem-solving echoes my
own beliefs established 30 years ago based on my experience running a business. The overall
compensation needs to be fair and competitive, but that’s all. Paying beyond that will not improve
performance.

4. Recognition
This relates to the concepts of mastery and meaningfulness and to Maslow’s (1954) needs of
belongingness and self esteem. Recognition is a process in which leadership identifies and thanks
employees who made a contribution to the company’s success (Carder and Clark, 1992). It should
be clear to the employee that management truly understands the contribution, and that the thank
you is sincere. It’s not effective to have everyone get together and have management say that
everyone has done a great job. It needs to be personal. It should be clear that the employee has
mastered the situation and achieved an important result. Done properly it can have a powerful
impact. While it is often commemorated with a gift, it should not be seen as incentive
compensation. Greater achievement should not attract more expensive prizes. And there should
not be an expectation that is part of the routine compensation.

5. Well-
Well-Being
Well-being relates to physical and social environments of the workplace and their contribution to
health and motivation. For example, a highly competitive culture is likely to elicit fear in many
individuals and is not in any way optimal for creative work. On the other hand, there should be
some challenge in the work.

While one could argue that well-being should be supported merrily on moral grounds, turns out
that there is an economic advantage to be had. Happy people are more productive in the
workplace. While it may be true that being more productive leads to happiness, Lyubomirsky and
King (2005) have marshaled a huge amount of evidence that happiness leads to productivity as well.

In our many years of research with employee surveys we find that many managers are unaware of
the culture that they create. It is certainly worth getting some objective information on your culture,
and help in improving it if that appears necessary. As to the physical environment, you do the best
you can. A shipyard is going to be a lot less pleasant than a Lexus showroom. But both can be neat
and organized. By far the most important aspect of a supportive culture is the need to drive out
fear. (Point #8 of Deming’s 14 points for management. Deming, 1982.)

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The Human Development and Leadership division believes that well-being is sufficiently important
that we added it to Deming’s other four categories of profound knowledge: variation, systems,
psychology, and the theory of knowledge. We were the first division to have a well-being chair.

6. Cognitive Psychology & Motivation

There is a temptation for us, as humans, to believe that we are not really subject to the vicissitudes
of instinctive drives. Rather, our intelligence enables us to choose actions on a more rational basis.
The Nobel winning work of Daniel Kahneman and Amos Tversky has provided important insight
on this issue. Kahneman (2011) describes two systems that determine how motivation will result in
behavior. System 1 is unconscious but controls much of our behavior. Much of our motivation
begins there and is not modified by system 2. Typically, we are not aware of this and do not
differentiate this circumstance from instances where behavior is under control of System 2, the
conscious system that we experience in daily life. System 2 has apparently ratified the command
from System 1, but it has actually done no thinking about it.

System 1 detects threats and initiates fight or flight. Basically, actions that satisfy fundamental needs
flow from System 1. “The roast beef looks really good, let’s eat.” The behavior may be modified by
System 2, “hold on, we are on a Mediterranean diet and we do not eat red meat.” Of course,
System 2 frequently does not prevail and we eat the roast beef anyway.

System 1 System 2
Fast Slow
Not conscious Conscious
Handles complexity Rational
Intuitive Often goes along with
Ignores conflict of system 1
evidence Capable of checking
Risk-averse System 1 conclusions

System 1 is not stupid. It handles complexity well. For example, it can pinpoint where a fly ball
will land for an outfielder very quickly. This is something System 2 could not do, even slowly. But
System 1 has several biases that shape the behavior that flows from it when System 2 does not
intervene. These include:

1. Confirmation bias. A tendency to ignore evidence that conflicts with your initial
hypothesis.
2. What evidence you see is all there is.
3. Overconfidence.
4. Infers and invents causes and intentions. When something happens there is a strong
tendency to invent a cause, without strong evidence, and sometimes without any evidence
at all, to support that cause.
5. Loss aversion. People will forgo an expected gain to avoid a potential loss. Kahneman’s
example is a bet on the toss a coin. If the coin comes up heads you win $150. If the coin
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comes up tails you lose $100 dollars. Although the expected outcome is positive, you
stand to win more than you lose, most people will reject the bet. Losses loom larger than
gains.

A general conclusion from biases 1-4 is that System 1 tends to be impulsive. That can be mitigated
by System 2. Socialization and education are focused on the development of System 2. A society
dominated by System 1 will be chaotic and rather dangerous.

Another important thing about these biases is that they are not consistent with a “law of least
effort.” Both psychology and economics have tended to assume such a law. Creatures will do the
least possible work for the most benefit. Just as my study of rats pressing levers to get food rather
than take it for free, Kahneman cites numerous examples where choices are made that do not
maximize return.

Not all motivation flows from System 1. Things that you have to do that you don’t want to do like
eating your vegetables or doing your homework flow from System 2. Of course these often require
some form of extrinsic motivation. Perhaps extrinsic motivation becomes a signal that the
underlying task is not desirable.

Conclusion
So why, in spite of massive scientific evidence to the contrary do business leaders have faith in
incentives?

Ignorance. Amazingly, Skinnerian behaviorism is still taught in many introductory psychology

courses, and is taught without reference to the profound contradictions that exist. Remember that
John Garcia’s monumentally important paper was rejected by the elite psychologists on the
editorial boards of the major journals that he submitted to. If they did not understand the
importance of the work why should we expect non-scientists to understand?

Simplicity. On the surface it looks very simple. Remember the instructions from the texts that
begin on page 2. You decide what you want for an outcome, and offer the employee a substantial
reward for achieving it. In practice, even in circumstances where incentives can be effective, the
contingencies are difficult to manage. You have to prevent shortcuts, gaming the system, and
cheating. The reward must be the right size, not too large and not too small. And you had better
make sure that the task is one that is sufficiently routine to be positively influenced by rewards.

Tradition. Over 100 years ago, Frederick Taylor (1911) developed the ideas of what he called
scientific management. Fundamental to his ideas was the notion that workers prefer to do nothing
and must be controlled by rewards and punishment or they would do nothing. Taylor was
tremendously influential in his day. While his day is long past his imprint still remains in the
compensation practices of many companies. It is almost humorous that what he called scientific
management was based on terrible science.

I had personal experience with Taylor’s theory in action in 1960 during the summer before I
entered college. I got a job in a Ford assembly plant. My father was a retired Ford executive. I
expected to see a bunch of lazy workers complaining about the pay. In fact what I saw was a bunch
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 Carder, Employee Motivation-Six Leadership Themes

of workers who were humiliated by the dreadful cars they were producing. I never heard a
complaint about pay. Workers were treated like domestic animals. I was never spoken to by
anyone in a white shirt. When Ford was turned around under Deming’s guidance, the most
important criterion for a plant manager was that she know all the employees in the plant by name
and relate to them in a positive way (Petersen, 1991) Dr. Ed Baker, who followed Bill
Scherkenbach as Ford’s Quality Director, once told me that the thing he was most proud of that
had resulted from the turnaround, was to see executives and hourly workers working side by side in
classrooms.

When Paul O’Neill took over Alcoa in 1987 he observed that the company desperately needed to
be turned around, and that this could not be done without the strong engagement of the workforce.
Rather than devise an elaborate compensation scheme O’Neill proposed to emphasize worker
safety. His reasoning was that the employees would not help him turn the company around unless
they felt the company cared about them. The only way to make sure they felt that was to make sure
the company did care for them. Since the manufacture of aluminum is a very dangerous business,
an emphasis on safety was a logical approach.

When O’Neill announced his plan many stock analysts advised dumping the stock. Dumping the
stock turned out to be a poor idea. O’Neill’s strategy increased the market cap of the company
from $3 billion in 1986 to $27.53 billion in 2000, while increasing net income from $200 million to
$1.484 billion in the same period.

Self-
Self-justification.
justification. Expressing a belief in pay-for-performance may be a way that executives can justify
the huge payments they get in pay- for-performance programs. Not surprisingly these programs do
not seem to work any better for CEOs than they do for other workers. A just released large study of
CEO compensation (Cooper et. al., 2017) suggests that the opposite is the case. Below is the
abstract from that article:

Measures of Chief Executive Officer (CEO) excess compensation are negatively related
to future firm returns and operating performance. The effect is stronger for more
overconfident CEOs at firms with weaker corporate governance. Overconfident CEOs
receiving high excess pay undertake activities such as overinvestment and value-
destroying mergers and acquisitions that lead to shareholder wealth losses.

“Excess compensation” is their term for incentive compensation. Rather than provide support for
the effectiveness of pay for performance, the study adds to the evidence that pay-for-performance
destroys performance.

If you want motivated employees

1. Pay them a fair wage. The ultimate test is that the employee needs to believe it is fair.
2. Avoid incentive compensation, and/or pay-for-performance.
3. Make the work interesting.
4. Give them autonomy to be creative about how they do the job.
5. Enable them to master the work they’re doing. This can involve education, training, and
design of the work.

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 Carder, Employee Motivation-Six Leadership Themes

6. Make sure they understand the purpose of their work and that they feel that the work is
meaningful.
7. Recognize success. This means a genuine thank you from leadership which makes it
clear that leadership understands what has been accomplished and appreciates the
accomplishment.
8. Consider the work environment both physical and social, make sure they support
individual and organizational well being, and attempt to understand what behaviors may
be elicited by the conditions.

References
Carder, B. and K. Berkowitz. Rats' preference for earned in comparison with free food. Science,
167, 1273-1274, 1970.
Carder, B. and J. D. Clark. Theory and Practice of Employee Recognition, Quality Progress, 25,
25-30, 1992.
Carder, B. and M. Monda. Deming’s Profound Knowledge for Leadership; We Are Still Not Out
of the Crisis, ASQ Human Development and Leadership Division, 2013.
http://asqhdandl.org/uploads/3/4/6/3/34636479/2013_profound.pdf
Cooper, M. J., H. Guleh, and P. R. Rau, Performance for Pay? The Relation Between CEO
Incentive Compensation and Future Stock Price Performance.
https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID2878954_code72948.pdf?abstractid=1572085
&mirid=1, 2017.
Deming, W. E, Out of the Crisis. MIT Center for Advanced Engineering Study, Cambridge, Mass,
1982.
Festinger, L and J. M. Carlsmith, Cognitive consequences of forced compliance Journal of
Abnormal and Social Psychology, 58, 203-210, 1959.

Gallup, http://www.gallup.com/poll/188144/employee-engagement-stagnant-2015.aspx , 2015.

Garcia, J. and R. A. Koelling, Relation of cue to consequence in avoidance learning. Psychonomic

Science, 4: 123-124, 1966

Kahneman, D, Thinking, Fast and Slow. Farrar, Straus, and Giroux, New York, 2011

Kohn, A., Punished by Rewards; The Trouble with Gold Stars, Incentive Plans, A’s, Praise, and
other Bribes. Houghton Mifflin, New York, 1993.

Levitt, S. and S J. Dubner, Freakonomics: A Rogue Economist Explores the Hidden Side of
Everything. New York, William Morrow, 2005.
Maslow, Abraham H., Instinct Theory Reexamined, Motivation and Personality. New York:
Harper & Row, 1954

Lyubomirsky, S. and L A. King, The benefits of frequent positive affect: Does happiness lead to
success? Psychological Bulletin, 131,No.6,803–855, 2005.

Petersen, D. E. and J. Hillkirk, A Better Idea: Redefining the Way Americans Work. Houghton
Mifflin, New York, 1991
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 Carder, Employee Motivation-Six Leadership Themes

Pink, D. H., Drive: The Surprising Truth About What Motivates Us. Riverhead Books, New York,
2009.
Pinker, S., The Language Instinct. New York: Harper Perennial, 2007.
Simpson, J. C., It's All in the Upbringing. Johns Hopkins Magazine, 2000.

Skinner, B. F., Are theories of learning necessary? Psychological Review, 57, 193-216, 1950.

Frederick W. Taylor, The Principles of Scientific Management. New York: Harper Bros., 1911.

Acknowledgment
I needed a lot of help with this project from: Wanda Sturm, who found most of my mistakes early
on; Marilyn Monda, who made it better by making it shorter; my writing partner of over 20 years,
Patrick Ragan, who always provides insights about what I am trying to say; especially Dr. Mark
Jones, who organized the whole thing; and finally, Rachele Plencner, who intervened with some
timely proof reading. Thanks to all of you.

About the Author

Brooks Carder, PhD. Brooks is a leader in the application of the
disciplines of Quality to the improvement of safety performance.
He and his colleague, Patrick Ragan, authored the chapter on
“Benchmarking and Performance Appraisal” in The Safety
Professional’s Handbook, and a book, Measurement Matters; How
Effective Assessment Drives Business and Safety Performance,
published by ASQ Quality Press.
Brooks’ consulting work has included leading manufacturing improvement teams in Silicon Valley,
developing safety improvement plans for major chemical companies, and the development of
marketing strategies for pharmaceutical manufacturers.
His education includes an AB cum laude with honors from Yale University, and a PhD in
Experimental Psychology from the University of Pennsylvania.

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The Human Development and Leadership
Division
Helping you reach your potential
www.asq.org/hdl

The Human Development and Leadership

Division
Helping you reach your potential
www.asq.org/hdl

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