Release Date 19 January 2017

Employers continue to believe that performance-related cash bonuses, such as those offered to bankers, increase motivation, despite evidence showing they may decrease interest in their work.

In a new study, psychologists at the University of Reading tested people’s expectations of the effect of incentives, and found most firmly believed they result in improved future performance.

The study follows earlier research that found, while offering financial or other rewards can lead to a short-term improvement, the recipients are in fact often less interested in completing the task well in future.

Dr Kou Murayama, a Psychology associate professor at the University of Reading who led the research, said: “Society has a deep-rooted misunderstanding of how motivation works, and employers are repeatedly shooting themselves in the foot with the frequent use of rewards to encourage certain behaviours or increase effort.

“Our work shows we need to correct our strong misbelief in a carrot and stick approach to achieve sustained motivation among workers.”

The findings of the study, published in Motivation Science, are applicable to many scenarios. As well as questioning the benefits of paying bonuses, they also cast doubt on whether parents can bribe their children with sweets to make them behave, or if rewarding students will make them continue to study hard in the long run.

In the experiment, hundreds of participants were given a description of a previous study carried out by the same team and asked to make a prediction about the results. It compared whether a group offered a performance-based reward for playing a game were more likely to play again than a group offered no incentive.

More than half of the participants (62.5%) believed the reward group would be more motivated to play again, but in fact the opposite was true. To confound matters, those making the wrong assumption were also far more confident in their predictions than those who guessed correctly.

The team suggests rewards actually undermine motivation, by triggering a subconscious feeling in the recipient that their autonomy is being threatened. People offered rewards may also find they focus on this more than the task itself.

Earlier work by Dr Murayama looked at the balance between external rewards and internal motivation, and whether this means money could be used less often as an incentive. He said further tests in situations that more closely mimic real life will be needed to determine this.

Rather than relying on rewards to control others, respecting autonomy and intrinsic motivation is one alternative strategy that it is thought could achieve better results. Changing working patterns or payment schemes could also improve motivation.

Dr Murayama said: “So much effort is put into having an immediate effect on students or employees, and it is true that people respond well in the short term to things like financial incentives. However, we have shown that providing a workplace that meets people’s needs and improves job satisfaction is likely to have a greater impact on employees than money on its own.

“In the future, it may be possible to explore how such incentives can be transformed into an inner desire in the person to carry out tasks, which is far more powerful.”