About ten years ago, I, and other members of our management team, read a book that changed the course of our firm: Drive: The Surprising Truth About What Motivates Us by Daniel Pink. In Drive, the author lays out research detailing why traditional methods of motivating employees are flawed.

Carrot-and-Stick Motivation Often Doesn’t Work

A common method of motivating employees is the “carrot-and-stick” model — using reward and punishment. While this approach can effectively shape behavior, it’s best used for rule-based routine tasks. It’s less effective, or even counterproductive, in motivating high performance, problem-solving, or creativity.

Problems with the carrot-and-stick approach include:

• It can extinguish intrinsic motivation,
• diminish performance,
• crush creativity,
• crowd out good behavior.
• encourage unethical behavior,
• create addictions, and
• foster short-term thinking.

The Three Drivers of Motivation

Behavioral science has better answers for motiving people than the reward and punishment approach. This better approach has three essential elements:

One: Autonomy

Research shows that our “default setting” is to be self-directed and autonomous. We don’t like to be micromanaged and robbed of independent action and the freedom to make decisions on our own. (Think about how teenagers bristle at being told what to do — we adults are no different.) Unfortunately, the modern business world is steeped in the notion that “management” means controlling and directing employee behavior. The opposite is more motivating — giving employees broad direction and allowing them the autonomy to decide how to best work and problem-solve.

Two: Mastery

Mastery means learning and working towards improving. Research has found that “making progress in one’s work turns out to be the single most motivating aspect of many jobs.”

According to Pink, mastery abides by three peculiar rules:

• Mastery is a mindset: It requires the capacity to see your abilities not as finite, but as infinitely improvable.
• Mastery is a pain: It demands effort, grit, and deliberate practice.
• Mastery is an asymptote: It’s impossible to fully realize, which makes it simultaneously frustrating and alluring.

Three: Purpose

I once read the story of a custodian at SpaceX who, when asked what his job was, replied, “I’m helping humanity become a multi-planetary species” (referring to SpaceX’s ultimate goal of colonizing Mars). Wow. Talk about infusing purpose up and down an organizational chart.

It is in our nature as humans to seek purpose. A reason to get out of bed in the morning. We want to be part of something greater than ourselves.

The Lesson

In Drive, Pink notes organizations that focus on the three elements will have happier employees who are more productive, which leads to greater profitability and growth. Plus, doesn’t it just sound like more fun to work in a firm that focuses on providing autonomy, an opportunity to pursue mastery, and coupled with a strong purpose than a company focused on carrots and sticks?

Of course, compensation and benefits matter. But Pink says that once an employee is fairly paid, the three elements are more motivating than merely incentivizing with higher compensation.