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  • Lydia Richards

Are you Punishing with Rewards?

Updated: Jan 18, 2022

When you see that awkward headshot of an employee displayed near the checkout counter and a sign above them saying, “Employee of the Month” - you can be sure, this is a disaster in the making.

Despite the ‘common wisdom’ incentive or recognition programs that predictably reward competence or completion do exactly the opposite of what leaders intend: Reward programs lower motivation.

To understand this surprising finding, we need to consider the difference between intrinsic and extrinsic motivation. Intrinsic motivation is behavior driven by internal rewards, like the fun of a challenge, mastering a new skill, knowing that you are making a meaningful contribution to a worthy goal. Extrinsic motivation is behavior driven by rewards like money or recognition. When you offer extrinsic rewards, people find less intrinsic satisfaction in their work.

Weird huh? A meta-analysis of 128 research studies found:

Rewards hurt the ones who receive them. When recipients of prizes and awards were later asked about their level of motivation, they found less joy in their work than before earning the reward. Some research suggests that the earning of a reward makes us feel as though our contribution is transactional - like a commodity. A fascinating study showed that when people were offered money to do something for the common good, they were less inclined to do it, than when they were offered nothing. It feels good to do good. Rewards can rob us of some of that “feel good” satisfaction.

Rewards hurt everyone else too. Those who do not receive the maximum reward, often experience it as negative feedback about their competence. Some may reject the entire process out of jealousy or conviction that the selection process was unfair. Therefore, rewards tend to DEmotivate the very people who need more motivation.

Rewards hurt teams. While friendly competition is common, particularly on sales teams, it destroys any chance of cooperation and collaboration. In all my years of working with teams, I have never found a team that is more productive when members compete. When it comes to teams, the “whole” can be so much greater than the sum of the parts.

Reward programs become harmful, but very hard to stop. Once an organization has adopted a reward program people acclimate to it quickly. It’s the new normal and therefore expected. You’ll get no bump in productivity or loyalty for having it, but taking it away can be disastrous.

So what does work to motivate people?

  • Genuine, specific expressions of gratitude

  • Verbal or tangible gifts

  • If they are tangible, they must be unexpected, and at random intervals

  • Gestures for the purpose of appreciation, not control

If an employee does a particularly terrific job, the most effective approach is genuinely to tell them so. Thank them publicly, or even give them a gift to say thanks. If a gift is given a gift, it should be something that reflects them personally. Thoughtfulness will be appreciated and remembered.

Our attraction to rewards programs is understandable, as we can “set it and forget it”. However, there are no shortcuts when it comes to cultivating an engaged, productive workforce. Your workforce will light up and give you their very best work, when genuine appreciation is a daily habit for every leader, manager and supervisor.


Lydia Richards, CEO and founder of TeamWorks has been creating high performance organizations for 15 years. For more go to

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