The Real Impact of Incentives on Performance at Work

What empirical impact do extrinsic and intrinsic motivators have on company performance?

At the core of the psychology of human behavior is the idea that we are incentivized to do things to pursue pleasure (carrots) and to avoid pain (sticks).

But what role do material incentives such as cash, vouchers, and awards play at a time when intrinsic motivators like purpose and growth are influencing the kinds of work people choose to do and the companies they choose to work for?

Incentive Programs Boost Performance

A 2010 meta-analysis conducted the International Society of Performance Improvement (ISPI) found that properly constructed incentive programs increase performance by anywhere between 25 and 44 percent. The same study found that these incentive programs engage participants and help companies attract quality employees.

They also concluded that monetary incentives are twice as effective as non-monetary…