Why external rewards undermine internal motivation

We have a great system…how do we improve it?

Doctor's Bag

In my last post, I mentioned the issue of lack of trust in institutions. It appears that our world is increasingly running on financial incentives and regulation. Psychologist Barry Schwartz states that this undermines our will to do the right thing.

This week Dr Todd Cameron, GP and practice owner in Victoria, posted an excellent four-minute LinkedIn video about why financial incentives are not as effective as we sometimes think. He mentioned the following issues with financial performance systems:

  • They assume people are lazy
  • They are not supported by scientific evidence
  • They ignore activities that are difficult to measure
  • They reduce the flexibility of organisations
  • They take away resources for system improvement
  • KPIs often work against each other or against other goals, values or purposes
  • KPIs can undermine collaboration.

Research confirms that incentives, big or small, usually backfire. Like punishments, they affect internal motivation and creativity. Social scientist and author Alfie…

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