Alfie Kohn's Punished by Rewards might be the most important book you've never heard of.
The book's argument is as simple as it is provocative: Rewards, under any form ("Do this and you'll get that"), destroy motivation and defeat their goal of getting people to do whatever it is they're supposed to do. Kohn goes over enormously voluminous evidence from social psychology that seems very strongly to suggest that "Do this and you'll get that" doesn't work.
The reason is very simple. There are two kinds of motivation: extrinsic motivation and intrinsic motivation. Intrinsic motivation means you are motivated to do something by the thing itself, and by your own intrinsic reasons. Extrinsic motivation means you are motivated to do something because of outside factors, like a reward or a threat. And the evidence is clear that we do things much better when we have intrinsic motivation rather than extrinsic motivation (as each of us surely knows from personal experience).
What's worse, extrinsic motivation actively destroys intrinsic motivation. We see this with children, who are very strongly and naturally intrinsically motivated to learn — until they get to school, which uses extrinsic motivation (grades, gold stars) to compel learning, and destroys their intrinsic motivation to learn. If you tell children that the reason why they should do math is so they'll get a good grade, you are telling them that math is not intrinsically interesting.
In the business world, we see the same dynamic: incentive schemes, bonuses, evaluation, and the rest, destroy intrinsic motivation. They reveal a mindset that says that work is inherently tedious and that people wouldn't do it if they didn't have to — which becomes a self-fulfilling prophecy.
And if you give people an incentive scheme, they will do their best to game it. They will do their best to do the bare minimum required to get the goodie they are promised, instead of doing good work because doing good work is inherently valuable and interesting. Incentive schemes undermine teamwork — since workers are competing with each other for rewards — and creativity — since it becomes just about doing the thing required to get the reward — which happen to be among the most valuable assets for success in a 21st-century economy.
Why, then, do rewards continue to proliferate?
Partly because they work in the short term. We've all had this experience. You're doing something, and your boss (or whoever) tells you that if you do it really well, you'll get a reward. You start working harder. And so, over the short term, rewards do work. But over the long term, rewards destroy intrinsic motivation and make you work less hard.
This is partly because of behaviorism, the school of social psychology that says the only reason we do anything is because of incentives. Behaviorism was the reigning ideology in the early and middle parts of the 20th century, and influenced most management research of the era, many of whose premises are still with us. Kohn spends a very long time arguing, from countless studies, that behaviorism has been scientifically discredited, even as what he calls "pop behaviorism" still reigns supreme in our culture. In this, Kohn's main antagonist is B.F. Skinner, a Harvard psychologist who was the founder and leader of behaviorism. Kohn points out that Skinner's work on behaviorism started out with work on pigeons and rats, who are indeed very easily motivated by goodies, and simply expanded this work to apply to humans. Kohn spends some time on Skinner's extraordinarily bleak worldview: To him, humans are nothing but bundles of wants and are only motivated by punishment and reward. Skinner envisioned that his work would help build a future utopia — I think many would call it a dystopia — where we would all be like rats in a panoptic maze, with all the right rewards dangled at the right time, so that there would no longer be crime or social disruption. As a Christian, I couldn't help but see a link (as, indeed, did Skinner) between his atheism and his view of human nature as essentially animal, purely self-interested, and rat-like.
I think most adherents of "pop behaviorism" would rethink their view if they knew how dire true behaviorism is. In fact, for all its pseudo-scientific accoutrements, it should only take a few minutes of introspection to realize that behaviorism is fantastically unbelievable: We are more than purely reactive animals who only do things to avoid punishment and seek rewards. (Skinner would say that is an illusion, which is of course a very convenient way of dealing with the problem — if I was living in an illusion, how would I know?).
Pop behaviorism also persists, Kohn argues, because of cynicism. Most bosses really think that work is an unrewarding drudge and that the only way to get people to do it is to manipulate them; most parents and teachers, deep down, think that kids are self-interested animals and need to be bullied into doing the right thing. The devastating thing is not just that this cynicism persists, but that it is self-fulfilling. Bosses who think work is drudgery will create an environment where work becomes drudgery, and see their cynicism as justified. As has been noted, extrinsic motivation destroys intrinsic motivation, so that over time, bosses who use only extrinsic motivation will destroy their employees' intrinsic motivation, making the use of rewards necessary to keep the machine running.
The most immediate and predictable response to Kohn's argument is some version of "Oh yeah? Well what else do you have in mind?" And Kohn straightforwardly grants that there is no simple answer to that question. There is no single, foolproof way to strengthen an employee's intrinsic motivation. Bosses have to do the hard work of working with their employees, of assigning them to jobs that they are motivated by, of listening to their legitimate concerns, of fostering teamwork, of involving them in decision making, of potentially rearranging priorities so that everyone works on something interesting. Coming up with some incentive scheme that seems to work for a little while is a lot easier and more straightforward.
And that's what it ultimately comes down to: Rejecting pop behaviorism entails treating human beings as actual human beings, with legitimate wants and aspirations, instead of treating them like animals who are only motivated by goodies. That is hard — but ultimately much more rewarding.