Why Carrots and Sticks Keep Backfiring

Most organizations still operate on an assumption that dates back to the early twentieth century: people work harder when you reward what you want and punish what you don't. Bonuses, performance rankings, incentive plans, and progressive discipline — these are the tools managers reach for when they need to "motivate" their teams. And yet, decades of research paint a far more nuanced picture. The carrot-and-stick model doesn't just fall short; in many high-skill, knowledge-work contexts, it actively undermines the very outcomes leaders are trying to produce.

Edward Deci's landmark experiments in the early 1970s first demonstrated what he called the "undermining effect." When people who were already intrinsically interested in a task were offered external rewards for doing it, their intrinsic motivation actually decreased once those rewards were removed (Deci, 1971). The finding was counterintuitive and, for many in management, deeply uncomfortable. Subsequent meta-analyses confirmed the pattern across more than 100 studies: tangible, contingent rewards reliably reduced intrinsic motivation for interesting tasks (Deci, Koestner, & Ryan, 1999).

This doesn't mean compensation is irrelevant — far from it. Fair pay, equitable benefits, and transparent reward systems matter enormously for attracting and retaining talent. The problem arises when leaders rely on extrinsic incentives as their primary strategy for driving engagement, creativity, and sustained performance. When that happens, work becomes transactional. Employees learn to ask, "What do I get for this?" instead of "How can I do this well?" The psychological shift is subtle but profound, and it shows up in lower innovation, higher turnover, and the kind of quiet disengagement that no bonus plan can fix.

So if carrots and sticks are insufficient, what does the science say leaders should do instead? The most robust answer comes from Self-Determination Theory — a framework that has been tested in classrooms, clinics, sports teams, and, increasingly, in the workplace environments where HR professionals and leadership coaches operate every day.

Self-Determination Theory: The Three Pillars of Intrinsic Motivation

Self-Determination Theory (SDT), developed by Edward Deci and Richard Ryan over more than four decades of research, proposes that human beings have three basic psychological needs that, when satisfied, fuel intrinsic motivation, well-being, and high-quality performance. Those needs are autonomy, competence, and relatedness (Ryan & Deci, 2000). The theory has been validated across cultures, industries, and organizational levels, making it one of the most extensively supported frameworks in motivational psychology.

Autonomy: The Need to Act With Volition

Autonomy in SDT does not mean independence or working in isolation. It means experiencing a sense of volition and psychological freedom — the feeling that one's actions are self-endorsed rather than coerced. When employees feel that they have meaningful choice in how they approach their work, when they understand why a task matters, and when their perspective is genuinely considered, their autonomy need is satisfied.

Leaders who support autonomy tend to provide context rather than commands. They explain the rationale behind decisions, offer choice within boundaries, and minimize controlling language. Research in organizational settings has shown that autonomy-supportive management is associated with greater job satisfaction, higher performance ratings, stronger organizational commitment, and reduced burnout (Gagné & Deci, 2005). Conversely, controlling management styles — micromanagement, surveillance-heavy accountability systems, rigid top-down mandates — tend to erode motivation even when the surface-level results appear compliant.

Competence: The Need to Feel Effective

Competence refers to the need to feel capable and effective in one's interactions with the environment. Employees whose competence need is met feel stretched but not overwhelmed, challenged but equipped. They receive feedback that is informational rather than evaluative — feedback that helps them improve rather than simply ranking them against peers.

Leaders satisfy the competence need by setting clear expectations, providing timely and constructive feedback, investing in skill development, and designing roles that match employees' strengths with meaningful challenges. Importantly, competence is not just about having skills; it is about perceiving that one's skills are growing and making a difference. This is why development conversations — not just annual reviews — matter so much. When leaders treat development as an ongoing dialogue, they signal that growth is valued and supported, which directly fuels intrinsic motivation (Baard, Deci, & Ryan, 2004).

Relatedness: The Need to Connect and Belong

Relatedness is the need to feel connected to others, to experience caring and being cared for, and to have a sense of belonging within one's social environment. In the workplace, relatedness is satisfied when employees feel that their leader genuinely values them as people — not just as producers of outputs — and when team dynamics reflect trust, mutual respect, and psychological safety.

Amy Edmondson's research on psychological safety (Edmondson, 1999) dovetails naturally with the relatedness pillar of SDT. Teams where members feel safe to speak up, ask questions, and admit mistakes are teams where the relatedness need is being met. Leaders who build these environments tend to listen actively, show vulnerability, recognize contributions publicly, and create space for authentic interpersonal connection. The payoff is not just warmer feelings; it is measurably higher learning behavior, innovation, and team performance.

From Theory to Leadership Practice: What SDT Looks Like on the Ground

Translating self-determination theory into leadership behavior requires more than good intentions. It requires leaders to examine their habitual patterns — how they give feedback, how they delegate, how they communicate expectations, and how they respond when things go wrong. For many leaders, the shift from controlling to autonomy-supportive behavior feels counterintuitive, especially in high-pressure, results-driven environments where the instinct is to tighten control.

Replace Controlling Language With Informational Language

Consider the difference between "You need to get this done by Friday" and "This deliverable is due Friday because the client presentation is Monday — how do you want to approach it?" Both sentences convey the same deadline. But the second one provides rationale (satisfying autonomy), implies confidence in the employee's ability to plan (supporting competence), and opens a dialogue (fostering relatedness). The shift is small in effort but large in psychological impact.

Research on managerial communication styles has found that informational feedback — feedback that provides useful data about performance without controlling overtones — enhances intrinsic motivation, while controlling feedback diminishes it (Ryan, 1982). Leaders who habitually use phrases like "you should," "you must," and "I need you to" may inadvertently be creating a controlling climate, even when their content is reasonable and well-intentioned.

Design for Choice, Not Just Compliance

Autonomy-supportive leaders look for opportunities to offer meaningful choice. This does not mean abdicating responsibility or letting employees set their own deadlines without constraint. It means identifying the dimensions of a task where choice is possible — the method, the sequence, the tools, the collaborators — and explicitly offering that latitude. Even in highly structured environments, perceived choice increases ownership and engagement.

One practical approach is to define outcomes clearly while leaving the path open. "Here is what success looks like and here are the constraints. Within those boundaries, how would you like to proceed?" This frame honors organizational needs while respecting the employee's agency. It is also, not coincidentally, a hallmark of effective delegation — a competency that many leaders struggle with and that has measurable downstream effects on team capacity and morale.

Make Development a Daily Practice, Not an Annual Event

The competence need is not satisfied by a yearly performance review or a sporadic training budget. It is satisfied by a leadership climate where learning is woven into the fabric of daily work. This means normalizing questions like "What did we learn from this?" rather than "Who is to blame for this?" It means investing time in coaching conversations that help employees see their own growth trajectory. And it means providing stretch assignments that signal confidence in the employee's potential.

Leaders who excel in this area often report that they spend more time in development conversations, not less — but that this investment pays dividends in reduced supervision, higher initiative, and stronger retention. The research supports this anecdotal evidence: organizations where employees report high need satisfaction on all three SDT dimensions show significantly lower turnover and higher discretionary effort (Gagné & Deci, 2005).

Measuring What Matters: The AL360's Motivation & Development Domain

One of the most common challenges in leadership development is moving from abstract theory to concrete, measurable behavior change. Leaders may intellectually agree that autonomy, competence, and relatedness matter, but without specific feedback on how they are showing up in these areas, growth remains aspirational rather than actionable.

This is where multi-rater feedback becomes essential. The Achieving Leader 360 (AL360), developed by FactorFactory, is grounded directly in Self-Determination Theory, psychological safety research, and adaptive leadership frameworks. The assessment measures leadership across six domains and nineteen factors, providing leaders with a detailed, evidence-based portrait of their behavior as perceived by supervisors, peers, and direct reports.

The Motivation & Development domain of the AL360 is particularly relevant to the SDT framework discussed in this article. This domain captures the specific behaviors through which leaders foster — or undermine — intrinsic motivation. It examines how effectively leaders support employee development, provide growth-oriented feedback, and create conditions where people feel motivated from within rather than compelled from without.

But the AL360 does not stop at one domain. Because SDT's three needs are addressed through multiple leadership behaviors, they appear across several AL360 domains:

  • Empowerment & Delegation maps closely to autonomy support — how effectively leaders share authority, trust their teams with meaningful responsibility, and resist the urge to micromanage.
  • Communication & Relations connects to relatedness — the quality of interpersonal connection, listening, and trust-building that leaders demonstrate.
  • Employee Involvement captures the extent to which leaders solicit input and create participative environments, satisfying both autonomy and relatedness needs.
  • Leadership Philosophy reflects a leader's fundamental orientation toward people — whether they lean toward trust and empowerment (Theory Y) or control and compliance (Theory X), a distinction that shapes every interaction in ways consistent with or contrary to SDT principles.

The multi-rater design of the AL360 is critical because self-perception and others' perception of leadership behavior often diverge significantly. A leader may believe they are autonomy-supportive, but direct reports may experience their behavior as controlling. These perception gaps are not failures — they are the most valuable data points in the entire assessment, because they reveal the specific behavioral shifts that will have the greatest impact on team motivation and performance.

Turning Feedback Into Growth

The AL360 is designed not as a one-time evaluation but as a development catalyst. When leaders receive detailed feedback across all six domains, they gain a roadmap for targeted growth. An executive coach or OD consultant can use AL360 results to help a leader identify, for example, that their competence-support behaviors are strong (they set clear goals and provide skill-development opportunities) but their autonomy-support behaviors need work (they tend to prescribe methods rather than allowing choice). That specificity transforms "be a better motivator" from a vague aspiration into a concrete, coachable development plan.

Longitudinal use of the AL360 — administering it at intervals over time — allows leaders and their coaches to track measurable progress against baseline scores. This is how self-determination theory moves from academic insight to organizational reality: not through a single workshop, but through sustained, feedback-informed behavior change.

Building a Motivation-Rich Culture: Implications for HR and Talent Strategy

Self-Determination Theory's implications extend well beyond individual leader behavior. When HR professionals and organizational development consultants apply SDT at a systemic level, they can reshape the policies, practices, and cultural norms that either support or thwart intrinsic motivation across an entire organization.

Rethinking Performance Management

Traditional performance management systems — forced rankings, annual reviews tied exclusively to compensation, stack ranking — tend to be experienced as controlling. They satisfy organizational needs for documentation and differentiation, but they often undermine the very motivation they aim to drive. SDT-informed performance management emphasizes ongoing coaching conversations, developmental feedback, and evaluation processes that feel informational rather than punitive. This does not mean eliminating accountability; it means embedding accountability within a supportive, growth-oriented context.

Designing Roles for Engagement

Job design is one of the most powerful and underutilized levers for intrinsic motivation. Roles that offer task variety, meaningful impact, and appropriate levels of challenge satisfy the competence need. Roles that provide discretion in how work is accomplished satisfy autonomy. And roles that involve collaboration, mentoring, and team interdependence satisfy relatedness. HR professionals who evaluate job architecture through an SDT lens often find straightforward, low-cost redesign opportunities that significantly improve engagement without any change in compensation.

Selecting and Developing Leaders Who Motivate

Perhaps the most strategic application of SDT in talent management is using it as a criterion for leadership selection and development. Organizations that assess leadership candidates not just for technical competence and results orientation, but also for their capacity to support autonomy, build competence, and foster relatedness, are investing in the conditions that sustain high performance over time. The AL360 provides a structured, psychometrically validated method for making this assessment — and for developing leaders who may have the right intentions but need specific behavioral feedback to translate those intentions into impact.

The Cost of Ignoring the Science

The organizational costs of motivational failure are well documented: disengagement (Gallup consistently reports that a majority of the global workforce is not engaged), turnover (which the Society for Human Resource Management estimates can cost 50–200% of an employee's annual salary), reduced innovation, and the quiet erosion of discretionary effort that no metric captures until it's too late. SDT does not promise a magic solution to these challenges, but it does offer a scientifically grounded framework for understanding why they occur and what leaders can do differently.

"The most powerful thing a leader can do is create the conditions where people motivate themselves. Self-Determination Theory gives us the blueprint — autonomy, competence, and relatedness. The AL360 gives leaders the feedback to know whether they're actually building those conditions or just believing they are."

The gap between knowing about intrinsic motivation and leading in ways that actually foster it is where the real work of leadership development happens. It requires honest feedback, specific behavioral data, and a commitment to growth that goes beyond reading an article or attending a seminar. For HR professionals, executive coaches, and organizational development consultants who are ready to help their leaders close that gap, FactorFactory's Achieving Leader 360 provides the evidence-based starting point. Learn more about the AL360 or contact FactorFactory to discuss how multi-rater feedback grounded in Self-Determination Theory can transform your leadership development strategy.