It’s widely accepted that rewards and recognition can motivate people. But does that mean they work in every context?

To answer that, we need to understand how motivation works. Psychologists generally classify motivation into two categories:

• Intrinsic Motivation: This comes from within—driven by personal satisfaction or interest in the task itself. For instance, someone might exercise because they love it or play music simply for the joy it brings.

• Extrinsic Motivation: This stems from external rewards like money, praise, or recognition. For example, someone trying to lose weight only to fit into a wedding outfit is driven by an extrinsic motivator.

  
  

While both types have their place, over-relying on extrinsic rewards can sometimes backfire—especially when they replace or diminish intrinsic motivation.

The Overjustification Effect: When Rewards Undermine Motivation

A well-documented phenomenon called the Overjustification Effect shows that when people are rewarded for activities they already enjoy, their intrinsic motivation may decline.

Let’s say someone loves reading. If they start getting paid for it, their brain may begin to associate reading with earning money rather than the enjoyment it brings. Once the payment stops, their desire to read may fade. The activity becomes something they were “doing for the reward,” not for its own sake.

This effect is particularly problematic when organizations reward behaviors that employees are already internally motivated to perform. When the external reward disappears, so can the motivation.

Does This Apply to Everyone? Children vs. Adults

Early research on this effect focused on children—who are more impressionable and still forming their preferences. When children receive a reward for doing something like a puzzle, they may infer that the activity isn’t enjoyable on its own, but only worth doing for a prize.

Adults, however, experience the effect differently. Since they’re more aware of the trade-offs involved in work and life, rewards like salaries and bonuses tend to reinforce their motivation rather than crowd it out. Most adults know they’re working both for compensation and fulfillment.

Still, adults are not immune. When incentives are poorly designed—especially when they ignore purpose or performance quality—they can lead to disengagement or even unethical behavior.

Task Completion vs. Quality of Performance

A key factor in whether incentives enhance or reduce motivation is what the reward is tied to:

• Rewards for completion (e.g., hitting a number, finishing a task) can signal that the task itself lacks inherent value.

• Rewards for excellence (e.g., quality work, creative problem-solving) can validate effort and skill, boosting intrinsic motivation.

  
  

Organizations often fall into the trap of incentivizing quantity over quality. This can create a check-the-box culture, where the goal is to “get it done,” not to do it well—ultimately leading to disengagement or burnout.

When Incentives Go Wrong: Classic Cautionary Tales

Even well-intentioned reward systems can produce unintended—and sometimes damaging—outcomes:

• The Cobra Effect: In colonial India, the British government paid citizens to kill cobras. Locals began breeding cobras for profit. When the reward program ended, they released the snakes, worsening the problem.

• The Banking Scandal: A global bank incentivized employees to open more customer accounts. The pressure led some to create unauthorized accounts—triggering lawsuits and public backlash.

• The Daycare Dilemma: An Israeli daycare introduced a fine for late pickups. Instead of reducing delays, parents treated the fine as a fee, and late pickups increased.

  
  

These examples show how misaligned incentives can not only fail but actively undermine the outcomes they’re meant to drive.

Remote Work and the Rise of “Busyness” Metrics

In the era of remote work, many employees feel pressured to appear productive. One study found that remote workers spend an extra 67 minutes per day online just to signal that they’re working.

This is a classic example of rewards chasing the wrong metric—presence over performance. When incentives or recognition are based on visibility rather than impact, they promote performative busyness, not meaningful work.

For remote teams, the challenge isn’t just about motivation—it’s about measuring what truly matters.

What Makes Incentives Work?

If poorly designed incentives can cause so much damage, what separates good ones from bad?

Effective incentives:

• Reinforce existing intrinsic motivation

• Recognize excellence and effort—not just completion

• Align with organizational values and desired behaviors

• Are transparent, fair, and clearly communicated

• Avoid encouraging short-term wins at the cost of long-term damage

Final Thoughts: Align Motivation with Meaning

Incentives aren’t inherently good or bad—but they’re not a silver bullet. The Overjustification Effect is a powerful reminder that rewards can sometimes do more harm than good if not thoughtfully applied.

The goal isn’t to eliminate incentives—but to design them with intention. When recognition reinforces purpose, rewards align with values, and performance—not just presence—is celebrated, organizations unlock not just productivity, but deep, sustainable engagement.