The carrot and the stick metaphor is one that is used widely to display Reward and Punishment as two methods in order to ensure productivity. The thought is simple, in order to get a mule to move on a farm, there are two ways. You can dangle a carrot in front of it and have it move towards the carrot, and when it has done its task it gets the carrot as a reward. Alternatively, you can hit it with a stick when it stops and by following behind the mule with a stick it will be inclined to keep moving.
Translated into modern business, this can be explained with a sales team. Make more sales and you will get a cash bonus (this is the carrot), or make less sales than your quota and you will be, in extreme cases fired (that being the stick). You can see this exemplified in David Mamet’s play, Glengarry Glen Ross (popularized by the film with Alec Baldwin and Al Pacino). If you haven’t seen it, I highly recommend you do. This is a bit of a spoiler, so skip the next paragraph if you don’t want to hear more.
In the story, a sales team isn’t meeting their quota, so Alec Baldwin comes in to fix it. He offers a new Cadillac to the top seller and says that the lowest seller of that month will be fired. The salesmen get vicious and turn on each other. It gets to a point where they are even damaging the work of their colleagues who are now seen as their competitors. This “incentive” not only put a serious weight on the sales team, but that weight impaired them and stopped them from doing their job right.
This article is inspired by a Daniel Pink video I saw on Hubspot’s blog. The video speaks about the danger of the “carrot and stick” method. Studies have proven that for simple, mechanical tasks (say doing dishes, for example) this method works perfectly. However, for anything more complex, for anything that requires a minimum amount of creativity and free thinking this method actually hinders productivity! Employees perform far worse than they would without this incentive. It may be counter-intuitive, but the secret is to let go. Giving your creative team freedom without pressuring them with monetary gains is the best possible thing you can do.
Here is the video explaining all of this and more, in detail. Enjoy!