Career Development

Carrot and Stick Motivation: Definition and Examples in the Workplace

December 17, 2020

There are many different methods of motivating employees to do well at work. One common method is the carrot and stick approach. Creating a carrot and stick policy is typically fast and easy to implement, and it can be customized for your employee needs and company culture. In this article, we explain what carrot and stick motivation is and how you can implement it in your workplace, including examples.

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What is carrot and stick motivation?

Carrot and stick motivation is a motivational approach that involves offering a “carrot” (a reward—for good behavior) and a “stick” (a negative consequence for poor behavior). It motivates staff by creating actionable goals and desirable rewards for employees who can alter their behavior and performance. It is a simple and effective form of feedback for employees.

The carrot and stick theory can be applied effectively in the workplace with a reward and consequence system as motivational tools for staff members. Using the carrot and stick approach in the workplace can be an effective form of extrinsic motivation. Set the goal you would like your employees to achieve, then create a carrot and a stick related to that goal.

For example, if you want your sales team to sign contracts with five new clients per month, you need a reward for those who do so and a consequence for those who don’t. Your reward could be an increased commission on those five sales, and the consequence could be taking a percentage off of the commission of the employee with the lowest number of new clients that month. 

The carrot and stick approach can work very well to modify the behavior of your employees, guiding them to avoid the actions that are punishable and engage in the actions that will earn rewards. As long as your reward is attractive enough and your consequence is undesirable, this method can help motivate employees to achieve your preferred outcomes.

Related: Intrinsic vs. Extrinsic Motivation

How to implement a carrot and stick policy

Use these steps to begin a carrot and stick motivational policy for your team:

  1. Set a goal.
  2. Create an incentive.
  3. Decide who should receive the carrot.
  4. Outline a consequence.
  5. Decide who should receive the stick.
  6. Choose your carrot and stick policy carefully.

1. Set a goal

When you first implement a carrot and stick policy, you need to set a goal for your employees. It should be measurable and achievable within a deadline. You need to be specific about what you want your staff to accomplish and have a date by which you expect the goal to be achieved. 

By beginning with a series of small, attainable goals, your employees are more likely to reach your desired objectives and earn their rewards. It is important to begin with small goals that you are confident your staff will be able to achieve. This will make it easier to implement your carrot and stick policy.

Your objective should be a goal that can be measured, such as a certain production output, a sales total or another common metric used by your employees. Opt for a goal such as “Increase sales by 5% by the end of this quarter” instead of simply setting the goal to “Increase sales.”

Related: SMART Goals: Definition and Examples

2. Create an incentive

The key to the carrot and stick approach is using an incentive that interests or appeals to employees. Decide on a reward you can offer for reaching the goal. There are four general types of rewards you could give your staff members:

  • Compensation
  • Benefits
  • Recognition
  • Appreciation

Choose a reward that you believe your employees would want to receive. In a large company, a company-wide email recognizing the employees who achieved the objective could be a highly sought-after reward. For a small startup with only a few employees who often work closely together, company-wide recognition might not be as attractive of a reward, and a small stipend or gift might be more appreciated. Consider what might be valuable to your employees, and use your company culture and structure to help you determine potential rewards.

If you notice that not many employees can reach your goal, try offering a different reward to see if that helps with motivation. Alter your rewards as needed by choosing a new reward if there doesn’t seem to be enough interest, or by creating larger rewards for bigger, more challenging goals.

3. Decide who is eligible to receive the carrot

You will also need to decide who is eligible for the reward and clearly outline any qualifications to all employees. If everyone surpasses your goal, you may decide to give a small reward to each employee. Alternatively, you could choose to give a larger reward to the employee who performed the best. For example, if you have set a sales goal for your employees and they reach the goal, you could give everyone a small reward such as a staff party or a catered lunch, or choose to reward the top employee with a larger personal prize, such as a monetary bonus.

Related: Using Key Performance Indicators (KPIs) to Achieve Goals

4. Outline a consequence

Choose a consequence for employees who do not meet the stated goal or have the lowest performance, and clearly communicate it. When your staff reaches its goals and you consistently follow through on providing the “carrot,” your staff members will be more inclined to believe that you will also follow through on the “stick” as well. Once they see that you are serious about your carrot and stick motivation policy, they will be more motivated to avoid the punishment and receive the reward.

5. Decide who is eligible to receive the stick

Just like with the incentive, you will need to decide who receives a consequence. You could choose a small punishment for those who were unable to reach your goal, or you could have a more serious punishment for the employee who performed the worst at the task. 

For example, if your goal is to reach a certain production output and only half of your employees can reach that goal, you could choose to have the employees who failed assist with inventory, or you could select the employee with the lowest output and give them the responsibility of tidying up the break room for the next two weeks. 

6. Choose your carrot and stick policy carefully

If you choose to reward all staff members who can reach or surpass your goal, then your consequence should be applied only to the employee with the worst performance. Similarly, if you are singling out the employee who performed the best, apply a small punishment to all who were unable to reach your goal. This can help you avoid dividing your employees into those who got a small reward and those who got a small punishment. 

You should unify your staff in achieving the goals you set out, while still allowing for them to compete. If everyone either gets a reward or a punishment, there will be little motivation to surpass the goal or avoid group punishment. Instead, single out either the employee with the best performance or the worst performance to motivate staff to be the one who avoids the stick and receives the carrot.

Related: The Best Ways to Motivate Your Team

Carrot and stick examples

Using rewards and consequences that employees are actually motivated by is the key to having the carrot and stick approach work successfully. If you offer a reward that nobody desires or a consequence that no one minds, employees will not have a reason to work toward achieving the goals you set.

Examples of rewards for staff members include:

  • Taking the employee out for dinner or buying a group lunch
  • Allowing them to work from home for a pre-arranged length of time
  • Gifting a personalized mug, water bottle or another frequently-used item
  • Adding a bonus to their next paycheck
  • Upgrading their desk, office chair or another piece of equipment that is used daily
  • Going out for a group activity
  • Giving paid time off
  • Publicly thanking the employee(s), either in a company-wide email, in-person or with a hand-written note
  • Giving a gift card to a service, subscription or activity that the employee would be interested in
  • Increasing their sales commission

Your company culture can help determine what rewards will be the most desirable. If your team values health and wellness, for example, consider a spa day, a gym membership or a massage. 

Be sure to keep your carrot and your stick balanced. Obtaining the reward should be just as motivating as avoiding the punishment. You need both in place to inspire your staff members to shape their behavior and achieve the goals you have set.

The possible consequences that could be used in a carrot and stick approach will vary widely based on the job. Here are some examples:

  • Loss of a portion of the employee’s commission
  • Having to work an unfavorable shift
  • Missing out on a company-wide reward
  • Having to complete a disliked task, such as assisting with inventory or cleaning the break room


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