From return-to-office sabre-rattling to hectoring memos declaring the end of rewarding employee loyalty, it\u2019s clear that chief executive officers (CEOs) are feeling their oats. A slowing US economy is shifting power back to the corner office after years of tight labour markets gave workers extraordinary pull. And leaders aren\u2019t hesitating to put that juice to use. They\u2019re swearing off warm and fuzzy cultures and instead channelling one of Don Draper\u2019s most memorable Mad Men lines: \u201cThat\u2019s what the money is for.”<\/p>\n
Wanting to reassert this kind of top-down control over their organizations may be a natural instinct, but it\u2019s also a profoundly counterproductive one. Management that relies primarily on fear as a stick\u2014and financial incentives as a carrot\u2014stifles creativity and innovation.<\/p>\n
Also Read: Are Silicon Valley CEOs of Indian origin at risk of facing what Intel\u2019s boss is?<\/a><\/p>\n Examples of CEOs cracking down in ways that would have been inconceivable a year or two ago are now legion. Consider Cognition, an AI startup whose leader followed up an acquisition by telling his new employees they are now expected to work 80+ hour weeks and that many of his people \u201cliterally live where we work.”\u00a0<\/p>\n Then there\u2019s a recent memo from AT&T CEO John Stankey, in which he doubled down on the company\u2019s return-to-office mandate and declared that he will no longer reward loyalty. Employees, it implies, are expected to show total<\/a> commitment to AT&T, but it will offer none to them in return.\u00a0<\/p>\n Earlier this year, Meta\u2019s Mark Zuckerberg laid off about 5% of his workforce by labelling them \u201clow performers,” despite the fact<\/a> that many insisted they had never received a bad evaluation; some speculated that the cuts \u201cwere a scare tactic to dissuade employees from dissent.”<\/p>\n There\u2019s something seductively simple about this approach. Do what I say, and I\u2019ll pay you. Don\u2019t, and I\u2019ll fire you. After all, isn\u2019t it the job of employees to execute their CEO\u2019s vision?\u00a0<\/p>\n Also Read: Layoff riddle: Why are companies getting worse at letting employees go?<\/a><\/p>\n Stankey claims that \u201cmanagement science” supports moving from what he calls \u201cfamilial cultural norms” to a \u201ccompetitive market-based culture.” Speaking as a management scientist, though, nothing could be farther from the truth\u2014especially for companies where innovation is a priority.\u00a0<\/p>\n To see why, we need to look at the work of the legendary management scholar Teresa Amabile, who studied the effects of intrinsic and extrinsic motivations on creativity. She defines intrinsic motivation as when people are motivated \u201cprimarily by their own interest and involvement in the task.” Extrinsic motivation is when they are \u201cmotivated primarily by external goals such as the promise of reward or the expectation of evaluation.” Her findings: People who accomplish tasks due to intrinsic motivations are much more creative<\/a> and innovative than those with extrinsic ones.<\/p>\n This won\u2019t surprise anyone who has worked with a gifted scientist, engineer or artist. The most innovative and creative people have always been driven by love for what they do.\u00a0<\/p>\n But surely it helps when managers provide a little extra incentive, right?<\/p>\n