Home Blogs Entrepreneurship motivates staff. Not carrots or sticks.

Entrepreneurship motivates staff. Not carrots or sticks.


The role of entrepreneurship in corporate strategy goes far beyond trying to get innovative products to market or gaining an edge over your competitors. It helps to set the culture of an organisation that affects staff retention, engagement and productivity.

For a long time businesses have used the old carrot and stick approach to motivate employees into generating new ideas and creating new products. If an employee did well, they were given a financial reward, and if they did poorly they were poked hard with a stick. This approach seems to work OK, but in reality, it’s not so helpful.

The typical economic view of an employee/employer relationship is similar to that of equity theory, where either side of an exchange, the inputs should equal the outputs. In this instance employees trade their time with a financial sum of similar perceived value.

The problem with this is that if the employees are required to perform anything that requires immense cognitive skill, they believe that the exchange is uneven and thus they should be rewarded with greater financial sums.

However studies have shown that extrinsic motivators (bonuses/stricter schedules) only work on employees who are less productive and are encouraged only to use rudimentary cognitive skills. Employees who are encouraged to use more cognitive skill will typically only do so with intrinsic motivations such as autonomy, mastery and purpose.

Encouragement of entrepreneurship, or in the corporate sense, intrapreneurship is a great vehicle to deliver intrinsic motivation to employees. Entrepreneurship can give people the autonomy to work without the noise of politics, to master a skill no one else believed they had, and to give them greater purpose in their organisation and in their day-to-day life.

By increasing social capital, an employee will value their position at the organisation much higher, which puts a perceived disparity in the employee/employer exchange they are making. This in effect means that the employee no longer demands greater sums of money for the work they are doing because they feel that they are getting the better end of the bargain.

Google is a great example of how intrinsic motivation can be used to deliver ideas to market. It’s a well known fact that Google permits their employees to spend 20 percent of their time on new ideas and concepts, which helps to empower them with autonomy, mastery and purpose. Gmail and Google News are two game-changing products that have come out of Google’s ‘20 percent time’. But what many people don’t know is that Google actually pay their staff below average wages.

Changing the way we motivate employees to work and to be entrepreneurial can have a significant impact on the individual and the organisation’s growth both internally and externally. By shifting employee motivations intrinsically, you are integrating a cultural change at the root of entrepreneurship. Creating change is never an easy task therefore management of the organisation must honour and support this social relationship.

Matt Leeburn is co-founder and CEO of Interaction Dynamics and Click Logic. He has extensive experience in new business development, marketing and digital strategy. Follow him on Twitter @intdynamics.

Image by CarbonNYC David Goehring