Daniel Pink, in his book Drive, describes a number of studies that suggest that people are motivated by financial incentives when they do simple tasks, but that for more complex tasks, financial incentives can actually decrease performance. People have to be paid enough so that they are not worried about money, but giving them additional money beyond that doesn’t motivate them to do more.

For complex tasks, research shows that there are three things that motivate people: autonomy, or the ability to direct your own behavior; mastery, or the desire to get better at the things you do; and purpose, or caring about what you do.

Pink uses Atlassian, an Australian software company, as an example of how autonomy can motivate. At Atlassian, engineers get one day every three months to work on whatever they want to—the only rule they have is that they have to report on the results of their work the next day. This policy of autonomy has led, in part, to Atlassian having a higher employee engagement score (87% compared to an average of 80%) than any other company in a Hewitt survey of 110 Australian and New Zealand companies.

1. In a business setting, financial incentives are intrinsic / extrinsic rewards.

2. At Atlassian, autonomy is an intrinsic / extrinsic reward.

3. As an experienced manager, you know that it is important for your employees to be intrinsically motivated. Which of the following actions is most likely to achieve that goal? (which one is correct?)

Giving employees information about why their work is important to the company

Giving employees bonuses when they do good work

Rewarding your highest-performing employees with extra days off work

Giving employees better benefits