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Financial Incentives Motivate Creativity

Financial Incentives Motivate Creativity

New research suggests workplace financial awards are the best motivator to reward creative thinking — better than a plaque or even a party recognizing the employee contribution. Interestingly, the new discovery by an University of University of Illinois expert is at odds with prior beliefs.

Ravi Mehta, a professor of business administration explains that in contexts where a premium is placed on being original, social recognition as a reward for an especially imaginative piece of work doesn’t necessarily enhance creativity. However, he admits “the general consensus in the research literature on creativity is that money hurts creativity.”

Mehta believes this belief is not applicable to work settings as most of the research was conducted with children as the test subjects, and the participants were not specifically told that the reward was for being creative.

In the new study, researchers explored how the contingency of rewards impact creativity, and how adults would respond to different types of creativity-contingent rewards. Mehta and his co-authors performed five experiments to examine the role of creativity-contingent monetary rewards versus creativity-contingent social-recognition rewards on creative performance.

The findings provide new insights into the underlying motivational processes through which these rewards affect creativity.

The experiments demonstrated that, within the context of creativity, monetary rewards induce “a performance focus,” while social-recognition rewards induce “a normative focus.” The researchers found that the former enhances one’s motivation to be original, thereby leading to more inventiveness in a creative task, while the latter hurts it.

“We found that if you tell people to be creative and then give them monetary rewards, they will be more creative,” Mehta said.

“But wouldn’t the same be true of all rewards? If you tell people to be creative and then give them a social-recognition reward instead of money, then they’ll be just as creative as those you reward with money, right? We found no empirical evidence for that.”

Mehta said social recognition is “all about people knowing about you and your work, and thereby influencing one to act more in accordance with social norms,” whereas creativity means “coming up with something different, something novel, something that is not the norm.”

“As adults, we don’t want to come up with something that’s too radical, too out-there, especially when we know that our peers will be judging us,” he said.

“Most of our daily activities as working adults are about adhering to social norms. We don’t want to stand out too much.”

But when a monetary reward is dangled, people amp up their performance and consciously try to “blow the doors off the competition” in terms of creativity, Mehta said.

When you ask someone to be creative, you’re asking them to think outside the box or go beyond social norms and use thought processes that are not automatic, he said.

“That’s why a social-recognition reward kills creativity, because it makes creators more risk-averse. It appeals to conformity, to not standing out, which drives you to the middle, not the edge. It compels you to fall in line with social norms, and there’s less motivation to be creative.

“People who value creativity value the bizarre, the stuff that’s out there. Therefore, they’re less likely to care about the approval of others, or a sense of belonging with their peers.”

The research has practical applications for how people generate creative ideas, and how to motivate creative-class employees.

“There’s a trend among companies for crowdsourcing ideas or user-generated content,” Mehta said. “Virtually all social media is user- or consumer-driven. This ought to point them in the right direction: Money talks, but social recognition doesn’t.”

The research also is applicable to people who work at ad agencies or in creative fields.

“A little caveat, though: People in those fields are expected to be creative, so social recognition also would work for them,” Mehta said. “But more money certainly wouldn’t hurt them, either. In that case, both rewards would lead to more creativity.”

The paper will be published in theĀ Journal of Consumer Research.

Source: The University of Illinois

Financial Incentives Motivate Creativity

Rick Nauert PhD

Rick Nauert, PhDDr. Rick Nauert has over 25 years experience in clinical, administrative and academic healthcare. He is currently an associate professor for Rocky Mountain University of Health Professionals doctoral program in health promotion and wellness. Dr. Nauert began his career as a clinical physical therapist and served as a regional manager for a publicly traded multidisciplinary rehabilitation agency for 12 years. He has masters degrees in health-fitness management and healthcare administration and a doctoral degree from The University of Texas at Austin focused on health care informatics, health administration, health education and health policy. His research efforts included the area of telehealth with a specialty in disease management.

APA Reference
Nauert PhD, R. (2018). Financial Incentives Motivate Creativity. Psych Central. Retrieved on September 26, 2020, from
Scientifically Reviewed
Last updated: 8 Aug 2018 (Originally: 6 Oct 2017)
Last reviewed: By a member of our scientific advisory board on 8 Aug 2018
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