This completely changes the role of the manager as motivator. Rather than being the source of motivation (kind of a ludicrous idea in itself), the manager must help employees to find their own intrinsic motivation.
Lean thinkers understand this idea as respect for people. Dr. Deming talked about joy in work. Douglas McGregor talked about theory x and theory y thinking. All of these perspectives incorporate an understanding of workplace systems and human psychology. Extrinsic motivation is easy but not effective. It is really just abdicating management and using extrinsic motivation in place of management. The alternative requires managers to actually manage. This is challenging but the correct choice to make.
So rather than trying to bribe people to want things using pizzas and promotions, managers should help their people to discover meaning and develop skills at work. What some managers don’t realize is that people want to do good work. Create a happy, positive work environment and people are naturally motivated. Even better: They motivate themselves and each other.
But when you offer people money to do things that they wanted to do, anyway, they suffer from something called the Overjustification Effect. “I must be writing bug-free code because I like the money I get for it,” they think, and the extrinsic motivation displaces the intrinsic motivation. Since extrinsic motivation is a much weaker effect, the net result is that you’ve actually reduced their desire to do a good job.
Money, it’s been shown time and time again, is a demotivator. I’m not talking about a fair or even generous salary. Being a cheapskate is no way to find a great employee. But once people have joined your team, incremental money–bonuses and the like–usually demotivate people.