I just finished watching "Dan Pink on the surprising science of motivation" who claims that for higher order cognitive tasks, intrinsic motivation such as autonomy, mastery, and purpose are more effective than extrinsic rewards such as money or threat of job loss (carrot and stick). He claims that extrinsic rewards work well for mechanical tasks because they provide focus, but creative work suffers from that kind of focus.
Although I think there is some value to his idea, I find it ironic that he is trying to apply intrinsic motivation for employees of companies which exist on the basis of extrinsic motivation. Most companies in the U.S. are created for the purpose of making money, which is an extrinsic motivation. I think that ultimately, intrinsic motivation for employees is only going to work when it is consistent with the thrust of the organization. Anything else will eventually be seen as manipulation. If an organization's primary purpose is to do something good in the world, then I can see how members of that organization might be motivated to do great work towards that goal.
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