What Motivates Employees More: Rewards or Punishments? - HBR

The 18th-century polymath Jeremy Bentham once wrote, "Pain and pleasure govern us in all we do, in all we say, in all we think." Modern neuroscience strongly supports Bentham's intuition. The brain's limbic system, which is important for emotion and motivation, projects to the rest of the brain, influencing every aspect of our being, from our ability to learn, to the people we befriend, to the decisions we make.
It is not surprising, then, that when we attempt to motivate people, we try to elicit an anticipation of pleasure by promising rewards (for example, a bonus, a promotion, positive feedback, public recognition), or we try to warn of the pain of punishment (a demotion, negative feedback, public humiliation). But what's not always clear is: Which should we be using - the promise of carrots or the threat of sticks? And when?

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