12-1. In designing an effective financial incentive plan, it’s important to understand the relationship between money and motivation. Hertzberg said the best way to motivate someone is to organize the job so that it provides the feedback and challenge that help satisfy the person’s higher-level needs. Deci found that extrinsic rewards may actually detract from a person’s intrinsic motivation.

Vroom’s expectancy motivation theory says a person’s motivation depends on expectancy, instrumentality, and valence. Skinner’s behavior modification–based approach means changing behavior through rewards or punishments that are contingent on performance.