In theory, staff should be wary during these tough times and find motivation in the potential consequences of under performing; if ultimately they were made redundant they know the market is difficult with lower starting wages on offer for the few jobs out there.
 
Such staff concerns have certainly been evident in the UK workplace over recent years. Research from the UK Management Culture of Fear, which takes into account feedback from almost 1,000 UK workers regarding working conditions and overall satisfaction levels, shows that there has been a significant decrease in the level of satisfaction experienced by UK employees thanks to a “culture of fear".
 
However, the ‘stick’ – threats and fear of unhappy consequences if results are disappointing – has not in any way displaced the use of incentives. In fact, we have seen plenty of evidence from employers that we encounter that the use of ‘carrots’ – incentives and rewards – has remained fairly constant throughout this time (albeit they may have been relabeled to avoid public scrutiny). So why do employers continue to use ‘the carrot’, as oppose to simply relying on ‘the stick’?
 
Well there are many negative consequences of the use of fear rather than incentives for motivation, and it is clear that many managers do not fully appreciate the harmful effect this may have.

 
Fear of ‘the stick’ can drive some people to achieve more but often its ‘side-effects’ can, on balance, outweigh any motivational advantages. Much of the fear of the stick is what some experts call ‘expectancy’ – even if managers say nothing about it, many staff cautiously expect the worst. For instance, even if it is only expectancy, many staff will be stressed and almost nervously paralysed by fear so that their performance deteriorates. This is the Yerkes-Dodson effect, the ‘law’ that dictates that performance increases with physiological or mental arousal, but only up to a point, but when levels of arousal become too high, performance decreases. 
 
Another negative effect of the ‘stick’ is that some staff will be so desperate to avoid it that they will resort to unethical, dubious tactics and ‘shady deals’ to keep the boss off their back. Fear-based motivation can create an unhappy atmosphere and even unite staff against management rather than rally them behind the organisation.  

The reality of the difficulties faced in most markets, together with the tough job climate are providing enough fear that there should be absolutely no need for a manager to ‘wave the stick’ for further ‘effect’. Instead, what staff need and will respond better to are more ‘carrots’ that give them a chance to benefit by rising to the challenges faced, responding positively without these ‘side effects.’