Rewarding and Motivating People in Today’s Workplace

The Think Tank sessions titled A Neuroscience Approach: Rewarding and Motivating People in Today’s Workplace, attended by senior leaders were centred around three key questions.

• Employee expectations on rewards and recognition in the post-Covid era?  
• What constitutes a memorable employee reward and recognition experience?
• How does the human brain respond to the opportunity of meaningful rewards?

Let’s look on what senior leaders had to say and align that with the current research and thought leadership.

External Economic Factors – High Inflationary Environment

With rising food prices and spiralling fuel costs, many employees in Australia are starting to feel the financial pinch. In fact, just recently the Australian Bureau of Statistics reported a monthly inflation increase of 7%, there was an 18.6% increase in food costs and fuel prices are up by 15%. With interest rates expected to increase and wages simply not keeping up, Australians are starting to feel the pressures financially.

The problem is that companies are affected too. With increasing expenditure, customers cutting back, and even the cost of transitioning to hybrid, many find themselves unable to increase salaries across the board, and certainly not in line with inflation.

Combining this environment with being in an employee market (employees feel they have more choices to explore their employment options), signifies the necessity to focus on the retainment of talent.

Senior leaders agreed that current economic factors have caused employees to consider their remuneration and reward opportunities (more than ever), and organisations that fall short of industry and individual expectations risk losing top talent.

Bypassing Rationality – Evoking Emotion

Due to the high inflation environment, employees have become more deliberate in evaluating spending habits and the value of everyday items.

From a behavioural science perspective, this means humans are activating certain parts of the brain (more than usual) that are involved in rationality and calculation (calculating value). This means when it comes to cash-based rewards (such as gift cards), individuals look at it the same way they assess wages and salaries having eroded in value, especially if cash rewards haven’t increased at the pace of inflation. This thought process humans go through is likely to conclude the cash reward is less valuable than before, especially in this environment.

Rewards not easily tied to a dollar value such as merchandise, travel and unique experiences avoid this thought process as it activates emotional triggers in the brain (skipping the rational and calculation process).

Experiments by Professors Christopher Hsee and Yuval Rottenstreich, as well as social psychologist Daniel Kahneman, draw similar findings where humans evaluate tangible rewards (non-cash) based on feeling, and avoid the process of calculating its monetary worth as done with cash rewards. Therefore, perceiving non-cash rewards as more valuable, aspirational, and motivating.

Concluding that cash rewards are well suited to evaluation by calculation and hedonic rewards are geared to a person’s likes/emotions (trigger feeling).

It was highlighted by senior leaders that evoking emotions is triggered by meaningful rewards as they come across as authentic, personal and memorable. There were interesting examples from the Think Tank sessions outlining that meaningful rewards are more cost-effective. The classic $20 gift card just didn’t have the same gesture and emotional response as giving a team member a free coffee.

Senior Leaders – What Constitutes Meaningful Rewards

During the Think Tank sessions, senior leaders through their own experiences and knowledge shared what constitutes meaningful rewards in the workplace.

• Tailored and personal to the individual.
• Reward and recognise all the key moments - birthdays, anniversaries, key milestones, births, and the small things.
• Social and team rewards are memorable and bring people together.
• Give out rewards that are unexpected (surprise and delight).
• Mix up the type of rewards.
• Choice/flexibility in rewards is necessary to cater for all personas, needs and wants.
• Rewards such as extra leave/time off are very valuable.
• Tangible rewards are not only symbolic but remind people of the reward experience every time they use it / see it.
• Unique experiences are underrated.
• Incentive travel is considered the most sorted out and aspirational.
• Award nights.
• Make it fun!
• Company-branded merchandise is not only memorable but promotes loyalty.
• Publicly rewarding individuals is very powerful as it inspires others but leaders need to consider those individuals who don’t like public recognition.
• Recognition from peers as part of the reward experience is extremely memorable.
• Rewarding staff by facilitating and paying for certifications, attending conferences, education events, qualifications, and self-development (encouraging and enabling career progression).
• Rewards that can be shared with family and friends (tangible or experiences)

In the Think Tanks sessions, a determination of whether the reward experience was meaningful or not is whether the individual talks about the reward experience with others (colleagues, friends, and family), even well after the experience occurred. In other words, it seems to promote storytelling.

Senior leaders highlighted important considerations that enhance the reward experience, in turn, promote a culture of recognition.

Related Materials:

• Empower leaders to issue meaningful rewards and educate leaders on the why – see related article - Managers Matter.
• All employees must feel they have the opportunity to earn rewards (fair and inclusive) – see related article - 3 Best Practices for Rewarding Employees.
• Not only should organisations reward KPIs, but also need reward behaviours. See related article - Top Employee Recognition Tips.
• The reward is enhanced when the recognition is authentic and timely – see related article - Why a timely thank you is the currency of smart business.

The Human Brain and Meaningful Rewards

What happens in the brain when humans receive a meaningful reward? What are the neurochemicals responsible for giving us that positive emotional feeling and rush? What benefits are there when these chemicals are released?

• Dopamine - acts as a deciding factor in the human body that governs motivation and craving.
• Serotonin – promotes happiness and puts us in a good mood.
• Adrenaline – gives humans a release of energy and increased effort.
• Oxytocin – limits the release of cortisol, meaning this chemical is responsible for reducing anxiety and fear. This neurochemical is also linked to promoting positive behaviours and emotions, such as trust, that helps encourages continued socialising.

These four neurochemicals work together to produce an emotional response that drives motivation, happiness, energy, belonging and positivity. The frequent release of these chemicals has a profound impact on improving the overall wellness of individuals and when achieved company-wide, plays a big role in creating a positive corporate culture and improving the Manager employee relationship. Related article - Supporting Employee Health and Wellbeing.

BE AWARE – Taking Rewards Away – Loss Aversion

Collaborating with senior leaders not only enabled experts to share their views on meaningful rewards, but it enabled them to share what not to do. What commonly came up were examples of the negative impacts taking away existing reward opportunities had on employees and the company culture. As meaningful rewards produce a positive emotional outcome, taking it away has a negative emotional outcome. Not only does it produce negative emotions (anger, panic, frustration, confusion, disappointment), but that feeling is felt much more than a gain. This is no secret in the behavioural science community due to the popular behavioural economic principle called loss aversion, which in short suggests it is twice as painful to lose something as it is positive to gain.

Due to the negative emotions caused, and the fact humans feel the loss more, senior leaders who shared these examples had to introduce a more substantial reward than before to replace that feeling of loss and to amend the negative emotions caused.

Employees are more conscious than ever on remuneration and reward opportunities due to the inflationary economic environment. As we are in an employee market, organisations risk losing top talent if they don’t address industry and employee reward expectations. Due to the emotional nature of the human brain, meaningful rewards have a considerable positive impact on overall engagement, motivation, trust, loyalty, and well-being.