Rewarding Employees and Understanding Motivation

Rewarding employees effectively isn't a science, nor is it straightforward. But, by better understanding motivation we can better reward our teams.

Rewards can come in all shapes and sizes. However, we as organisations and as leaders often miss the mark.  The concept of reward and recognition is misunderstood and frequently mismanaged.


How can we motivate our people and stimulate improvements in our processes? It is definitely not by implementing a 'one size fits all' reward and recognition scheme tied to our objectives. Nor is it rolling out another 'Employee of the Month' program.

The trap many organisations can fall into is set by the idea that rewarding an activity will get you more of it and punishing an activity will get you less. This carrot and stick management style will often achieve the opposite effect of the intended objectives.

Rewarding employees effectively

There are 3 key elements to a truly valued incentive:

  • It must have merit.
  • It must be meaningful.
  • It must be tailored to the team or individual.

Reward cadences must also be calibrated to maintain an appropriate level of tension in the environment. This stimulates the desired performance and behaviour as well as sustains the value of the reward. All too often the effectiveness of reward systems starts out well enough but degrades over time. This can be due to poorly considered metrics, the reward being taken for granted, extended time between rewards being triggered or the goal being unachievable.

Furthermore, when the reward is distributed equally over a team where some individuals have not contributed as much as others there can arise questions about fairness and equity.

Extrinsic and intrinsic motivations

We create rewards with the intent of creating motivation. It therefore begs the question, "what drives our behaviour?" Psychologists have proposed different ways of thinking about motivation, including looking at whether motivation arises extrinsically or intrinsically for an individual. It has been found that each type has a different effect on a persons behaviour and their pursuit of goals.

Extrinsic motivation is when we are motivated to perform a behaviour or engage in an activity because we want to earn a reward or avoid punishment. This is a very transactional system – people will engage in the behaviour not because they enjoy it but because they expect to get something in return or avoid something unpleasant.

Intrinsic motivation is when you engage in a behaviour because you find it rewarding. You are performing an activity for its own sake. The behaviour in itself is its own reward.

Extrinsic rewards can help us to:

  • Provide a source of feedback to highlight a KPI or behavioural standard has been achieved that deserves recognition.
  • Induce interest and participation in an activity in which an individual was not initially interested.
  • Motivate people to acquire new skills of knowledge.

Some the drawbacks can be:

  • They can precipitate short term thinking.
  • They can diminish performance.
  • They can decrease intrinsic motivation.
  • They can become expected and addictive.
  • They can encourage shortcuts and unethical or counterproductive behaviour.

It is important that we are able to strike a balance in our environment. Extrinsic motivators should be used to complement, rather than provide the primary driver of, performance. Behaviour should ideally be intrinsically-driven – doing things because they are the right things to do.

The effect of rewards

Our motivation and reward system is based around the production and consumption of dopamine. Research suggests that most of our dopamine release is not from achieving goals, but actually released when we are in the pursuit of our goals. This is what allows us to pursue things for extended periods even when the outcome is not certain.

The one thing most high-performing environments have in common is that they are very good at defining and attaching reward to more granular steps. In these environments rewards are linked to the 'stepping stone' elements of reaching an outcome rather than the outcome itself. These things can be both subjective and objective. The key is that those being rewarded then recognise they are doing or contributing to something positive and are on the right path. 

Within Lean thinking people learn and improve the process simply because we can visualise, define and have agency over what is important to us. Our reward system is focused and geared around improving the process through iterative steps. In this case these incremental events of learning and reflection are generally more rewarding than the outcomes themselves. Lean culture celebrate those iterations of improvement and learning each day. Each improvement cycle provides a regular feedback loop of our performance and the sought-after dopamine hit.

The elements of motivation

In Dan Pink’s book Drive he sites three essential elements to motivation:

  • Autonomy: the desire to direct our own lives.
  • Mastery:  the urge to get better and better at something that matters.
  • Purpose: the yearning to do what we do in the service of something larger than ourselves

A clear sense of purpose toward shared goals and our individual part of that process enables us to connect and come together as a community. It enables us to work together for the common good, providing a sense of identity and belonging. We know what it is we need to do and why we need to do it. We also know what the person next to us on our team is doing and why.

These are the rewards that keep us going and are most meaningful at the end of the day. 

TeamAssurance enables you to provide clarity of purpose and visibility of progress towards goals to everyone. Book in below to discuss how the platform can support your organisation.