Dan Pink has noted. “There’s a mismatch between what science knows and what business does.”

When I worked in the city we had a saying that we “created our own Prima Donnas.” Generally they were highly talented individuals who earned a lot of money for the bank and as a result, their manager was terrified of losing them and indulged their every whim. The individual became hooked on their power and started behaving badly which inevitably the manager ignored. This encouraged more of the same. Eventually they were fired because they went too far; a situation where everyone lost. The big issue was always, who was going to be the first manager to stand up to the Prima Donna? This is similar to the issue of adopting a different means of compensating employees. Who is going to be the first institution to adopt a more healthy approach to reward?

Art Kleiner, editor of strategy + business says the articles he publishes on the brain are the most widely read. This suggests that business leaders are beginning to make reference to the brain to guide business policy. One business policy that has been debated extensively in recent years is the role of financial reward: both the absolute amounts and the relative value of money compared to other forms of reward have been part of the debate. Questions ask whether we are pulling the right lever, or neglecting rewards which have minimal financial cost but are highly motivating.

Dan Pink has noted. “There’s a mismatch between what science knows and what business does.” To support this assertion, he describes consistent findings across many studies that financial incentives inhibit rather than promote creative problem solving and motivation. In addition, a review of 51 studies by the London School of Economics showed “overwhelming evidence” that financial incentives reduce motivation and pleasure at work. Once basic needs are met, additional income does not affect job or life satisfaction. Happiness research has consistently found that the most satisfied people are those with the strongest social connections not the most money.

The trouble is no one theory is predictive of motivation over all. Different theories seem to impact different aspects of motivation.

What is motivation?

One definition which seems to work well in an organisational context is “The willingness to exert high levels of effort towards organisational goals, conditioned by effort’s ability to satisfy some individual need” – Robbins 1996.

Perspectives on motivation

At the heart of motivation theory are perspectives or assumptions about what motivates human behaviour. These assumptions have to a large extent influenced the theories which have grown up. To use Dan Pinks terminology, motivation 1.0 assumed humans were biologically driven and motivated to pursue basic survival needs like food, water and sex. Motivation 2.0 assumed humans responded to reward and punishment in the environment. To pursue reward and avoid threats. Pink proposes a motivation 3.0 which he says is needed today; humans need to create, learn and make a better world.

Within these different assumptions, numerous theories about what motivates people and how different actions are rewarding have been developed. The table below summarises the different types of motivational theory and some of the areas where researchers have found evidence that they work. If you scan the table you will no doubt see theories that influence your organisation’s motivation and reward policy and which are implicitly or explicitly used by managers.

The trouble is no one theory is predictive of motivation over all. Different theories seem to impact different aspects of motivation. The current theories of motivation are helpful, but do not provide the insight needed to create and sustain a highly motivated workforce.

Dan Pink attempted to address these issues by looking at the science and proposing a theory that covers both what humans are motivated to achieve and how they respond. Pink’s model described what he calls the human drive for Autonomy, Mastery and Purpose.

The other side of this issue is we need the brains of people to be working at their optimum. Most if not all of the prevailing motivational theories were created in the West, mainly the USA and assume a number of culture underpinnings which may not be relevant in a global business.

Neuroscience views motivation in two ways: moving towards something to satisfy primary needs like water, food, and social connection. Or moving away from or avoiding threats which could cause harm.

Can neuroscience add anything?

A neuroscience perspective on motivation can add interesting insight which in the main isn’t bias by cultural considerations.

Neuroscience views motivation in two ways: moving towards something to satisfy primary needs like water, food, and social connection. Or moving away from or avoiding threats which could cause harm.

In towards motivation the dopamine system is primarily active. Dopamine determines how the brain processes reward and hence what is motivating to pursue. The neurotransmitter dopamine is found all over the brain. There is a system of brain regions that are important: one is the nucleus accumbens, another is the Striatum and the third is the ventral medial prefrontal cortex. They form a coherent system of reward and motivation within the brain. The system is an old and all-purpose one that probably developed to provide motivation to find food, and shelter and other survival needs. It developed to seek primary rewards but has been adapted to other things that people find rewarding such as an attractive face, chocolate and money.

The threat system evolved to keep us safe. Yet in organisations it can be triggered by modern day threats like a dissatisfied boss or low performance rating or inequality of the return for effort. The major neurotransmitter associated with aversion or threat is serotonin.

While these reward and fear networks overlap, neuro-scientific research clearly illustrates that a set of hard-wired neural systems motivate avoidance and approach.

Relatedness is people’s need to care about and be cared about by others, to feel connected to others without concerns about ulterior motives, and to feel that they are contributing to something greater than themselves.

Neuroscience research areas

Apart from research into the approach and avoid systems as a general understanding of what motivates us and what is rewarding, neuroscience can add insight in both the needs areas – what motivates and the how areas – the impact of how rewards are delivered. Neuroscience research has looked at:

• The role of needs including basic needs like safety and social connection and secondary needs like money. This research throws light on the “need” psychological theories of motivation as well as adding to our understanding of which needs are actually important
• The role of goals and the impact of goal frustration
• The role of equity in motivation and reward
• The role of expectations in motivation and rewardPrimary and secondary needs

Primary and secondary needs

Primary rewards like food activate the brain’s reward circuitry. Another primary need is for safety. Kim and colleagues (2006) have shown that the avoidance of punishment activates the reward circuitry and it is rewarding to escape punishment or perceived threats.

Research has also looked at secondary rewards such as money. Money also activates the brain’s reward system.

Bonuses

Dan Ariely, a behavioural economist at Duke and author of Predictably Irrational, has researched bonuses. It showed that when groups were offered a monetary bonus for higher performance those offered low and medium level rewards did better or just as well as each other. The group who were offered the highest bonus did significantly worse, especially when the task involved cognitive effort. In a further study he showed that when people were asked to perform in public, performance diminished. Both pieces of research indicate that anxiety over rides the motivation to do well and interferes with cognitive functioning.

Motivation 3.0

Relatedness is people’s need to care about and be cared about by others, to feel connected to others without concerns about ulterior motives, and to feel that they are contributing to something greater than themselves.

Purpose and relatedness

The other primary need to receive attention is social connection or relatedness. Relatedness is people’s need to care about and be cared about by others, to feel connected to others without concerns about ulterior motives, and to feel that they are contributing to something greater than themselves. Economists, and most business people, assume that work is an economic contract: time and skills given in exchange for money. But behavioural economists and neuroscientists are now suggesting that work is actually a social contract. Matt Lieberman, founder of Social Cognitive Neuroscience, says: “Social is not one of our programmes – it is our basic operating system.” And Zink and colleagues (2008) showed that when subjects were rated higher in a social hierarchy, activity increased in the ventral striatum, part of the reward circuitry.

Zaki has found being liked by others is rewarding in and of itself. In one experiment people were asked to rate how much they liked particular foods. Participants were then scanned as they learnt if peers agreed with them or not. When their rating was the same, either peers liked or did not like the same foods, there was activity in nucleus accumbens, the reward system, indicating that being the same as the group was rewarding in itself. In the same experiment disagreement with peers showed negative activity in the brain region for reward and later those people were motivated to engage with the group, to be more like them and to establish a social connection.

In his research Mobbs created a Game Show study where people were first introduced to two contestants who played a guessing game. First, participants were asked to rate how similar they were to the contestants (on social, ethical and personal preferences like favourite films or music). Next, participants were scanned whilst watching as the contestants played the game. Results showed that when the participants observed the similar contestant win money, activity increased in the ventral striatum, it was rewarding. Rewards were not seen when the dissimilar contestant won money.

Relatedness is deepened when leaders ask people how they feel about an assigned project or goal and listen to their response and when they take time to understand how people’s values at work align with their goals. Enhancing social contact in the workplace can also be very rewarding. Mentoring subordinates or nurturing client relationships leads to an increased sense of personal connection – as well as a better bottom line.

Relatedness is people’s need to care about and be cared about by others, to feel connected to others without concerns about ulterior motives, and to feel that they are contributing to something greater than themselves.

Relatedness verse money

Research has demonstrated that if there is a choice between money and social connection we are motivated more by social rewards than by monetary rewards. The brain experiences physical pleasure when we are socially rewarded – when we give, when people co-operate with us, when we believe we have a good reputation or when we receive recognition.

Scientists found a similar result in an experiment where people had an opportunity to make money for themselves. Making money was fair to others or it was unfair. Getting money usually shows a positive activity in the reward regions but in cases where obtaining the money put at risk their social connections, participants showed less activity in these regions. The value of money was over ridden by the risk to social connection.

Competence and Mastery

Competence is a need to feel effective at meeting every-day challenges and opportunities, demonstrating skill over time, and feeling a sense of growth and flourishing. To test this Kang and colleagues conducted a study where participants read trivia questions while having their brains scanned. The level of curiosity to know the answer correlated with activity in the reward areas. To develop people’s competence, HR policy needs to make resources available for learning. What message does it send about competence when training budgets are the first casualty of economic cutbacks? It also helps to agree learning goals — not just the traditional results-oriented and outcome goals but the process of learning and growing skills and competence. For example, at the end of each day, instead of asking, “What did you achieve today?” ask “What did you learn today? How did you grow today? In what ways will the learning help you and others tomorrow?”

Having these three components – relatedness, autonomy and competence – creates an environment where people are immersed in their work, and enjoy a deep and sustained focus on it, bringing all their skills and motivation to a task.

Autonomy

Autonomy is the need to perceive that there is choice; that a person can determine when, where and importantly how they do their job. The way HR policies such as performance management are written either promotes the likelihood that a person will feel they have autonomy or undermines it. Research shows that sustained peak performance is a result of people acting because they choose to not because they feel they have to. There is also evidence that self-directed decision-making encourages employees to thrive.

Having these three components – relatedness, autonomy and competence – creates an environment where people are immersed in their work, and enjoy a deep and sustained focus on it, bringing all their skills and motivation to a task. This state is often referred to as a state of “flow.” Research suggests ‘flow’ pays dividends as the brain experiences a reward response. And the benefits of ‘flow’ aren’t only enjoyed by employees. A recent study of Fortune’s “100 Best Companies to Work for in America” found that companies whose employees feel pride in their work and are happy with employee policies generate higher stock returns than comparable companies.

Unlike Maslow’s needs, these three needs appear not to be hierarchical or sequential. They are foundational to all human beings and our ability to flourish.

When the three basic needs are met in the workplace, people experience day-to-day motivation that in turn leads to a sense of reward. That works in reverse as well. Dan Ariely has tested the impact of meaningful work compared with pointless work and measured how financial reward impacts on both. He has demonstrated that just a minimal amount of acknowledgement provides motivation and meaning. But when people or their efforts are ignored, they need more money to keep working.

Taking advantage of the science requires shifting policy focus from, “What can we give people to motivate them?” to “How can we facilitate people’s autonomy, relatedness and purpose, and competence?”

How rewards are delivered will impact motivation and the value of the reward independently of the need it meets.

How rewards are delivered

How rewards are delivered will impact motivation and the value of the reward independently of the need it meets.

Equity and reward

Social comparison can have a strong impact on how fair people perceive rewards. For example, an employee may be very happy with their pay rise until they learn a colleague got a bigger increase. One piece of research looked at this by scanning pairs of people whilst they guessed the number of dots on a screen. They received a monetary reward for correct guesses. At the end of the guessing phase each person was told how much they would receive for their correct answers. The person who received the most showed increased activity in the ventral striatum. Whilst the absolute amount was rewarding, getting more than the other person was even more rewarding. This suggests that, under these circumstances, social comparison is as important as the actual amount of money.

The opposite has been found with unfair rewards Tricomi and colleagues studied the impact of inequality by dividing pairs of participants based on how much money they were given ($50 or $0). Both the well rewarded ($50) and poorly rewarded ($0) then transferred money either to themselves or to the other person. Results showed that activity in the reward circuitry was greatest when the well rewarded transferred money to the poor, therefore supporting the view that equality feels better. However, poor subjects showed the opposite pattern with increased activity in this reward region when transferring money to themselves.

And power and testosterone also impact how fairly people treat each other. John Antonakis found that leaders with power were more likely to unfairly distribute money to themselves rather than the team even when that meant less money was available overall. This was exacerbated when leaders had high levels of testosterone. These results speak to the importance of the governance systems in place to manage this ‘power’ bias in reward.

Expectations and reward

We are still learning about how dopamine actually works but we know it can influence our sense of reward, motivation and hence our behaviour and performance in an upward or downward spiral. Positive expectations which are met release dopamine which makes us feel good and we seek to repeat that behaviour. This maximises both positive behaviour and confidence, reinforces positive expectations and more dopamine release. Unmet expectations have the opposite effect.

The manager’s role is to understand the needs that are most important to members of their team and to orchestrate work to provide more opportunities to pursue those needs, thus providing motivation.

In summary

Taken together, it appears that the brain treats many needs as rewarding and motivates the individual to pursue the fulfilment of these needs. In this case the manager’s role is to understand the needs that are most important to members of their team and to orchestrate work to provide more opportunities to pursue those needs, thus providing motivation. The manager’s role is also to minimise the likelihood of threat impacting a sense of reward or frustrating their pursuit. Of course in reality this is a balancing act across individual and organisational needs and rewards but suggests managers must think more about ‘what motivates this person’ and less about ‘how much money do I need to give them.’

Globalization, increasing competition and the movement of talent around the world mean the need to ensure people are motivated and rewarded well has become a competitive advantage with numerous studies showing the link to productivity and bottom line results. Maybe if we understand how the brain responds to reward and what motivates people to pursue it, even if monetary rewards weren’t changed, other forms of reward might be adopted and begin to have a greater impact on motivation and reward policy as part of a total reward package.