I had the recent privilege of consulting to a company that specializes in employee recognition- the tangible kind of recognition where good performance is rewarded with personalized mugs, trophies or any number of concrete goodies from their expansive inventory. Their business is going well. Both as a believer in the value of employee recognition, and as an executive coach who knows that recognition at work is often ignored, I was happy to see that their business was booming.

However, I could see ominous storm clouds were on the horizon.

Before sharing my weather forecast, let me provide my take on how psychology develops its theories and clinical principles. Theories of human motivation can serve as a useful example. It was only three academic generations ago that the dominant psychotherapy of the time, psychoanalysis, conceptualized every problem as repression. The analyst job was to unearth either real, or more likely, therapist- imagined aggressive or sexual drives, whose denial by the patient was seen as the reason they were on the Freudian couch.

When psychoanalysts were eventually challenged by the first behaviour therapists, every problem was then reinterpreted as a product of some historical reinforcement. Supposedly somewhere in the past, maladaptive behaviour was fostered by attention or gain, labelled as positive reinforcement, or as a way to escape anxiety or fear. (negative reinforcement).

This reinforcement perspective gained popularity in every domain from education to parenting. In business, it fuelled the performance management revolution that in turn promoted a well-constructed work environment filled with rewards as the key to a motivated workforce.

Those consultants who continued to conceptualize climbing the corporate ladder as a phallic conquest were doomed.

I was trained somewhat later, during the ascendancy of the so-called cognitive revolution that transformed behavioural conditioning into something more cerebral, by stressing the individual’s expectation that a specific behaviour would elicit a desired reward. In this world view, workers could not simply be manipulated like mice with cheese equivalents. According to this new and “correct” view, these workers needed to consciously “buy-in” to any reward system with the cognitive belief that they had the required skills to achieve rewards that they valued.

Consultants who maintained that the corner office or yearly bonuses would motivate every employee were likely to be unemployed.

Over the last ten or fifteen years, a “new” approach -self-determination theory (SDT) – has emerged. As is our discipline’s pattern, new connotes not only improved but were also “right” in contrast to previous approaches now seen as “wrong.” Whereas research on self-determination theory began in academia studying discrete behaviours in confined laboratory situations, it has now moved towards naturalistic conditions, many of which involve the workplace.

Psychological research undergoes abrupt shifts. In contrast to the harder sciences that add new knowledge to a growing body of discipline knowledge, Psychology tend to throw out the old and embrace the new. We even have an acceptable term for this: paradigm shift.

What does this have to do with my client’s business model? Simply put, the company’s current focus on so-called extrinsic or external rewards to motivate workers is now seen not only as out-dated but as potentially harmful.

According to SDT, motivational processes must tap three core psychological needs that exist in all human beings: autonomy, competence, and relatedness. Since the 1980s, hundreds of studies led by Professors Deci and Ryan have reliably linked these three core needs to human well-being. Simply put, environments that are detrimental to these three needs are also detrimental to human happiness.

Importantly, when an activity makes people feel autonomous, competent, and related to others, they are more motivated to pursue it. Workplaces that respect and encourage these three psychological needs in employees have been shown to have a more productive, motivated, and satisfied workforce.

Does all this mean that prizes, bonuses, and corner-offices are off the table as rewards for exceptional performance?

In my opinion, no. I think that companies should use these reinforcement tools wisely and integrate them into a culture that provides managerial support for workers to achieve goals in their own creative ways while relating to sympathetic bosses and friendly co-workers.

However, it does imply that my client’s website requires some serious re-writing!

The material in this post was significantly improved with the help of two McGill graduate students, Thomas Khullar & Kimberly Carrière.