Neuroscience can unlock employee recognition

Many companies struggle to justify their increased investment in rewards. Making an emotional connection with employees will help you stretch your budget. Jo Faragher reports

HR teams continue to face the challenge of doing more with fewer resources. As budgets are cut and senior executives demand a return on investment from their teams, HR departments have to be more creative with their reward and recognition programs.

Gartner conducted a recent study that found 71% of HR professionals believed that burnout was more difficult in their teams than it was pre-pandemic. Over half of HR professionals cited increased complexity in recruitment and retention challenges as a major issue.

Reward Gateway Edenred’s (RGER) 2024 research shows that around half of all employees considered quitting their job in the past six months. However, 83% felt they would be more productive if their manager showed them genuine appreciation or care.

Making a difference

What is the difference between “appreciating” an employee and rewarding them for their contributions? Chris Britton is the director of people experience at RGER and believes that there’s a clear line between “appreciating” an employee and rewarding them for their contribution.

It’s not enough just to acknowledge what people have done, you must also recognize them for who they really are. He says that they are first and foremost human beings, then employees.

According to the company’s Appreciation index for 2024, businesses can unlock a 5%-7% improvement in business performance or profit by unlocking this appreciation.

Research from the Haas School of Business, UC Berkeley, supports this. The study found that those who felt appreciated for their contributions were 23% more productive. People who feel that their friends and family care about them are 43% more productive.

Britton adds, “Recognition means saying thank you for your work, your actions and meeting your key performance indicator.” “Appreciation means recognizing who you are and your character.

He says that HR teams and managers could make a difference by changing the way they provide feedback. It should be “specific and personal” and given at the right time. Instead of noting someone’s report in an annual evaluation, sending a message to express your appreciation for the way it was written, or for something that they did well, will have a greater impact.

Light up your brain

Maria Fronoshchuk explains that this new approach to neuroscience “lights up the brain” in a completely different way.

If we focus only on what someone has done, we will miss the larger picture of who that person is. She explains that there is a difference between appreciation and recognition.

This unlocks positive brain chemicals such as dopamine, serotonin and oxytocin. Cortisol is then reduced, the stress-hormone. She says that as a result of this, employees will feel more connected to their workplace and have a greater sense of belonging.

Lyla Taguma is a neuroscientist at Cowry and a behavioural designer. She says that companies can integrate these approaches when building reward and recognition programs by aligning their offerings to Maslow’s Hierarchy of Needs.

At the lowest level of organisation, they would provide “basic” requirements, such as a fair wage and essential benefits. They would also ensure that employees did not feel overwhelmed with work hours or workload.

As employees move up the hierarchy they will feel more connected to their colleagues and show more empathy. This is achieved through improved communication and a healthy workplace culture. Employees in unhealthy environments feel that they can’t express their emotions, so there is a lack of empathy, which impacts retention,” Taguma says.

To the top of this pyramid, organizations need to reflect workers’ self-esteem needs and self-actualisation, which they can achieve through open, accessible career paths or supportive learning systems, that help them become “the best version of themselves”.

Conversation vs Transaction

Nebel Crowhurst is the chief people officer of RGER. She says that this approach is used to support its employees. Managers can recognize or celebrate milestones that employees have achieved outside the traditional benefits, like passing their driving test or getting divorced.

Crowhurst says that not everyone has a child or gets married, so they wanted to tailor the benefits to what was most important to their employees.

Phil Williams, the head of employee programs for EMEA, at BI Worldwide agrees that engagement is more likely to be sustained by “emotionally resonant experiences” than by transactional rewards. He calls recognition “a conversation, rather than a purchase”.

When someone receives an anonymous “thank you” or a generic reward, their brain processes this very differently than a personalized message that acknowledges the individual effort or support they provided during a major life event. He says that we’ve seen time and time again how organisations who treat their employees as individuals rather than just their roles create stronger and more loyal cultures.

“A generic team shout-out has a much lower emotional impact than, for example, recognizing a colleague’s first year of parenthood or privately acknowledging resilience during a difficult patch. These moments demonstrate that people are valued for who they really are, not just their achievements. This is what makes people feel like they belong. And belonging drives retention.”

Recognition that is meaningful

What does this look like in practice? Justine Woolf of Innecto Reward Consulting says that a simple method to implement this is by asking your employees when they have felt recognized.

What was the reason, the nature of recognition and how did you feel about it? She suggests that the people who remember examples are usually those who were taken by surprise (or pleasantly surprised), were deeply personal, or involved a sense of humor.

“Recognition does not have to be large money. We often forget the cash awards. It’s easier to remember a memory that involves other people, because they are involved. We need to know our employees personally to make our recognition efforts meaningful.

It doesn’t have to be formal. Amy Brann is the author of Make your Brain Work. She says: “When someone feels seen at work, through a manager listening, offering tailored assistance, or acknowledging an event in their life, it activates the ventral striatum of the brain and triggers oxytocin release, strengthening social bonds.

When recognition is given at the expense of time or attention to the giver, the brain of the recipient registers this as an authentic investment and deepens emotional resonance.

This contrasts with cash and perks that may cause short-term spikes in dopamine, but lack the depth of relationship that sustains loyalty. Personal connection signals to the brain that you are important here. This builds belonging, and belonging is what keeps customers.

Disconnect increases

Archana Mohan is a Chief Operations and Technology Officer in Financial Services. She cites a recent BetterUp study that shows 43% of UK workers feel disconnected from their colleagues. This leads to a feeling of not belonging at work.

She advocates that “care over money” be used to cultivate a sense of belonging, and help retain employees.

“Care is not being a softie,” she says. “It’s all about being present,” says she. It is recognised that creating psychological safety where people can speak up, admit mistakes or challenge ideas is one of the most important factors in high-performing teams. Care is not only comforting but essential in a world of uncertainty and disconnection after a pandemic.

In a world where workplaces are increasingly struggling to retain and hire employees, especially Gen Z employees , focusing on the neuroscience of rewards could help unlock new levels engagement without making a large financial investment.

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