By Gloria Lombardi

As leaders come to understand the importance of the employee experience, the first challenge is identifying what the current employee experience looks and feels like. Then the desired experience needs defining, before the ‘gap’ can be closed. The desired employee experience should, of course, prioritise and support employee engagement. So how can organisations create a work environment where employees feel motivated and can thrive as individuals?

Employees need to be psychologically connected to their work. People prefer meaningful work, or at least the ability to make meaningful progress. Crafting great employee experiences for a diverse workforce is not easy – there are so many individual, organisational, and cultural factors to take into account.

Understanding the psychology of behaviour can inform strategy and decisions.   A good starting point is to identify the need “to build experiences based on employee behaviour, rather than expecting employees to behave differently inside and outside of work,” says Grace Burton, Research Lead (Employee Experience) at Benefex. Burton is conducting some fascinating research into human behaviour and creating great experiences in the workplace. Such insights are the foundation of Benefex’s technology; going beyond software, they mean to tap into what it means to be human in the 21st century workplace.

MARGINALIA speaks with Burton to explore her fascinating research, and learn how organisations can apply behavioural psychology to craft great employee experiences. In this interview, Burton describes the critical role of social recognition, the shift in reward expectations, and the links between employee experience, recognition, and the bottom line. She also introduces MARGINALIA to Benefex’s new peer recognition app, OneHub Recognition.

Gloria Lombardi: Assuming ‘employee experience’ is not a buzzword term, what is it all about? What has your research shown to be happening inside organisations?

Grace Burton: Currently, most organisations are transitioning from treating employee engagement as a discrete activity, to understanding that a positive employee experience directly supports engagement. This isn’t happening in isolation; we’ve seen the customer experience movement succeed – it’s now well understood that the way to drive customer loyalty and build brand reputation is to deliver an authentic, positive experience. The more progressive organisations are applying these same principles to their employee experience.

It’s unlikely to be a coincidence that this shift in organisational approach is concurrent with a wider societal desire for experiences over possessions. Netflix, Spotify, Uber, Airbnb and their ilk have disrupted the mass market; we’re witnessing a change in people’s priorities and behaviour — access and convenience are placed above ownership.

This shift, of course, has implications for the workplace. More and more employers are buying into the idea that they need to build experiences based on employee behaviour, rather than expecting employees to behave differently inside and outside of work.

GL: How does a focus on behaviour relate to the employee experience?

GB: What’s key to understand here, is that we all have some very basic psychological needs – to belong, to have a social network, and to feel approved of. We need these in our home lives as we need them at work. With the line between home and work blurring, we’re seeing these needs manifest more openly in the workplace. Organisations need to fulfil these needs in order to be an employer of choice and survive the war for talent. So we’re watching employers now wrestle with how to build experiences that meet these needs and expectations.

Recruitment is an expensive business. The average cost of replacing an employee is now topping £30,000, which is eye-watering when you consider that’s just the average. It’s not just the cost of recruitment and training, but the less tangible affects on organisational culture and productivity which all play in to this figure.

For employers to reduce voluntary turnover wherever possible, they need to develop a recognition strategy, which is both authentic to the organisation and relevant to the employee.

GL: What’s the link between recognition and employee experience?

CB: For a long time, when we talked about reward, at the most basic level we meant pay. The most progressive employers would talk about total reward, encapsulating the tangible and intangible benefits offered. To remain competitive, employers are now looking at the entire experience they offer staff, and considering the fundamental factors that motivate all of us, in the workplace and beyond.

We consult with world-leading organisations on all sorts of strands of their employee experience, and more and more we were being told by our clients that whilst they understood that they needed to overhaul how they think – and what they do – about employee recognition, there was really no solution out there which was both authentic and relevant. Two thirds of our clients – we surveyed 147 of our clients last year – told us that recognition was the top issue they wanted us help to solve.

We’ve reached a point where we can confidently assert that the current state of employee recognition programmes is absolutely unfit for purpose. And this is a staggeringly expensive mistake for organisations – globally £62bn is spent a year on employee recognition programmes. Yet, year-on-year we see engagement indicators trend downwards.

Let’s consider the ubiquitous long-service award, which typically starts at five years’ service. Put that alongside the average length of service in an organisation for millennial employees – 4.5 years, and you begin to see the issue. What is an organisation actually celebrating by having long service awards as the flagship of their recognition strategy? Most businesses, 87 percent, with a recognition programme centre it on length of service. What does that say about the valued behaviours within the organisation? We know that the highest-performing organisations are those with a strong company culture and that live their values – we know these are key factors in attracting potential employees, so any recognition initiative needs support culture and values.

GL: What’s the answer to this recognition problem?

GB: We think the answer is already in front of us: deliver a thoughtfully designed experience that is authentic to your organisation.

To deliver this great experience in terms of recognition it’s so important to grasp what’s actually going on psychologically when we experience social reward.

There was a really fascinating piece of research conducted about what happens when our brains are at ‘rest’; the hypothesis was that when we’re not tasked with something taxing, and our brain is allowed to ‘rest’, we default into a state called social cognition. This is when we think about our relationships with other people.

Our brain responds to social reward; under fMRI, researchers have observed greater neuron activity in the striatum in response to reward. Interestingly, it’s not just being rewarded ourselves that produces this response, the striatum is also concerned with observing others and learning about others. Pro-social behaviour (increasing the welfare of others) and vicarious reward (observing someone else being rewarded) both produce the striatum response.

We must not underestimate the power of a compliment or genuine gratitude. Being well thought of by others is an effective trigger of the reward response.

GL: Is there still a role for extrinsic rewards within a social recognition strategy?

GB: Extrinsic rewards and incentive programmes – bonuses, gifts, stock options, special privileges – cause ‘temporary compliance’ in the workplace. That is, for a short space of time after receiving the reward the employee is more productive, but once the reward (or the novelty of it) runs out, there’s no lasting behavioural change. These schemes inevitably generate diminishing returns, often exacerbated by a conditioned expectation of more rewards in the future.

There’s also a motivation paradox. Studies show that we believe others to be self-interested and primarily motivated by money, yet, paradoxically, we don’t identify these traits in ourselves. We’re now understanding that employee reward programmes based on financial bonuses aren’t as effective as we might have once thought. There was a study conducted with salespeople – offering them entry into a special ‘club’, with a gold star on their business card, a company-wide commendation from the CEO and a trip valued at $2000. The cost of entry? Losing $30,000 of their annual commission. Over two thirds took the offer, putting social recognition above financial gain.

Meta-studies of productivity conclude that people who expect a reward upon successful completion of a task actually perform worse than those who do not. This isn’t just about simple tasks; tasks that require ‘cognitive sophistication’ also suffer when a reward is expected. And it’s ‘sophisticated’ thinking that drives innovation. Frame this in terms of incentive programmes and not only do they fail to drive engagement, they can also damage productivity and the success of the organisation. Studies show that employees really want recognition for their achievements and contributions; 78 percent of workers said being recognised motivated them and 69 percent said they’d work harder if they felt their efforts were better appreciated.

To sum up, organisations must shift the way they think about recognition away from incentive schemes toward crafting an authentic reward experience.

The future of recognition needs to be social at its core and linked to the company values, which will help attract the right people to join the organisation in the first place.

GL: Benefex has just launched a new social recognition app, OneHub Recognition. Could you tell MARGINALIA what it’s all about?

GB:  As being thanked and seeing others be thanked rewards us, then the idea of a social stream of gratitude and recognition makes sense. Marry this up with what we know about online behaviour such as, for example, that 80% of all social media use is mobile, you can see why we’re excited to launch a mobile app to enable peer recognition to become truly social.

Instead of sending an e-card (when was the last time you sent a friend an e-card?) or nominating a colleague to receive a gift card through some clunky form, employees write messages, record videos, and even send gifs and memes to thank their colleagues. We know this is how people act outside of work, and we want employees to bring their ‘whole’ selves to work, and recognise their colleagues naturally and authentically.

We believe that the future of work needs to be simple, social, and authentic. We want to be able to take this one step further than we already have with our OneHub employee experience and benefits platform, and deliver exceptional recognition experiences with our new app.

Follow the link for more information about the OneHub Recognition.