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The carrot but not the stick: The psychology of employee engagement

Published: 20/10/2021

A whole load of psychology and behavioural economics goes into building an effective wellbeing programme that successfully encourages positive lifestyle choices. Here are eight tips to offering the right rewards.

With the right tools and education, a longer, healthier and happier life is possible. Yet even despite knowing this, it is not always easy for us to make healthy choices.

Our brains are hardwired in such a way that we are prone to seeing our wellbeing as better than it is and that our decisions tomorrow will be different. This sort of thinking applies to physical activity as much as it does the food we eat.

Luckily, there are ways that a workplace wellbeing strategy can help employees overcome this challenge. Findings from our Britain’s Healthiest Workplace study1 revealed that one of the most powerful agents for change can be rewards.

In the words of economist Steven E. Landsburg: “Most of economics can be summarised in four words: people respond to incentives. The rest is commentary.”

What motivates employees to engage with benefits?2

70% said providing incentives and rewards for participation

19% said making health promotions available for family members

5% said allowing participation during working time

Eight tips to offering the right rewards

Psychology and behavioural science play a big role in helping employees to overcome cognitive biases and encourage them to engage with behaviours that might benefit their health and wellbeing.

1) Make them short but sweet

Providing tangible short-term rewards often work best if any wait for the reward is kept to a minimum – in behavioural economics terms this is sometimes called our present bias3.

2) Don’t be afraid to be creative

Even with limited resources, a creative approach to rewards can still pay dividends, such as offering an additional day of annual leave, or symbolic recognition – for example, a thank you note, public recognition or an award.

3) It’s all about the experience

Vouchers are less likely to be forgotten than cash and experiences tend to make us happier than money4. We’ve also seen through behavioural economics that the perceived value of monetary amounts can vary, so providing tangible non-cash items, such as personalised gifts, can help address this5.

4) No need to stop at one

You need not limit yourself from offering just one reward – they can be combined to boost the total value available, or to provide a choice of rewards. Both of which can broaden the appeal and motivate a wider range of employees.

5) Everything is connected

As we’ve explored, the different elements of our wellbeing are interconnected across all multiple pillars, so all must be supported. But we cannot tackle everything at once. To get the journey started, perhaps focus on one area at first and space them across a wellbeing calendar.

6) Onwards and upwards

A low threshold for a reward might help some but provide little motivation for others. One way to overcome this is to use a system of escalation, so people can do more to unlock further rewards (for example, a steps challenge).

7) Incentivise healthy behaviour

The principle of harnessing our psychology can also be seen in workplaces where nutritious food is subsidised or provided for free. Those who wish to indulge in something not as healthy incur an additional cost, which can play into a sense of loss aversion and motivate us to choose the better – but perhaps less appealing - option.

8) Keep it simple

The design and communication of a health and wellbeing programme must be simple, intuitive and accessible to avoid overloading employees with information and spoiling engagement – something illustrated by the Fogg Behaviour Model6, which shows the interplay between perceived effort and personal motivation.

Earn CPD

To learn more about how psychology can be used to help drive wellbeing success within organisations, try our The Perfect Plan – wellbeing strategy in action learning module as part of our Mastering Wellbeing at Work course for advisers.

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A version of this article appeared in our Mastering Wellbeing at Work Guide as a part a Workplace Wellbeing Toolkit offering a range of resources for employers.
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Where to next?

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    With no playbook for measuring return on investment (ROI) for wellbeing initiatives, where on earth should employers start?

  •               Insights Hub                 

    Our Insights Hub brings you our range of adviser content - from video series to articles & blogs.

1. Britain’s Healthiest Workplace 2019
2. Michael Silverman, 2004, Non-financial recognition, the most effective of rewards?
3. O’Donoghue & Rabin, 1999
4. Pchelin & Howell, 2014, The hidden cost of value-seeking: People do not accurately forecast the economic benefits of experiential purchases
5. Michael Silverman, 2004, Non-financial recognition, the most effective of rewards?
6. Dr BJ Fogg, Behavior Design Lab, Stanford University