How to Design Effective Reward Systems

Rewards reinforce desired behaviour. Rewarding your dog makes him learn new tricks faster. Rewarding school kids for good grades motivates them to study harder.

But rewards have to be varied in quantity and intervals to be truly effective. BF Skinner’s experiments revealed that a hungry pigeon would tap a lever 12,000 times an hour while being rewarded on average for only every 110 taps. Whereas a pigeon inside a Skinner Box (a box which delivers food to the pigeons on tapping a lever) programmed to deliver food for a fixed number of taps learns that lever taps beyond the required minimum are just a waste of effort.

Adding variability definitely increases the frequency of the pigeons completing the intended action. But we humans are social animals, work in complex environments, and our efforts are seldom as black and white as tapping a lever. Rewards affect us at two different levels: the community level, and the individual level. If you are running a company or a team, it could be translated to: the company/team level, and the employee level.

The Community Level

We are social animals, and our brains are adapted to seek rewards that make us feel accepted, attractive, important within our peers, culture, and society. The need to feel social connectedness shapes our values and drives much of how we spend our time.

It is no surprise that social media has exploded in popularity. Apps like Facebook, Twitter, Instagram, collectively provide us with powerful social rewards. With every post we anticipate social validation. These social rewards keep us coming back, wanting more.

For example, having a good amount of followers on Instagram, or a great many upvotes on Quora are good factors for social validation. That’s how the community rewards us, and it’s a great driving factor to contribute (by posting images, or answering questions) more. These are the same reasons for people to write answers on Stack Overflow, and post articles on Wikipedia.

Similarly, company recognitions, awards for excellence in studies and sports, are strong motivators for us to excel in what we do. These rewards make us feel that we are an important part of the community, that we have a place, in fact an important place, in the society, the group, or the team.

Psychologist Albert Bandura proposed that new behaviours can also be acquired by observing and imitating others. His research revealed that learning also occurs through the observation of rewards and punishments, a process known as Vicarious Reinforcement. This theory, known as The Social Learning Theory, expands on the Operant Conditioning Theory, in which behaviour is governed solely by reinforcements.

Bandura also demonstrated that this technique works particularly well when people observe the behaviour of other people who are similar to them or slightly ahead in experience. For example, if you start making YouTube videos, you try to learn from others who are better, and whom you admire. Startup founders take advice from other founders on a continuous basis. They don’t pose any threat, and is seldom your competition.

The Individual Level

Apart from social recognition, we also seek a more personal form of gratification. We are driven to conquer obstacles, even if just for the satisfaction of doing so. The pursuit of completing a task can influence people to continue all sorts of behaviours. This is the reason we push ourselves while lifting weights, running the distance, and playing video games as well.

Surprisingly, we pursue these rewards even when we outwardly don’t appear to enjoy them. Solving bugs or puzzles might look excruciating from the outside, with occasional grunts and frustrated face contortions, but this painstaking process can be a wonderfully mesmerising struggle for the person involved.

Rewards of the self are a defining component in video games, as players seek to master the skills needed to pursue their quest. Levelling up, unlocking special powers, and other game mechanics fulfil a player’s desire for competency by showing progression and completion. Massively popular games like Fortnite and PUBG utilise similar rewards in their game mechanics.

These are the same reasons we set productivity or fitness goals. That’s why we aim to achieve inbox zero or size zero. That’s why we build businesses-not just to make money or get social validation, there’s a strong need to get individual validation as well.

That’s why people donate money to charities, and causes they believe in. That’s the reason fans support creators on sites like Patreon. There’s no monetary reward per se, only the satisfaction that they contributed to someone’s success.

So, while designing reward systems in your apps, for your company, or for your students, you have to look at both the levels-the community level and the individual level-to see how everything pans out. Effective reward systems are usually a combination of both.

Take this blog, for example. I do this to get love and respect from you, but also to get better at synthesising my research, and put them into an easily digestible format.