Ivan Pavlov was a Russian physiologist who worked on conditioned responses. He discovered by experimenting on dogs that they learned to associate different stimuli and objects with food. Pavlov monitored and measured the connections between the dogs, food, and salivary behaviors. Pavlov added a bell to the experiment to use as a stimulus. After providing the dog with food after ringing the bell on several attempts, he rang the bell and saliva secreted from the mouth of the dog even when the food was not provided. Pavlov called this process a conditioned response; the dog associated the food with the bell.

The Pavlovian experiment has become the backbone of 99% of the corporate reward systems. Most companies around the world incentivize and motivate their employees with financial incentives, or ‘carrots’. This in turn motivates employees to obtain more carrots, creating a never-ending cycle. Money motivates the areas in the brain to trigger electrical signals into other regions of the brain. Those signals are enough to create an addiction to the money stimuli.

The challenge for those who design reward systems today is how to design rewards and compensations systems that nurture people’s potential rather than making them selfish, greedy, money-centric.