Being wise with rewards may be
the secret to great leadership

Outstanding leadership is the cornerstone of nearly every successful organisation. Did Apple become great without Steve Jobs? Did Microsoft succeed without Bill Gates? The Oprah Winfrey Network certainly wouldn’t exist without Oprah.

With great leaders, organisations can achieve incredible things. This is why learning about leadership is one of the most important aspects of any Master of Business Administration (MBA) program.

Unfortunately, theories on what makes a great leader are like fingers: everyone has 10.

The proliferation of 'success coaches' and their armchair theories on what it takes to be a great leader makes it more critical than ever to rely on ideas tested over time and subjected to intense academic rigour.

Studying leadership as an MBA student at The University of Queensland (UQ) focuses on values-based, transformative models of leadership that produce positive outcomes for organisations and society.

Headshot of Dr Adam Kay

Dr Adam Kay is one of many experienced leadership experts at UQ’s Business School who teaches into the MBA program. He is an award-winning researcher whose primary interests include mindfulness, virtue ethics, leadership, justice, and corporate social responsibility.

One of the models Adam teaches in his leadership courses is the WISE rewards system, which builds upon universal motivators of sustained high performance to help build successful organisations. 

"What we all need from our leaders is reasons to feel motivated at work," Adam says.

"There are two basic types of motivation: extrinsic motivation, which is all about money, status and promotions, and intrinsic motivation.”

"There's nothing wrong with extrinsic motivators, but when the going gets tough, when we need people to be loyal and to perform at their best, dangling sticks and carrots only gets you so far.”

Adam believes sustained high performance can be found in intrinsic motivation, when people are motivated to do their work because "it's valuable, in and of itself."

To understand intrinsic motivation, you need to understand humans and their basic needs. This is where psychology comes in.

The universal needs of employees

Adam says that motivating people as a leader requires an understanding of every person's basic psychological needs.

"Psychological needs refer to fundamental aspects of human nature that are essential for psychological wellbeing and optimal functioning," Adam says.

"These needs are universal because they apply to all individuals, regardless of cultural or individual differences."

There are 3 universal psychological needs:

  1. Autonomy
    Autonomy refers to having a say in one's actions and choices. It involves having a sense of independence, self-direction and the freedom to make decisions that align with one's values and interests.
  2. Competence
    Competence relates to feeling effective, capable and competent in one's activities and pursuits. It involves seeking opportunities to develop new skills, experiencing growth and progress, and achieving mastery in different domains of life.
  3. Relatedness
    Relatedness refers to social connections and a sense of belongingness. It involves seeking and maintaining meaningful relationships, feeling connected and understood by others, and experiencing a sense of mutual care and support.

These 3 needs are considered essential for human motivation, wellbeing, and optimal functioning.

"When these psychological needs are met, individuals tend to experience greater satisfaction, vitality and overall wellbeing," Adam said. "Conversely, when these needs are thwarted or unfulfilled, individuals may experience psychological distress, dissatisfaction and a diminished sense of wellbeing."

How do successful leaders lead?

Understanding these universal psychological needs is one thing; applying them in the context of leadership is the next, more challenging step.

"One thing we can do as leaders is to take care of our people's basic psychological needs, to make them feel taken care of," Adam says.

"The critical step is to turn needs into motivation, and one way we can do this is by setting goals. Not just SMART goals, but WISE goals."

"Commonly, when employees achieve their goals, we reward them with a prize, a promotion, a cash bonus or a photo on the wall. This type of motivator is extrinsic and doesn't acknowledge people's desire to create intrinsic value.

"If you want to go from being a good leader to being a great leader, you need to be smart about motivating people and acknowledging basic psychological needs to create rewards that go beyond the extrinsic. To do this, we can use what I call WISE rewards."

"As a leader, you have the privilege to care for people's needs: autonomy, relatedness, competence. When you take care of those needs, they will take care of you and your organisation."

What is the WISE reward system?

The WISE reward system is a concept that emphasises the importance of providing meaningful and valuable rewards to individuals based on their performance and contributions. It promotes a thoughtful and strategic approach to recognition and incentives within organisations.

The WISE reward system is related to WISE goals, which are guided by the values and principles of win-win thinking, intrinsic motivation, service orientation and enlightened self-interest. The WISE reward system cultivates employees’ 3 basic psychological needs for autonomy, relatedness and competence by:

  1. Fostering autonomy by allowing employees to choose which tasks to connect their rewards to, and who the beneficiaries will be. This encourages employees to take initiative and align their actions with their values.
  2. Promoting relatedness by building positive, meaningful connections.
  3. Nurturing employees’ sense of competence by encouraging goal achievement and increasing awareness and positive regard by self and others.

By implementing the WISE reward system, organisations can create an environment that promotes wise decision-making, goal alignment, individual recognition, and a healthy balance between intrinsic and extrinsic motivation. This can increase employee engagement, productivity, and overall organisational success.

Adam believes this rewards system can even be applied to yourself as a leader.

"Just switch your thinking from ‘my goal’ to ‘our goal’," he says. "It’s important that your team gets to share in your success, and that it becomes a shared success."

"If you implement an effective WISE rewards system in a team dynamic, your team will feel more related to you in the workplace and with each other, which can set an upward spiral in motion.”

"Then watch your people flourish, your leadership flourish and your organisation flourish."

To understand more about the theory and practice of leadership and continue your own leadership journey, learn more about the UQ MBA by visiting the website or attending an information session.

Your goals. Your MBA

Learn more about the UQ MBA by visiting the website or attending an information session.