Extroverts and Introverts, Rewards and Risks

Are extroverts more "reward sensitive?"

In combing through the research on personality and brain function, Susan Cain (author of Quiet: The Power of Introverts in a World That Can't Stop Talking) concludes that they are.  This conclusion, or at least its strong probability, raises some interesting questions for workplace culture, performance and rewards.

The term "reward-sensitive" has been coined by psychologists and applies to people who are highly motivated to seek rewards.  As Cain notes, "reward sensitivity motivates us to pursue goals like sex and money, social status and influence.  It prompts us to climb ladders and reach for faraway branches in order to gather life's choicest fruits."

In introducing this idea, Cain calls our attention to the work of Dr. Janice Dorn, PhD in neuroscience with a specialty in brain anatomy, M.D. trained in psychiatry, who works as a "financial psychologist", having counseled more than 600 traders as part of her practice.  Dorn notes that her extroverted clients are more likely to be reward-sensitive, while the introverts are more likely to heed warning signals and are more successful at regulating their feelings of desire or excitement. 

The answer to why extroverts and introverts might react differently to the prospect of rewards, Dorn tells us, lies in the structure of their brains.  Research suggest that extroverts seem to be more susceptible to the reward-seeking cravings of the limbic system (the parts of the brain often referred to as its "pleasure center").  This, and the fact that extroverts appear to have more active dopamine pathways (dopamine being the "reward chemical" that the brain releases in response to anticipated pleasure), causes them to get an extra buzz from the pursuit and attainment of goals.  In fact, some scientists are exploring the idea that reward sensitivity, rather than just a feature of extroversion, may be the thing that makes an extrovert an extrovert.

While this buzz may have the positive effects of firing up extroverts to work hard and giving them the courage to take chances, it can also make them blind to warning signals and danger, leading them to take on outsized risks in pursuit of rewards.

Introverts, by contrast, don't buzz as easily.  Their response to their reward system is smaller.  This helps them be better at delaying gratification and makes them more likely to be cautious, to scan the environment for risks before proceeding, to see and consider peripheral issues.

Cain further postulates that the cultures of many businesses celebrate the go-go aggressive type, the forceful extrovert, and that these are the personality types who rise to the top, while the more cautious and cerebral types tend to be passed over for promotion.  She makes her case that having people with this personality type in control of our capital, institutions and power may be the source of many of the crises of our times, with examples ranging from Enron to Wall Street.

So what does this mean for those of us charged with designing and managing pay systems?  I think it raises some interesting questions, like the following:

To what extent can -- and should -- we assess the reward-sensitivity of our employee populations and organizational cultures, and take this factor into consideration when designing programs?

Many of us work in or serve organizations with extroverted cultures.  How should this fact impact our work in designing rewards?  Should our programs reinforce this culture -- or should they act as ballast, providing counter-pressure?

And what about our own personalities vis-a-vis the work we do?  Some of us are extroverts, apparently prone to be more reward-sensitive, and some of us are introverts.  Do we need to be more aware of our own tendencies, so that they don't overly influence the rewards we recommend?

What's your take?

Ann Bares is the Founder and Editor of the Compensation Café,  Author of Compensation Force and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting services to a wide range of client organizations.  Ann was recently named President Elect of the Twin Cities Compensation Network (the most awesome local reward network on the planet) and has joined the Advisory Board of the Compensation & Benefits Review, the leading journal for those who design, implement, evaluate and communicate total rewards.  She earned her M.B.A. at Northwestern University’s Kellogg School and is a bookhound and aspiring cook in her spare time.  Follow her on Twitter at @annbares. 

Creative Commons image "Brain" by dirk schaefer

Comments

[Dan Walter]

very interesting concept. YOu could have every new employee take a Briggs Meyers test at the time of hire, then apply one of 3-4 different compensation philosophies based on the results. My guess is that something like this would actually work, but someone would find a way to sue the company for discrimination or otherwise ruin it for everyone.

[E. James (Jim) Brennan]

So salespeople are dopes? (I know, very punny.) Being an ambivert causes me problems, too, but it falls short of bipolar disorder.

Re Dan's caveat, since the EEOC has now declared criminal record checks to be discriminatory, imagine that intrusive tests and subsequent inferior reward programs may be next.

[Ann Bares]

Dan and Jim:

I had to take personality tests (incl Briggs Meyers) at two of my employers, as part of the process of being considered for employment. (Yes I know what you're thinking - and they still hired her?!?) Point being, I don't know that these tests are considered that intrusive in many organizations, especially at more senior levels. And I'm not at all suggesting or advocating tailoring compensation programs to individual personality profiles. I'm just saying that there may be a phenomenon here that we, as reward specialists, might oughta be aware of. To me, and I think I was clear on this, any reward implications are probably better considered at the organizational/business unit/group level.

Salespeople dopes? Not quite sure where that conclusion came from. Are many salespeople reward-sensitive? I'm guessing so. Certainly our sales reward approaches, and the responses of many salespeople to those approaches, suggests it could be true.

Would a reward program that took into consideration (in addition to other things)org culture, including its level of extroversion and reward-sensitivity, be necessarily inferior? Help me see why that would be true.

Appreciate the comments and conversation.

[E. James (Jim) Brennan]

1. Dopamine-sensitive = pun stimulus :-(

2. If the pay plans selected for one group generate lower incomes, one might argue there is disparate economic impact due to a non-BFOQ criteria that disciminates and penalizes.

Just speculating, of course...

[Stephen Kirkland]

Good discussion....

[Ann Bares]

Jim:

1. Ah... got it. Boy I am slow on the uptake. Sorry.
2. Got it also. I guess I'm not thinking about it in as precise and granular a way as you are. As in, let's test the group and average their point on the I-E scale. I'm thinking of it in broader, cultural terms. But I see where you're coming from.

Stephen:

Thanks - glad you could join!

[Annika Larson]

Thank you for this article, Ann. It's interesting to think about the influence of the compensation department and committees as shaping the company's plan based on their own 'buzzes'.

What do you think the compensation work attracts? Introverts or extroverts?

[E. James (Jim) Brennan]

re #2, I meant that if extroverts are more motivated by incentives than introverts, it would be sensible to sort the groups into different total reward packages, reserving incentives for extroverts and giving fixed pay to introverts. Extroverts would then accordingly be granted more at-risk upside incentive opportunities, while the poor introverts who got stuck with fixed-pay schemes would earn less money and so be "disadvantaged."

For example, employment recruiters are frequently offered incentives while comp people sure never get "commissions" based on payroll control effectiveness. That tells you we already see that kind of reward practice segmentation based on HR personality generalities. (Never met a shy recruiter but most comp analysts are not very gregarious.)

[John A Bushfield]

Ann:
1. I don't think it matters. Company's need both, and rewards should be focused on results, not personality types.
2. Compensation design is an important, and powerful, culture management tool. In a values driven culture systems, including comp, should be designed to reinforce the company commitment to it's work environment.
3. Yes. Self awareness is extremely valuable in how we behave and relate to others. It allows us to experience all aspects of our personal and professional lives and enhances our quality of those experiences.

[Jennifer]

I think like most generalizations this does not work in every case. I have taken the Myers Briggs test - and am as strong of an extrovert as you can be - and am not cash "reward" sensitive. I am motivated by being able to do higher level, more strategic work. It is not about the money. I think it can be dangerous to make generalizations - particularly ones that assume then that people are not taking all risks into consideration...and I agree with Jim - rewards should be focused on results - period.

[Ann Bares]

To All:

This has become such an interesting conversation - thanks for taking the time to reflect and share your thoughts here. Fascinating for me to learn where my take on this is similar to - and different from - what other seasoned pros think.

Annika:

While it's always danger to overgeneralize and there are certainly exceptions, I've always held that extroverts tend to be attracted to recruiting and compensation tends to attract introverts. Agree? (I see that Jim does...)

Jim:

Interesting to follow how our takes on this diverge, as I think we typically tend to follow the same (somewhat warped) paths in our take on things.

I've never been a fan of tailoring pay design to individual employee preferences - I believe pay design should reflect the company's objectives and priorities and its desired "employment deal" with its employees.

Having said that, I think that a (maybe THE) critical step in any pay design process is seeking to understand how employees will read and respond to a reward program. Skipping that or even giving it short shrift is begging for bad surprises and unintended consequences. For me, the research on the extroverted personality and rewards, including the grounding in brain structure and processes, provides me with another insight that will help me be better at this. Just that.

John:

As always, your points are spot-on, and I don't really disagree with any of them. And yet, my take on this is different. As in, I think "it" (the reward sensitivity of our employee populations and organizational cultures) does matter, because understanding this allows us to anticipate how employees in an organization are likely to respond to different reward program designs, helping us hone in on a design that has the highest probability of success (in terms of the results we seek) and lowest probability of unintended/unexpected blowback.

Dan Walter, Margaret O'Hanlon and I are fond of saying that "everything we do in compensation is communication". If this is true, then part of our jobs is not only to thoughtfully shape those messages but also to take the steps to understand how they will be "read" and what behaviors they are likely to provoke. Information and research on what can cause people and entire organizations to be more or less reward-sensitive can only help us do this better, in my mind.

Jennifer:

The notion of reward sensitivity is not meant to be cash-specific and I think we in the rewards field, even where we practice almost exclusively in cash rewards, are well served to think of it more broadly. As Cain discusses the notion, she thinks of rewards in a much broader sense than cash. The opportunity to do higher level, more strategic work is a reward that motivates you. So if/when we think of people as reward sensitive, we must keep in mind that the particular things they find rewarding are quite often unique to them, their aspirations, circumstances and values. An extrovert, if they follow the pattern Cain suggests, will be very goal-oriented towards the things that he/she finds rewarding, which may or may not be cash.

With that said, though, your greater point to have a care about the generalizations we make is very well taken.

[Vidal]

Great article - intriguing concept. Of course now the challenge is to be as scientific as possible to potentially design a metric that can be effectively factored in and support Total Reward’s strategies.
Being one more tool to learn the driver of an individual, I think it is welcomed, not necessary to be tied to "cash" per say, but to help us understand rewards-behavior a bit better.

[Dan Walter]

Ann,

You are right, this has become a great discussion!

At a macro level I have also thought that a company;s culture drives the time of employees it hires and, more importantly, keeps. When companies are high-energy and ownership focused they end up with different staff members than than those who are more placid and "group-think" focused.

In reality both can be successful (or failures) and compensation programs can be a big part of this. I often find that companies say they want a certain kind of people, but compensate based on an entirely different set of principles. Alignment in this area is a must. Often this alignment is reflected in the link between the CEOs personality and the remuneration programs and messaging.

So, it may be that your thought behind extroverted and introverted compensation is happening without many people knowing it. Maybe we need to talk to people at different companies and see how "reward sensitive" they are, then look at the companies culture and pay programs to see if there is an unrealized correlation.

[Mercedes McBride-Walker]

I am ecstatic that neuroscience and compensation are coming together - bravo, Ann! It's only a natural evolution given that, as much as we talk about 'company philosophy', 'business strategy', or 'organization-wide initiatives', we must boil it down to the fact that the organization is made up of individuals. These are individuals who think, feel, and act out of selfish and unselfish intention, are influenced in very unique ways, and operate in sometimes very sophisticated and sometimes very simple ways based on whether their prefrontal cortex or amygdala has been triggered.

I'm not suggesting the sum of individuals is equal to its parts: I believe we know culture is much greater than that. Yet I do believe to increase the level of sophistication of the compensation discipline and to raise the level of value that compensation can provide in organizations, this type of information and understanding of how individuals respond to different stimuli - in part through neuroscience and the science and theory of motivation - is a great way to improve the dialog and perhaps even start a new one.

Thank you for this great post, Ann.

[E. James (Jim) Brennan]

Three cheers for enlightment! Compensation people who ignore psychology are about as useful as sailors who don't understand water and refuse to study the weather.

[Ann Bares]

Vidal:

Thanks for the feedback. I also see it as yet another tool or area of understanding that can help us do what we do better.

Dan:

Would be interesting research to be able to look at this more closely, in some manner or the other, wouldn't it?

Mercedes:

Glad you like the neuroscience connection. Agree that there is a lot there for us to potentially learn and gain from, as long as we keep it in perspective -- as one more variable to pay attention to in the increasingly complex organizations we work with/in.

Thanks again, all!

[Jean Sokolofski]

Myers-Briggs is NOT a test. It does not predict success or failure and should never be used when making hiring or compensation decisions. The Myers-Briggs Type Indicator identifies preferences in taking in information, processing information, making decisions and a person's orientation to the world. Just because someone prefers something, doesn't necessarily mean they are good at it. No two types are alike.

[Ann Bares]

Jean:

My impression is that most of us understand this, but thanks for clarifying for the benefit of any who do not.

[Doug]

I'm an introvert (80th percentile per MBTI) and I enjoy rewards very much. But I consistently refuse to jump through some stupid hoop just to get a silly treat, even if that silly treat is praise and financial rewards for pursuing what, to me, seems to be the path 90 degrees or more in the wrong direction. I think there should be a distinction between internal and external rewards that didn't seem to be part of the premise.

Extroverts buy into the "Ready, Fire, Aim" approach. Many seem to believe they are rewarded most for firing the most bullets, regardless of how many times they shoot their foot off. They need counseling on how to control that urge.

Introverts buy into the "Ready. Aim. Fire." approach. Many seem to believe they are rewarded for only firing when the stars align (analysis paralysis.) So introverts need counseling on how to control that urge.

Both types contribute. The problem often boils down to introverts being drowned out by the din created by extroverts.

[Ann Bares]

Doug:

Thanks for your insightful comments, and good to hear from the perspective of a fellow introvert.

You're correct that the premise I presented doesn't distinguish between internal and external rewards - but it seems to be that it would be difficult to get a very precise bead on that because I think that valuation is person-specific. What can be said, it would seem, with at least some level of scientific certainty, is that certain personality types (and brain anatomies/physiologies) are more responsive to whatever they find rewarding than others. Beyond that ... who knows!