Millions in bonuses for Deutsche Bank managers despite billions in losses: The brain researcher Gerhard Roth explains how material rewards work and what goes on in us when we are withdrawn.

Bonuses?  Deutsche Bank believes that this is just fair

Dhe human brain has scientifically shown three types of reward: material, social, and intrinsic. “The advantage of the material reward is that it works very quickly,” says the Bremen biologist Gerhard Roth, one of the most renowned brain researchers in Germany. The disadvantage: the effect quickly wears off again. With each repetition of the same reward, its effect is halved. In order to prevent this discounting, one has to increase the reward. Although this is having a positive effect again, the downturn is now occurring even faster. Every increase shows less effect, says Roth and speaks of a “bonus trap”.

Gerhard Roth
Gerhard Roth: Photo: Private

The reason for this effect is anchored in our brains, explains Roth. An actually one-off reward is immediately priced in by the people and a claim for the future is derived from it. This can be observed in the banking industry, where bonus payments are no longer seen as evidence of particular economic success, but are taken for granted in certain positions and functions.

Those affected would perceive a non-payment as withdrawal, explains Roth. “This sends the message: I am no longer worth anything to them.” The pain is twice as great as the gain, says Roth, and this insight into the effect of material rewards goes back to Nobel Prize winner Daniel Kahneman.

In the long term, only having fun at work helps

Social rewards are subject to the same laws. Even repeated praise loses its effect at some point – unless it does not happen. But this does not apply to the intrinsic reward in the form of fun and satisfaction with one’s own work. The only problem is that you cannot influence them directly from the outside. “You can only create an optimal framework so that your employees are satisfied,” says Roth.

According to Roth, people also have a good sense of whether a reward is fair or not. His warning in this regard is clear: “Nothing spoils morals like an unjust reward.”