Three outdated beliefs that are killing employee engagement and creativity

The disconnect between what organisations want to achieve when it comes to employee engagement and how they actually run their business has never been more apparent in the  increasing demand on companies to keep up with market development and competition.

In our workplaces, we often talk about employee engagement and how to increase it, yet surprisingly few businesses take action to challenge the systems that hold engagement back. While boardrooms buzz with discussions about workforce motivation and retention, the evidence is mounting that traditional workplace structures, time-honoured processes like annual performance reviews, rigid hierarchies, and elaborate bonus schemes are not just ineffective but counterproductive. It is time to reconsider what truly drives people.

At a recent seminar in Almedalen, this topic was discussed in depth. There are several important takeaways around employee experience and leadership that challenge long-standing assumptions. Together, they point to the need for a fundamental shift in how organisations should approach employee engagement.

Ditch the annual performance review

The traditional performance review is a ritual so embedded in corporate culture that questioning its value feels almost heretical. Many organisations still rely on yearly, biannual, or quarterly performance reviews, a process where the employee is evaluated and given feedback. And since it’s often a process that drives decision-making mechanisms related to salary discussions, managers declare “feedback is important”!

However, neuroscience shows that the brain perceives high-stakes evaluations as a threat, triggering stress responses that inhibit openness, learning, and creativity. The situation where an individual receives scheduled feedback and is evaluated by their manager according to a pre-defined process, rarely supported by a system that logs all interactions, causes activation of threat responses. The psychological impact is predictable: when employees know their words will be weighed against their future income potential, promotion prospects, or, even more importantly, their standing against others, authentic feedback becomes nearly impossible. As a result, instead of providing potential development opportunities, these sessions often turn into judgment forums, creating stress that blocks openness, trust, and growth. We have created a system that defeats its own purpose.

Feedback is essential, but it works best when continuous and embedded in daily conversations. A “feedforward” approach, which focuses on future actions and collaboration, shifts attention away from past performance and creates space for genuine growth and meaningful development to reach what you actually want to achieve. Technology can support this by enabling real-time feedback and coaching, encouraging dialogue, and allowing employees to improve continuously, without waiting for formal reviews and the prohibitive pressures they produce.

Flatten the structure to unleash energy

As organisations grow, additional management layers are often introduced to create structure, but this usually creates friction and confusion, and unnecessary distance between decision-makers and those affected by their choices. We believe we’re creating efficiency, but instead, we introduce delays and increase the amount of time spent on understanding these different layers. Research consistently shows that autonomy and involvement foster safety, motivation, and genuine engagement.

And the correlation between autonomy and engagement is not merely academic theory; it represents a fundamental truth about human motivation. When decisions are centralised without including those affected, employees feel powerless and less valued. The knock-on effect? Neuroscientific research shows that autonomy is a core psychological need. When employees lack it, the brain registers reduced agency and engagement, impacting cognitive and emotional investment. When employees feel powerless to influence their work environment, their investment in outcomes diminishes drastically, resulting in a workforce that shows up physically while remaining emotionally and intellectually disengaged.

While leadership remains essential, relinquishing control in favor of creating conditions where others can excel is key. Many successful organisations today are flatter, with self-managed teams and shared goals. These are environments where responsibility and initiative are recognised beyond job titles.

Stop tweaking the bonus system

Perhaps nowhere is the gap between intention and impact more pronounced than in compensation strategy. Despite extensive research on motivation, many companies continue to invest time and resources in refining bonus models in the hope that the right financial formula will unlock employee potential. Yet external rewards like money and titles generally produce short-term behavioral changes and unsustained gains that undermine creativity and long-term engagement. Studies in behavioral science and neuroscience confirm that while external rewards activate the brain’s short-term reward system, they do little to sustain intrinsic motivation over time.

Intrinsic motivation, growing skills, feeling capable, influencing one’s workday, and contributing to meaningful goals are stronger drivers of sustained commitment. When employees understand the deeper purpose behind their work beyond profits or KPIs, they engage more genuinely. Focusing on meaning, trust, and real development opportunities is more effective than controlling through incentives. Yes, we might need to introduce bonus schemes to be able to pay more if the financial results are good, but we should not believe that this is the way to drive motivation and make people walk the extra mile. We should also carefully consider if complex bonus systems are even worth implementing at all, as valuable time will also be spent on defining and understanding the models to begin with. And there is always a risk that we create an expensive system that fundamentally damages motivation, as fairness is a key element to avoid triggering a threat response.

Real leadership starts with trust, not control

Employee engagement is sometimes dismissed as something “soft” and “fluffy”, but it actually has clear commercial and financial consequences. Engaged employees perform better, remain longer, have fewer absences, and adapt more quickly to change. These outcomes directly impact how people manage relations, which, in turn, impacts customer experience and business performance, as employees who feel valued and empowered naturally extend that energy in client interactions.

We often talk about engagement as a top priority, yet companies continue to rely on outdated methods that undermine it. Real leadership means closing the gap between intention and action. That requires letting go of control, rethinking legacy structures, and creating space for trust, autonomy, and purpose. When we align our systems with what truly motivates the human brain, engagement stops being a problem to fix and becomes a natural outcome of a thriving workplace.

Bio:

Maria Börjesson is the CEO of Netigate, a leading European provider of customer and employee feedback solutions. With over 25 years of experience in technology and finance, she is driving innovation and growth at the company. Her focus is on empowering organisations to make data-driven decisions and improve customer experiences.

Maria is a self-confessed neuroscience nerd with a passion for understanding people. Her motto is: “It’s all about people, passion, and software.” In her spare time, Maria runs leadership development training. She brings a wealth of experience from senior roles in the IT and tech sector, traditionally dominated by males.