Collateral damage associated with performance-based pay: the role of stress appraisals

Abstract

Drawing on stress appraisal and self-determination theories, we hypothesized that the more requirements of performance-based pay are appraised as a challenge, the more individuals will feel less strain and be more prosocial, and that these effects will be explained by autonomous motivations. Conversely, the more requirements of performance-based pay are appraised as a hindrance, the more individuals will feel more strain and be less prosocial, and these effects will be explained by controlled motivations. An experiment (N = 82) provided support for the mediational hypotheses regarding challenge appraisal, intrinsic motivation, and the strain outcomes of anxiety and fatigue. Hindrance appraisal was found to directly reduce prosocial behavior (as coded in task responses). Furthermore, in reward conditions that were directly performance-salient, hindrance appraisal resulted in greater fatigue. A field study (N = 322) revealed further support for the hypotheses on emotional exhaustion and organizational citizenship. Overall, there was support for the role of autonomous forms of motivation as mechanisms in these associations, but less support for controlled forms of motivation. Thus, stress appraisals of performance-based pay can improve our understanding of when 'collateral damage' effects of extrinsic rewards can occur (i.e., when requirements are viewed as a hindrance). Moreover, these effects of stress appraisals can be partially explained by different qualities of motivation from the self-determination theory perspective.

Variable Compensation and Salesperson Health

“…Second, we confirm studies of the health-related outcomes of pay-for-performance plans (e.g., Dahl and Pierce 2020;Davis 2016;Parker et al 2019) in the specific context of sales and salespeople (Ganster et al 2011). This confirmation is important, because researchers have questioned whether the influence of pay-for-performance plans on health are sufficiently important to be studied at all (Pfeffer 2019).…”

“…Second, the nature of the relationship between variable pay and health remains unclear in several respects. To begin, only one field study provides causal evidence from the field (Timio, Gentili, and Pede 1979), while the remaining studies offer either correlational evidence (Dahl and Pierce 2020;Davis 2016) or evidence from the lab (Parker et al 2019). Further, most studies ignore important contingencies that might influence this relationship (the study by Dahl and Pierce [2020] is an exception).…”

Performance Related Pay System: How Does It Affect the Performance of the Employees?

“…When the participants were questioned on whether they had other options that could lead to better results in their performances, 90% of them gave an affirmative No, while the 10% were undecided. According to Parker et al (2018), based on stress appraisal and self-determination theories, performance-based pay systems works favorably for individuals because they tend to feel less strained and more prosocial, leading to autonomous motivations. In other words, the recognition of individual effort is essential in encouraging the employees to improve their performance.…”

Looking on the Bright and Dark Sides of Working Life: Appraisals of Work Characteristics and Employee Outcomes

“…For instance, found that workload, responsibility, role ambiguity, and role conflict could simultaneously be appraised as challenges and hindrances (for similar findings see Prem, Ohly, Kubicek, & Korunka, 2017;. Goal difficulty (Espedido & Searle, 2018) and performance-based pay (Parker et al, 2019) can be appraised as challenges and threats. Specifically, the results showed that on average, work stressors are positively related to challenge appraisals (k = 34, r = .151), hindrance appraisals (k = 19, r = .238), and threat appraisals (k = 9, r = .247).…”

“…studies employed an experience-sampling design or diary design (e.g., Ma Peng et al, 2021;, and 2 used experimental designs (1 field experiment, van Steenbergen, Ellemers, Haslam, & Urlings, 2008; 1 scenario experiment, Parker, Bell, Gagné, Carey, & Hilpert, 2019). Our review also found that 13/70 studies used multi-source measurement (e.g., Fugate, Prussia, & Kinicki, 2012;.…”