Performance-based pay linked to employee mental health problems, study shows

a post by Chuck Finder (Washington University in St. Louis) for the phys.org blog [via World of Psychology’s “Psychology Around the Net”]

Credit: Shutterstock

Roughly seven of 10 companies in the United States, if not around the globe, use some form of pay-for-performance compensation system: bonuses, commissions, piece rates, profit sharing, individual and team goal achievements, and so on. But does such an incentivized workplace create a negative effect on the mental-health wellness of those workers?

In the first big-data study combining objective medical and compensation records with demographics, researchers at Washington University in St. Louis and Aarhus University in Denmark discovered once a company switches to a pay-for-performance process, the number of employees using anxiety and depression medication increased by 5.7 percent over an existing base rate of 5.2 percent.

And the actual number of affected employees is almost certainly much higher, said co-author Lamar Pierce, professor of organization & strategy and associate dean for the Olin-Brookings Partnership at Olin Business School.

"This is the tip of the iceberg, and we don't know how deep that iceberg goes beneath," said Pierce, who has focused much of his Olin research on productivity, wellness and pay systems in organizations. "If you believe that the generation of significant depression and anxiety requiring medication represents a much broader shift in overall mental health, it's probably a much bigger effect in terms of people."

Continue reading

---