The effectiveness of individual performance-related pay in motivating people may be limited by high levels of work intensification, according to an analysis of contingent pay. The authors examined three dimensions of this type of reward – performance-related pay, employee share ownership and profit-related pay – concluding that only performance pay is associated with feelings that work might be too demanding or that an employee has insufficient time to get the work done.
The study cites other research suggesting that performance-related pay may be perceived as an exploitative payment system, or a burden of responsibility that provides extra pay for workers but ultimately benefits the employer. This leads to a concern that feelings of work intensification associated with this type of contingent reward may actually detract from its positive impact on job satisfaction, employee commitment and trust in management. For example, it might derail employees’ positive attitudes because employees perceive the primary mechanism for evaluating their performance, the performance appraisal, is ‘overly subjective or implemented unjustly’.
The authors conclude:
‘In such circumstances, performance-related pay might miss providing salient rewards to deserving employees despite subjecting them to high work demands and pressures.’