DOI: 10.5255/ukda-sn-856878
title: Experiments on Performance-related Pay and Stress: Performance-related Pay and Social-Evaluative Threat, 2021-2022

description: As described in the overarching funded project description, the focus of the research is to examine the relationship between performance-related pay and stress using experimental methods. Importantly, stress is measured here both subjectively (i.e. asking the stress level of participants) and objectively (i.e. collection of salivary cortisol). 

The basic experiment is generally the same across all of the experiments in the project. Subjects are recruited by using a database at the university where the experiments took place. All experimental sessions happened at 1400 to control for the diurnal patterns of cortisol. Participants were also told to avoid exercising, smoking, drinking caffeine and eating two hours before the experiment since these also affect cortisol. During the experiment, participants are told generally about the experiment and enter a 10-minute relaxation period where they can colour in a mindfulness colouring page if they wish. Then they are asked questions about their subjective stress and a baseline cortisol measurement. Next, participants are given three example maths questions to complete in their own time and then allocated their employment contract. The performance-related pay (PRP) contract is piece rate based on the number of correct answers while the minimum performance contract (nonPRP) is a flat rate once ten questions are answered correctly. Then, participants are given 10 minutes to complete as many questions of maths problems (up to 50) without the use of a calculator. The computer screen gives the number of correct answers and for the nonPRP group, a banner is shown when they answer 10 questions correctly. After the task, a screen shows how much they earned from their performance, including the show up fee. Another measure of cortisol is taken and a survey administered to collect information on subjective stress and to collect demographic information. Participants had a 10-minute rest period of colouring after which a third cortisol sample was taken. Then participants had one final 10-minute rest period after which a fourth and final cortisol sample was taken. Finally, participants were called into the control room and given their payment. Cortisol samples were frozen and after all were collected were sent to a laboratory for analysis.

In this experiment, we want to investigate whether the well known effects of social-evaluative threat (SET) on stress interacts with PRP since in many PRP situations in the labour market elements of SET can be used (e.g. a public leaderboard for salespeople). Thus, in this experiment we replicate the basic structure as described above, randomly allocating across the PRP and nonPRP condition, though we add in an additional crossover session for the SET and nonSET conditions. The PRP piece rate is set at £0.20 per correct answer and the nonPRP condition paid a flat payment of £5 for 10 correct answers. The SET condition is operationalised with one of the research team walking around the laboratory during the work task with a clipboard taking notes of the participants as well as a public leaderboard showing on the screen so participants can compare their performance with other participants. As with Experiments 2.1 and 1.2, the higher show-up fee of £7.50 was used to increase the sample pool.

Data analysis of the data suggests that the SET condition led to higher subjective stress, but not higher cortisol, but there was no effect of PRP on either measure of stress. There was an interactive effect of SET and the nonPRP condition to generate higher subjective and objective stress, particularly driven by low performers. The results of this experiment were published in the journal, Stress, in 2023.