Unbelievable, but true: Bonuses on top of job compensation can increase stress and reduce productivity
Getting a bonus on top of your salary is a double-edged sword! Fatigue, anxiety and depression, sleep disorders and burnout have increased dramatically in recent years, but they are not the only symptoms of work stress. It may arise from some remuneration schemes.
The surprising finding was established in a recent year-long study presented in the Journal of Marketing.
Bonuses based on merit and performance can sometimes have a negative effect on health, according to an experiment involving employees at a large German company that sells goods and services to the construction and automotive industries. Over 12 months, the effect of the company’s compensation model, where 80% of terms are variable, and a method with 80% fixed terms, is tracked.
The results indicate: financial overstimulation is among the possible reasons for the increase in sick leave. But if variable compensation in total pay is higher, it positively affects employee productivity. According to the authors of the study, bonuses and sales commissions have a particularly motivating effect on employees.
But their empirical evidence suggests that increased pay also leads to higher levels of stress, which in turn lowers productivity and increases sick leave because it worsens workers’ health, so the vicious circle is complete.