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

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 behaviour (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 hindering). Moreover, effects of stress appraisals can be partially explained by different qualities of motivation from the self-determination theory perspective.