Employment contracts and stress: An experimental study

Background/purpose: Many workers have Performance Related Pay
(PRP), a payment method which has been linked to poor health in several
large surveys. However, it is not known whether PRP is the cause of poor
health or if people with poor health are more likely to work in PRP jobs. An
experimental pilot study found that participants who were randomly assigned
to PRP contracts displayed higher levels of stress than those paid a fixed fee.
Methods: The current study extends this pilot study by employing a larger
sample size (N = 100) and a cross-over design. Participants were randomly
assigned to the PRP/non-PRP condition and then answered mathematical
questions in a simulated work task for 10 minutes. PRP participants were
paid £0.20 per correct answer, whereas participants in the non-PRP condition
were paid a fixed rate of £5 for 10 successful answers. Stress was measured
through self-report (before and after the task) and salivary cortisol (before and
three times after the task). A week later subjects returned to complete the non allocated condition in a cross-over design.
Results: Workers paid by PRP rated themselves as significantly more stressed (M=3.20) than those paid by non-PRP (M=2.71) after task completion, t(99)=3.04, p=.003, 95% CI [0.17, 0.81], d=0.49, an effect that remained even after controlling for order and other confounding effects. Cortisol results will be analysed in December 2019.
Conclusions and implications: These findings provide a foundation for future experiments investigating PRP and stress, and have implications for how to improve workers’ health.