Performance related pay is a feature in most companies, with everything from bonuses to profit-sharing dependent upon individual and collective performance.  The rationale is clear, that by offering that carrot, employees will be motivated to try harder and perform better at work.

Recent research from Washington University in St. Louis suggests it has a clear cost involved however, with employees at organizations with performance related pay showing a worrying increase in mental health issues, including anxiety and depression.  What’s more, they are confident that the true number of affected employees is much higher than they were able to uncover in their study.

“This is the tip of the iceberg, and we don’t know how deep that iceberg goes beneath,” the authors say. “If you believe that the generation of significant depression and anxiety requiring medication represents a much broader shift in overall mental health, it’s probably a much bigger effect in terms of people.”

Mental health

The researchers analyzed government records of over 315,000 full-time employees from over 1,300 companies.  They found that when companies implemented some form of pay-for-performance scheme, it coincided with a 5.4% increase in the likelihood that workers were also on anti-depressant medication.

It should go without saying that this cohort represents merely those who actually looked for help with their problems, so the actual number could be much higher.  Data from the US suggests that just 1 in 3 people actively seek help for mental health issues, with many of those who do seek it taking a non-pharmacological route.

The scale of the problem was underlined by the suggestion that performance-related pay might be responsible for 100,000 extra Americans turning to mental health medicines.  What’s more, people who were taking such medications were up to 9% more likely to leave the company within a year.

There did appear to be gender differences in this trend however, with women much more likely to leave a job that was harming their mental health than men were.  What’s more, there was also a significant difference in how employees of different ages responded.

The lower levels of labor mobility meant that it was much less likely for older workers to leave a job if they suffered poor mental health at work.  The data showed that practically all of the increase in prescriptions for mental health medications came from workers over 50.

Performance-related pay has many justifiable criticisms, but the mental health of workers is perhaps one that flies under the radar.  That is a situation that deserves to change.