New research indicates that more clearly communicating to employees how much they’re getting paid in specific time increments can have negative effects on their mental health, potentially draining productivity.
Determining how much pressure to apply to staff is one of the most important challenges facing managers. CEOs from many companies, including GE and Adobe, have overhauled their performance management systems to focus more on employee development and well-being.
The trick is applying enough pressure to inspire achievement without stifling creativity, or, even worse, making people sick. The impact of time pressure was studied by Stanford professor of organizational behavior Jeffrey Pfeffer and UCLA Berkley assistant professor Dana Carney.
They divided up 104 test subjects working for a fictitious company into two groups: one was asked to calculate a per-minute rate on their $57.50 of earnings for two hours work, while the other wasn’t.
Subjects in the first group were found to have 25% higher levels of salivary cortisol, a physiological indicator of stress. They also seemed to find less pleasure during two breaks exposing them to art and music.
The results of the study back up research conducted in 2001 by Cathleen Kaveny, now a theology professor at Boston College, who tried to figure out why lawyers often hated their careers and sometimes left the profession.
Lawyers, of course, often charged clients in billable minutes, making them hyper-conscious of the clock. Study subjects in this case were found to constantly stress about how much income they were forging, even while engaging in social activities. More firms have since dropped hourly rates—this could have more to do with pressure from clients fearful of runaway bills.
“All the research shows that when people are thinking about time and money, they’re not enjoying their lives,” Pfeffer said. “They become impatient. They don’t enjoy music, or sunsets. This calculation of what it costs to coach your kid’s soccer game is not a path to happiness.”
It wasn’t clear from Pfeffer and Carney’s research how much the experiment influenced subjects’ productivity, though they did find alarming levels of cortisol in more time-conscious subjects. “Cortisol is linked to all kinds of bad physical outcomes,” Pfeffer said. “A rise of almost 25% is a serious health consequence.”
He suggests employers, where possible, contemplate moving toward annual salaries rather than hourly pay scales.