High-Powered Pay Backfires, Demotivating Workers Across the Board
Paying workers high performance incentives can sometimes reduce their motivation to work hard, even though it usually boosts their output. A study found that this "crowding out" effect can happen in real workplaces, not just in experiments. However, some workers actually feel more motivated with performance pay. So, the impact of paying for performance can vary depending on the type of workers involved.