The Effects of Pay Systems on Blue-Collar Employees Emotional Distress

8/2/2019 The Effects of Pay Systems on Blue-Collar Employees Emotional Distress

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Th e Effects of Pay Systems on Blu e-Collar

Employees Emotional Distress: The Mediating

Effects of Objective and Subjective Work

Monotony

Arie Shirom,1,3 Mina Westman,1 and Samuel Melamed2

We hypothesized that employees emotional distress would be affected by the

degree to which their payment was contingent upon individual performance.

Respondents were 2747 blue-collar employees in 21 factories in Israel. They

completed questionnaires on company time. We found that, in comparison withthose who were paid only according to time worked, being on a performance-

contingent pay system was associated with higher le vel s of de pression and

somatic complaints, but not of anxiety. As expected, these effects were partially

mediated by the extent to which the respondents work was monotonous.

KEY WORDS: pay systems; piece rate ; monotony; depress ion; somatic

complaints; anxiety.

INTRODUCTION

Pay systems have long been known to influe nce employees levels of

job performance , satisfaction, and withdrawal behavior (e.g., Lawle r, 1971,

1990) . A highly appropriate research agenda for students of organizations

is the identification of those working conditions that may adversely affect

the psychological well-be ing of employe es expose d to them (Brief & Atieh,

1987). Our theoretical premise was that pay systems have a unique impacton employees emotional distress. We hypothe sized that the more variable

(i.e., contingent upon employees performance) the pay system, the higher

its deleterious impact on employees emotional distress. We further hy-

Human Relations, Vol. 52, No. 8, 1999

1077

0018-7267/99/0800-1077 $16.00/1 1999 The Tavistock Institute

1Faculty of Manage ment, Tel Aviv Unive rsity, Tel Aviv, Israel.2Occupational Health and Rehabilitation Institute, Loewenstein Hospital, Israel.3Requests for reprints should be addressed to Arie Shirom, Faculty of Management, Tel Aviv

University, P.O. Box 39010, Tel Aviv 69978, Israel; e-mail [email protected]


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pothesized that these effects were partially mediated by the extent to which

their jobs were perceived or objectively assessed to be monotonous.

In work organizations, pay systems have traditionally been the most

extensive ly manipulate d organizational reward. They have been manipu-

lated primarily to increase employees motivation to achieve higher levels

of individual and group performance. Performance-contingent pay systems,

such as piece-rate incentive plans, have been used for this purpose (Lawler,

1971) . In this research, the focus is on a comparison of the ir effects on

employees psychological distre ss with those of a time-based pay system.

The negative impact of performance-contingent pay systems, and pri-

marily piece-rate incentive s, on employe es health has often been stated as

if there were a solid body of evidence supporting it. This is particularlyevide nt in the writings of work reformers and social thinke rs such as Garde l

(1987) and Shostak (1980). Our search of the relevant literature, detailed

below, has led us to conclude that there was only a slim body of evide nce

supporting this assertion. In the following, we shall first describe the major

types of pay systems that are pertinent to our study. Next, we shall explain

the theoretical reasons for expecting performance-continge nt pay systems

to have adve rse effects on employe es psychological well-be ing. Then we

shall present our theoretical model and detailed hypotheses.Time-based pay, the comparison group in this study, refers to a pay-

ment system according to time worked. In heavily unionize d workplace s,

like most of those include d in the present study, the predominant form

was a monthly salary. Incen tive piece-rate system (abbreviated as piece-

rates) refers to a pay system in which employees wages are determined

solely according to individual job performance or output. Rate determina-

tion is based on units of production per time period. Under this system,

the rate of pay is often determined by industrial engineering techniques,

primari ly work and method study and by t ime measurement (e.g. ,

Kanawaty, 1992). Piece-rates represent the most variable pay system. Indi-

vidual wage incentives is a pay system that combines elements of the above

two systems. Employees are paid a time-based salary. In addition, if they

exceed a standard performance level, mostly determined by industrial en-

gineering methods, they are compensated by an individually-c alculate d

wage premium. G roup wage incentives system is similar to individual wageincentives except that the premium that compensate s employe es for above -

standard performance is determined on the basis of the performance of

the work group and is paid to the whole group. It represents the least

variable pay system, with individual wage incentive s represe nting medium-

level variability.

There were several reasons for our theoretical expectation that the more

variable the performance-contingent pay system, the more adverse its effects

1078 Sh irom , Westm an, an d Melam ed


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on employees psychological distress. These systems have been applied pri-

marily to blue-collar manual jobs rather than to professional, managerial, or

maintenance jobs (Shirom & Mar, 1991; Thierry, 1987). Since performance

standards set for these systems usually represent the expected output of an

average employee working at a normal pace (Globerson, 1985), they in-

volve some time pressure. Time pressure on the job has been shown to be

associated with psychological distress (Barnett & Brennan, 1995) . Under

some piece-rates systems, rest periods are rare and closely monitored. As

noted by Smith (1985, p. 61), performance-contingent pay systems elicit a

high level of energy expenditure by the worker, often above healthful limits.

Under piece-rates, this characteristic may be reinforced by interpersonal

competition among employe es. Yet another reason for the adve rse e ffects ofthese systems is the continuous monitoring of performance, sometimes on an

hourly basis. The harmful effects of such monitoring for employe es well-be-

ing have been investigated particularly in the context of electronic workplace

monitoring (Landy, Quick, & Kasl, 1994, p. 47). Furthermore, performance-

contingent pay systems inhe rently involve some degree of income instability

over time, which in turn may lead to economic insecurity. Economic insecu-

rity has been shown in several studies to predict adverse effects on psycho-

logical well-being (Jacobson, 1991; Mullis, 1992).As we have noted, only a few studies have docume nted the adve rse

effects of performance-contingent pay systems on employees psychological

distress. Reviews of these effects (e.g., Levi, Frankenhaeuser, & Gardell,

1986) often cite experimental studies based on very small samples (e.g.,

Levi, 1972) . These field experiments have provide d evide nce that during

periods of pie ce-rates payment employe es secreted significant ly higher

amounts of stress hormones than during periods of time-based pay.

Schleifer and his associates (Schleifer & Amick, 1989; Schleifer & Okogaba,

1990) showed, for 45 professional typists doing computer-based data entry

tasks, that self-rated anxiety levels were higher, and that blood pressure

measures were higher, during periods of incentive pay as compared to pe-

riods without incentive pay. The above rationale and empirical evidence

has led us to hypothesize that relative to time-based pay, piece-rates would

have the most pronounced deleterious effects on employe es emotional dis-

tress, followed by individual and by group wage incentive s, in that order(Hy 1).

Jobs most suitable for the introduction of performance-contingent pay

systems are those with a measurable output and a repetitive cycle of opera-

tion (Thierry, 1987; Kanawaty, 1992). Such jobs are commonly also machine-

paced. Before an incentive pay system is introduced into an unpaced work

situation, tasks in it are often simplified (Cox, 1985). Repetitiveness is intro-

duced into these jobs either by management or by employees trying to make

Wage System s and Distress 1079


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higher wage premiums (Smith, 1985, p. 61). These job characteristics, asso-

ciated with objective monotony (Cox, 1985; Smith, 1981), antecede the intro-

duction of performance-contingent wage systems (Globerson, 1985).

Therefore, one of the objectives of this research was to investigate the extent

to which objective and subjective job monotony mediate the effects of per-

formance -contingent pay systems on psychological distress.

The impact of work monotony on psychologic al distress has been

widely reviewed (Cox, 1985; Davis, Shackle ton, & Parasuraman, 1983;

Melamed, Ben-Avi, Luz, & Green, 1995; OHanlon, 1981; Smith, 1981;

Thackray, 1981). As noted by Melamed et al. (1995), the lack of an attempt

to combine obje ctive and subjective measure s of work monotony, when pre-

dicting psychological distress, has been a recurrent methodological short-coming in the research literature. In many survey-based studies, researchers

used exclusively workers perceptions of their jobs as monotonous, hectic,

and so forth, without measuring these work characteristics objectively (e.g.,

Alfredsson, Karasek, & Theorell, 1982; Coburn, 1979; Karasek, 1979).

As noted, a number of studies focusing on objective work conditions

have demonstrated high psychological stress reactions among workers en-

gaged in various monotonous tasks, such as assembly-line work (e.g., see

Caplan et al., 1975; Ferguson, 1973; Johansson, Aronsson, & Lindstrom,1978; Lundberg e t al., 1989). The rationale given by these researchers to

the adverse effects of work monotony on employe es emotional distress

does not overlap with the major reasons for our Hy1. Consequently, we

expected that the direct effects of performance-contingent pay systems on

psychological distress would still be evident even after the effects of the

mediating variable s of objective and subje ctive job monotony had been par-

tialled out. Technically, this expectation refers to a partial mediation (Baron

& Kenny, 1986). Therefore, we hypothesized that objective and subjective

job monotony would only partially me diate the negative impact of perform-

ance-contingent wage systems on psychological distress (Hy2).

It has been noted that the definitions of the different types of work

monotony are inconsiste nt, especially with regard to objective work char-

acteristics. Melamed et al. (1995) have defined obje ctive monotony as

either repetitive work, that is jobs characterized by relative ly short cycle

time and monotonous motor demands, or work underload, defined as jobsthat do not have an apparent cycle of operations but necessitate sustained

attention and ready response to certain predetermined events. Industrial

jobs that involve watch-keeping, monitoring, and inspection are typical ex-

amples of work underload. Such jobs combine the opposing demands of

sustaine d alertness with arousal-re ducing task characteristics and hence

their potential stress to employees exposed to them (Melamed et al., 1995).

We adopted this conceptualization of monotony in our study.



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Psychological distress was conceptualized as consisting of symptoms of

anxiety, depression, and somatic complaints. In past research, individuals re-

ports of somatic complaints have often been viewed as an important indicator

of psychological distress (Costa & McCrae , 1985; Jamal, 1990). Somatic com-

plaints are physical symptoms that are exacerbated by environmental stress

but are not necessarily associated with any diagnose d physical illness (Sack

& Girard, 1982). Anxiety and depression are sometimes viewed as alternative

manifestations of a common underlying diathe sis (e.g., Melame d et al., 1995),

and sometimes as conceptually and empirically distinct phenomena (Clark &

Watson, 1991). In our research, we adopted the latter view, also because it

is the one reflected in current diagnostic practice (Clark & Watson, 1991;

Garber, Miller, & Abramson, 1980) and in recent research that supports spe-cific stress

disorder relationships (Thoits, 1995, p. 56).

In several longitudinal field studies, Siegrist and his colleagues have

provided evidence that among blue-collar employees, performance-contin-

gent pay systems, as a component of an integrative measure of extrinsic

workload that also included shift work, noise, and time pressure, may be

implicated in elevated leve ls of several physiological risk factors for car-

diovascular heart disease (abbreviated as CHD) (Siegrist, Peter, Motz, &

Strauer, 1992) and of CHD incidence (Rosengren, Tibblin, & Wilhelmsen,1991) . Among the three criteria of psychological distress, somatic com-

plaints was shown to be a powerful predictor of physiological risk factors

for CHD (Eden, Shirom, Kellermann, Aronson, & French, 1977) . Following

the above line of evidence, we hypothe sized that among the three indicators

of psychological distress, somatic complaints would be most strongly im-

pacted by the objective chronic stress of performance-continge nt wage sys-

tems. As we have noted, performance-contingent pay systems tend to be

associated with the characteristics of time-pressure, continuous monitoring

of performance, and interpersonal competition. Consequently, we hypothe-

sized that anxie ty would follow somatic complaints in being affected by per-

formance-contingent pay systems. We expected that performance-

continge nt pay systems would have only a minor effect on depression (Hy3).

The theoretical model guiding our study is depicted in Fig. 1. Hy1 and

Hy2 are each represented by arrows. Figure 1 also displays the control vari-

ables used in the study. We shall now explain the rationale for their use.The dispositional approach to job attitudes (Schaubroeck, Ganster, &

Kemme rer, in press) posits that individuals bring with them to the work-

place a disposition for interpreting the conditions they encounter in ways

that are like ly to influe nce the distre ss they e xperience. O ne of the per-

sonality characteristics that may be linked to negative emotional states is

emotional reactivity, for both temperamental and instrumental reasons (cf.

Berenbaum & Williams, 1995). Emotional reactivity denotes proneness to



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easily enter and sustain a state of emotional arousal in response to emo-

tionally laden events (Melamed, 1987). In terms of cognitive self-regulation

theory (Carver & Scheier, 1990), emotional reactivity represents a malfunc-

tioning feedback model that concerns individuals subjective experience of

affective states. Individuals high on e motional re activity find it difficult to

regulate thoughts and image s, and the resultant emotions, in anticipation

of, during, and following emotional events (Melamed, 1995). This person-

ality predisposition was regarded as priming individuals to experience psy-

chological distress, and we therefore controlled for it in this research.

Several sociode mographic characteristics have been shown to predis-pose people to poor mental health since they, among other factors, deter-

mine people s life-long stress exposure (Turner, Wheaton, & Lloyd, 1995).

They include educational attainment, gender, age, marital status, and ethnic

status (Birdi, Warr, & Oswald, 1995; Dohrenwend et al., 1992; Kessler,

Price, & Wortman, 1985; Thoits, 1995, p. 55). Consequently, we decided

to control in this study for the effects of age, gender, marital status, edu-

cational attainment, and ethnic status on psychological distress.

METHOD

Participants

Respondents were 2776 blue-collar employe es who took part in the

CORDIS (Cardiovascular Occupational Risk Factors Determination in Is-

rael) study. This project is a multidisciplinary, cross-sectional, and longitu-

Fig. 1. The studys model and hypotheses.



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dinal epidemiological project aimed at identifying occupational risk factors

for cardiovascular disease (for additional details, see Melamed, Ben-Avi,

Luz, & Green, 1995) . Health check-ups were offered free of charge on

company time. About 60% (N = 4473) of the employe es of a sample of

21 manufacturing plants agree d to participate . A detailed description of

the types of plants sampled and the definition of blue-collar work is pre-

sented elsewhere (Melamed, Luz, & Green, 1992).

In this study, we excluded from the sample 1726 employees who did

not complete the psychological questionnaire that was part of the screening

routine . The major reasons for not comple ting the questionnaire were

either language difficultie s or being absent when it was administered. Com-

pared to those in the final study sample , the excluded men and womenwere older, and the men less educated. A higher percentage of exclusions

of both sexes engaged in physical work and were of European origin.

Means and standard deviations of the studys predictor variable s and

criteria are provided in Table I. The average age of the respondents in the

final sample was 38.0 (SD = 10.9); 31% were female employees; 82% were

married; and 39% were born abroad.

Measures

Objective Monotony. The three measures of objective monotony were

derived on the basis of a job analysis procedure. It was performed by an

experienced observer (following a pilot study described in Melamed et al.,

1995), who observed employees in the same job for 1 day. A total of 480

different jobs were identified in the 21 plants sampled. Each job was clas-

sified into one of the job categories listed below. The convergent validity

of the observer classification was obtaine d by asking workers and supervi-

sors to classify the same work. Jobs with no predetermined order of activi-

ties, entailing task rotation or decisions regarding the nature and order of

work activitie s, were classifie d as varied work. Repetitive work was opera-

tionally defined as work in which discrete sets of work activitie s are re-

peated in the same order . . . . The cycle time for the set of activities may

be measured and used as an index of the repetitiveness of the work (Cox,

1985, p. 86). The sequence of activities could be either determined by asupervisor or by a machine . To be classifie d as working in one of the four

types objective work monotony, an employee had to work in a single job;

that is, no job rotation within the group of employees. In this study, re-

petitive work was represented by thre e dummy variable s. These dummy

variable s, labeled short, medium, and long work cycle s, represented, re-

spectively, a work cycle of no longe r than 1 minute , between 1

30 minutes,

and between 30 minutes and 1 hour. Although some workers rotated oc-



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Table

I.Means,StandardDeviations,andcorre

lationsfortheStudyVaria

blesa

Variable

Mean

SD

Range

1

2

3

4

5

6

7

8

9

101

1

12

13

14

15

16

17

1.Anxiety

1.67

.40

1-4

(.71)

50

44

25

05

13

14

04

15

00

04

04

11

02

01

52

18

2.Depression

1.86

.53

1-4

(.75)

66

17

04

18

06

07

18

01

01

02

14

08

03

44

28

3.Somaticcomplaints

1.50

.40

1-4

(.77)

18

02

16

07

02

17

03

0

1

03

14

05

01

40

17

4.Gender(1=

women)

.31

.46

0,1

19

03

00

16

19

04

0

7

00

18

12

12

29

06

5.Age

38.0

10.9

20-65

07

40

30

07

02

1

0

02

15

01

10

06

12

6.Schooling

2.10

.59

1-3

08

00

18

070

0

05

10

13

08

10

28

7.Countyoforiginb

.39

.49

0,1

16

02

02

0

7

00

01

12

03

10

02

8.Maritalstatusc

.82

.38

0,1

02

03

0

6

01

04

08

08

01

11

9.Shortcycle

d

.12

.27

0,1

69

04

05

11

18

1

0.Medium

cycled

.18

.38

0,1

10

22

00

02

10

1

1.Longcycle

d

.11

.31

0,1

07

09

08

05

01

1

2.Underloadd

.15

.36

0,1

05

13

09

04

07

1

3.Piece-rateincentivese

.05

.21

0,1

16

07

08

11

1

4.Individualincentivese

.34

.47

0,1

20

02

11

1

5.Groupincentivese

.11

.32

0,1

00

04

1

6.Emotionalreactivity

3.67

1.20

1-6

(.85)

16

1

7.Subjectivemonotony

1.36

.94

1-3

(.68)

a

Listwisedeletionofmissing

datawasusedforallmultivariateanalyses.Minimal

N

=

2757.Allcorrelation

coefficients>.04aresignif

icantatthe

p

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The Effects of Pay Systems on Blue-Collar Employees Emotional Distress