Reward Devaluation Productivity Slump
RCTClinical Trial
When workers systematically overestimate the salary associated with a higher-level position, learning that the true financial reward is smaller than expected may deflate career tournament incentives even under meritocratic promotion rules.
Picture this
Imagine a runner training intensely for a trophy they believe is worth a thousand dollars; upon discovering the trophy is only worth five hundred dollars, their motivation drops because the expected reward for winning the race was downgraded.
What the evidence says
Correcting downward an overestimated supervisor salary under a meritocratic promotion regime reduced household health visits by 21% (-2.045 visits; p < 0.05), whereas under a non-meritocratic regime the effect was non-significant (-0.639 visits).
- Who was studied
- N = 673 Community Health Workers who overestimated supervisor pay at baseline across Peripheral Health Units in Sierra Leone.
- How
- Randomized experiment evaluating performance changes among workers who overestimated supervisor pay after receiving accurate salary information under meritocratic vs. non-meritocratic regimes.
What to do
Accurately manage employee salary expectations early to prevent incentive deflation caused by downward corrections in perceived promotion rewards.
From the source
"In the new more meritocratic regime, lower pay progression reduces the number of visits by 2.045 (-21%), while it has no significant effect in the in the old, less meritocratic regime..."
Promotions_and_Productivity_The_Role_of_Meritocracy_and_Pay_Progression.pdf