Employee X is paid on the results she delivers, and enjoys the excitement of unexpected bonuses. Employee Y is paid a standard wage and enjoys the security of a steady cheque each month. But which is better off? Well, regardless of income, research suggests that the employee Xs are not only happier but feel less pressured, and are less likely to leave their jobs.

“For me it works well. Having the direct link between performance and pay means that I have a more positive approach to my work,” explains Lauren Murphy, a PA at the Bank of America. “It’s nice to know that your effort and attitude towards work will be rewarded. We have many schemes here where we receive recognition and rewards for going ‘above and beyond’ our core roles, which can be in the form of gifts, stock or cash.”

If research by the employment magazine Contract Journal is to be believed, Lauren’s reward-based pay structure makes her happier, less stressed and more likely to get along with her managers. Psychologists are also quick to point out the synchronicities between performance pay and the human mindset.

“Our brains are very much stimulated by reward,” explains occupational psychologist Dr Angela Carter, of the Institute of Work Psychology at the University of Sheffield. “It comes back to those simple experiments where rats push a button and gain a reward, so they are motivated to keep doing it. If we do something and are rewarded we will continue to do it.”

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In the first of our five-part video series on body language we explore some of the postures seen in the workplace

• Video: Understanding body language - Part two

• Video: Understanding body language - Part three

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In the fourth of our five-part video series we look at some do's and don'ts in an interview situation

• Video: Understanding body language - Part five

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It’s not only the lure of extra cash that delivers the psychological reward to employees on performance-related pay deals. Experts have long argued that control over one’s work environment helps to lower stress and boost happiness. So allowing staff partial control over their pay packet delivers this benefit, while the dynamic of being rewarded by one’s manager fulfils a valuable function of appreciation for a job well done — the lack of which is associated with discontent and job-hopping.

But not everyone agrees on the benefits of performance-related pay. According to Jon Dymond, director of Hay Group Management Consultancy, this pay structure is preferred by younger workers, implying that it is less synonymous with work-life balance and more the choice of the young go-getter who doesn’t mind sacrificing his or her home life for a healthy bank balance.

And while some may be tempted to draw unflattering analogies between lab rats and office workers, human beings are a lot more complicated than their rodent counterparts. So although the “work-hard-gain-money” equation may work on some levels, there are more intricate factors at play.

“What is a reward for one person might not be a reward for another,” says Dr Carter. “It all depends on your personal value system. I would argue that praise from a manager would work just as well as money for most people. All they really want is appreciation for how hard they’ve worked.”

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