Dr Sudha and her colleagues analysed survey responses from 341 Maldivian civil service employees to understand how financial rewards relate to job performance. The researchers looked not only at how well employees completed their core duties but also how effectively they adapted to new situations – an increasingly important skill in today’s fast-changing workplaces.

The study found that increased financial rewards can influence performance in two different ways at the same time – one negative and one positive.

On the one hand, higher pay showed a small direct negative effect on performance. One explanation is the well-known “crowding-out” effect. Many public servants are strongly motivated by purpose, service, and professional pride. When money becomes more prominent, it can unintentionally dilute that intrinsic motivation.

A simple analogy helps. Imagine someone who volunteers because they care deeply about a cause. If they suddenly receive a cash bonus, part of their internal motivation may weaken – the activity can start to feel more transactional than meaningful.

However, the study also found a positive indirect effect. Better financial rewards were linked to stronger organisational commitment – and employees who felt more committed tended to perform better. In other words, pay can boost performance when it makes people feel valued and more connected to their organisation. The team’s findings suggest that how pay is implemented and interpreted matters greatly.

Their research also points to several practical ways organisations can strengthen performance. These include linking rewards clearly to meaningful contributions, combining financial incentives with genuine recognition, and fostering supportive management practices that reinforce employees’ sense of purpose and belonging.