Performance-Based Rewards and Culture: Tensions Between Merit and Social Context

Marcela Peterson

In many debates about people management, there is frequent discussion of meritocracy, performance, and the importance of rewarding those who deliver more. However, there is a structural aspect that rarely receives proper attention: the compatibility between the reward system and the culture in which it is applied. Implementing imported policies — especially variable compensation models anchored in the logic of “the more you perform, the more you earn”— can generate deep friction when such practices do not align with deeply rooted cultural values.

In certain contexts, national characteristics such as high power distance, strong collectivism, a tendency toward uncertainty avoidance, and a low competitive orientation shape expectations about how recognition should occur. In these cultures, the idea that individuals must stand out to receive differentiated rewards often contradicts perceptions of fairness, threatens group cohesion, and creates tensions within teams. Rather than generating motivation, systems based exclusively on individual merit may be perceived as divisive or unfair, eroding trust and cooperation in the workplace.

Despite this, there are signs of change. Research with workers shows that, even within more collectivist and hierarchical cultures, many professionals are already more open to the principle of equity—that is, the logic that rewards should vary according to individual contribution. This movement reveals a possible transformation in workers’ expectations, influenced by new economic dynamics, greater exposure to global practices, and changes in the labor market. Still, this openness does not mean that culture as a whole has changed; social values tend to be more stable than momentary attitudes.

This apparent contradiction, between a cultural context that does not strongly favor performance-based rewards and a workforce that is beginning to accept them, creates an important challenge for HR professionals. The adoption of variable systems cannot rely solely on international trends or corporate pressures. It is necessary to deeply understand how workers perceive fairness, recognition, and belonging, as well as to analyze which compensation practices strengthen and which weaken the existing organizational culture.

Another critical point is that cultural homogeneity does not exist. Organizations operating in countries with great internal diversity coexist with multiple ways of interpreting authority, hierarchy, meritocracy, and collectivity. Applying the same reward model uniformly — ignoring regional, generational, or sectoral differences — can generate even greater dissonance and strain.

Given these nuances, it becomes essential for recognition and reward systems to be designed in a contextualized manner. This implies considering not only broad cultural values but also everyday practices, employee expectations, team dynamics, and the types of behavior the organization truly seeks to encourage. Rather than importing ready-made models, companies need to build their own solutions — culturally sensitive and adjusted to local realities.

Thinking strategically about rewards means, above all, recognizing that motivating people is not merely a matter of numbers or targets, but of alignment between practices, values, and collective identity. When this alignment is respected, recognition policies become sustainable, strengthen engagement, and contribute to more coherent, integrated, and healthy work environments.