How much performance pay is there in the public sector and what are its effects?. (12th May 2017)

• Record Type: Journal Article
• Authors: Bryson, Alex; Forth, John; Stokes, Lucy
• Other Names: van Berkel Rik guestEditor.; Ingold Jo guestEditor.; McGurk Patrick guestEditor.; Boselie Paul guestEditor.; Bredgaard Thomas guestEditor.
• Is Part Of: Human resource management journal. Volume 27:Number 4(2017)
• Page Start: 581
• Page End: 597
• Publication Date: 2017-05-12
• Subjects: public sector -- performance pay -- workplace performance -- organisational commitment -- intrinsic job satisfaction; Personnel management -- Periodicals; 658.3
• DOI: 10.1111/1748-8583.12153
• Languages: English
• ISSNs: 0954-5395

Abstract

Abstract : Theory suggests that performance pay (PP) can align employees' interests with those of the employer and attract high‐ability workers and incentivise effort but that it may be less effective in the public sector. However, empirical evidence on its incidence and effects is largely confined to the private sector. We find that half the 20 percentage point gap in PP incidence in Britain between the public and private sectors is accounted for by differences in occupational composition. The gap falls to 8 percentage points when 'matching' employees in both sectors on their demographic and job characteristics. PP is linked to positive job attitudes among private sector employees, but not among observationally equivalent public sector employees. Furthermore, PP is negatively correlated with workplace performance in the public sector. These findings raise important questions about public policies promoting PP in the public sector.