Was Weber Right? : The Effects of Pay for Ability and Pay for Performance on Pro-Social Motivation, Ability and Effort in the Public Sector
This paper examines the effects of pecuniary compensation on the ability and motivation of individuals in organizations with non-pecuniary or pro-social missions. In particular, the paper compares flat pay systems, unrelated with ability or effort,...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2015
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2015/05/24467929/weber-right-effects-pay-ability-pay-performance-pro-social-motivation-ability-effort-public-sector http://hdl.handle.net/10986/21993 |
| Summary: | This paper examines the effects of
pecuniary compensation on the ability and motivation of
individuals in organizations with non-pecuniary or
pro-social missions. In particular, the paper compares flat
pay systems, unrelated with ability or effort, to two other
systems that are considered superior: high-powered, pay for
performance schemes and more traditional, “Weberian” schemes
that calibrate pay to ability, independent of effort. The
analysis uses a sample of future public sector workers and
finds that all three pay schemes attract motivated workers
into tasks with a pro-social mission. However, flat pay
schemes also attract low ability workers. In the short run,
pay-for-performance schemes generate higher effort than flat
pay and pay-for-ability systems, a difference driven
entirely by effects on unmotivated workers. Once selection
effects are accounted for, however, workers with pay for
ability and pay for performance exert statistically
indistinguishable levels of effort in the pro-social task.
Moreover, pay for ability elicits effort at lower cost than
pay for performance. |
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