Performance-related Pay in the Public Sector : A Review of Theory and Evidence
The objective of this paper is to provide a review of the theoretical and, in particular, empirical literature on performance-related pay in the public sector spanning the fields of public administration, psychology, economics, education, and healt...
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| Format: | Policy Research Working Paper |
| Language: | English |
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World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2012/04/16235004/performance-related-pay-public-sector-review-theory-evidence http://hdl.handle.net/10986/6046 |
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okr-10986-6046 |
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| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
ABSENTEEISM ACHIEVEMENT ADJUSTMENT ADVERSE SELECTION ATTENTION ATTRIBUTION BARGAINING BENCHMARK BORROWING BUSINESSES CAPABILITIES CAREER CASH FLOWS CIVIL SERVICE COGNITIVE ABILITY COLLEGE STUDENTS COLLEGES COMPETITIVENESS CONTROL GROUPS CREATIVITY DECENTRALIZATION DEVELOPMENT POLICY DRIVERS DROPOUT RATES ECONOMIC THEORIES ECONOMICS ECONOMICS LITERATURE EMPLOYEE INVOLVEMENT EMPLOYMENT EXTERNALITIES EXTRINSIC INCENTIVES FINAL OUTCOMES FUTURE RESEARCH GENDER GENDER EQUITY GENERAL POPULATION GENERAL PUBLIC GOVERNMENT EMPLOYEES HUMAN CAPITAL HUMAN RESOURCE IMAGE INCENTIVE EFFECTS INCENTIVE PLANS INCOME INFERENCE INNOVATION INSPECTION INSPECTIONS INSTRUCTION INSURANCE INSURANCE SYSTEMS INTRINSIC MOTIVATION JOB SATISFACTION JOB SECURITY KNOWLEDGE WORKERS LABOR MARKET LABOR RELATIONS LABOR SUPPLY LEARNING LEARNING OUTCOMES LITERATURE LOTTERIES MANAGERIAL DISCRETION MANUFACTURING MATHEMATICS MENU MIDDLE INCOME COUNTRIES MORAL HAZARD MOTIVATION NEGATIVE EXTERNALITIES NETWORKS OCCUPATIONS OPEN ACCESS ORGANIZATIONAL GOALS ORGANIZATIONAL MANAGEMENT OUTPUTS PAPERS PERCEPTION PERFORMANCE MEASURE PERFORMANCE MEASURES PERFORMANCE PAY PILOT PROJECT POSITIVE EFFECTS PRINCIPAL-AGENT RELATIONSHIPS PRIVATE INFORMATION PRIVATE SCHOOLS PRIVATE SECTOR PRIVATE SECTOR FIRMS PRODUCTION PROCESS PRODUCTION PROCESSES PRODUCTIVITY PROFESSIONAL STAFF PROFESSIONAL STANDARDS PROFIT SHARING PSYCHOLOGY PUBLIC ADMINISTRATION QUALIFIED TEACHERS RECOGNITION RESEARCH LITERATURE RESEARCHERS RESULT RESULTS RETENTION SAFETY SCHOOLS SCIENTISTS SERVANTS SIDE EFFECTS SOCIAL COSTS STAFF MORALE STAFF SALARIES STATISTICAL DATA STUDENT GROUPS STUDENT LEARNING SUPERVISION SUPPLIERS TARGETS TEACHER TEACHERS TEACHING TIME FRAME TIME PERIOD TRAINING PROGRAMS TRANSACTION UNIVERSITY STUDENTS USES WAGES WEB WORKER PRODUCTIVITY |
| spellingShingle |
ABSENTEEISM ACHIEVEMENT ADJUSTMENT ADVERSE SELECTION ATTENTION ATTRIBUTION BARGAINING BENCHMARK BORROWING BUSINESSES CAPABILITIES CAREER CASH FLOWS CIVIL SERVICE COGNITIVE ABILITY COLLEGE STUDENTS COLLEGES COMPETITIVENESS CONTROL GROUPS CREATIVITY DECENTRALIZATION DEVELOPMENT POLICY DRIVERS DROPOUT RATES ECONOMIC THEORIES ECONOMICS ECONOMICS LITERATURE EMPLOYEE INVOLVEMENT EMPLOYMENT EXTERNALITIES EXTRINSIC INCENTIVES FINAL OUTCOMES FUTURE RESEARCH GENDER GENDER EQUITY GENERAL POPULATION GENERAL PUBLIC GOVERNMENT EMPLOYEES HUMAN CAPITAL HUMAN RESOURCE IMAGE INCENTIVE EFFECTS INCENTIVE PLANS INCOME INFERENCE INNOVATION INSPECTION INSPECTIONS INSTRUCTION INSURANCE INSURANCE SYSTEMS INTRINSIC MOTIVATION JOB SATISFACTION JOB SECURITY KNOWLEDGE WORKERS LABOR MARKET LABOR RELATIONS LABOR SUPPLY LEARNING LEARNING OUTCOMES LITERATURE LOTTERIES MANAGERIAL DISCRETION MANUFACTURING MATHEMATICS MENU MIDDLE INCOME COUNTRIES MORAL HAZARD MOTIVATION NEGATIVE EXTERNALITIES NETWORKS OCCUPATIONS OPEN ACCESS ORGANIZATIONAL GOALS ORGANIZATIONAL MANAGEMENT OUTPUTS PAPERS PERCEPTION PERFORMANCE MEASURE PERFORMANCE MEASURES PERFORMANCE PAY PILOT PROJECT POSITIVE EFFECTS PRINCIPAL-AGENT RELATIONSHIPS PRIVATE INFORMATION PRIVATE SCHOOLS PRIVATE SECTOR PRIVATE SECTOR FIRMS PRODUCTION PROCESS PRODUCTION PROCESSES PRODUCTIVITY PROFESSIONAL STAFF PROFESSIONAL STANDARDS PROFIT SHARING PSYCHOLOGY PUBLIC ADMINISTRATION QUALIFIED TEACHERS RECOGNITION RESEARCH LITERATURE RESEARCHERS RESULT RESULTS RETENTION SAFETY SCHOOLS SCIENTISTS SERVANTS SIDE EFFECTS SOCIAL COSTS STAFF MORALE STAFF SALARIES STATISTICAL DATA STUDENT GROUPS STUDENT LEARNING SUPERVISION SUPPLIERS TARGETS TEACHER TEACHERS TEACHING TIME FRAME TIME PERIOD TRAINING PROGRAMS TRANSACTION UNIVERSITY STUDENTS USES WAGES WEB WORKER PRODUCTIVITY Hasnain, Zahid Manning, Nick Pierskalla, Jan Henryk Performance-related Pay in the Public Sector : A Review of Theory and Evidence |
| relation |
Policy Research Working Paper ; No. 6043 |
| description |
The objective of this paper is to
provide a review of the theoretical and, in particular,
empirical literature on performance-related pay in the
public sector spanning the fields of public administration,
psychology, economics, education, and health with the aim of
distilling useful lessons for policy-makers in developing
countries. This study to our knowledge is the first that
aims to disaggregate the available evidence by: (i) the
quality of the empirical study; (ii) the different public
sector contexts, in particular the different types of public
sector jobs; and (iii) geographical context (developing
country or OECD settings). The paper's main findings,
based on a comprehensive review of 110 studies of public
sector and relevant private sector jobs are as follows.
First, we find that overall a majority (65 of 110) of
studies find a positive effect of performance-related pay,
with higher quality empirical studies (68 of the 110)
generally more positive in their findings (46 of the 68).
These show that explicit performance standards linked to
some form of bonus pay can improve, at times dramatically,
desired service outcomes. Second, however, these more
rigorous studies are overwhelmingly for jobs where the
outputs or outcomes are more readily observable, such as
teaching, health care, and revenue collection (66 of the
68). There is insufficient evidence, positive or negative,
of the effect of performance-related pay in organizational
contexts that that are similar to that of the core civil
service, characterized by task complexity and the difficulty
of measuring outcomes, to reach a generalized conclusion
concerning such reforms. Third, while some of these studies
have shown that performance-related pay can work even in the
most dysfunctional bureaucracies in developing countries,
there are too few cases to draw firm conclusions. Fourth,
several observational studies identify problems with
unintended consequences and gaming of the incentive scheme,
although it is unclear whether the gaming results in an
overall decline in productivity compared to the
counterfactual. Finally, few studies follow up
performance-related pay effects over a long period of time,
leaving the possibility that the positive findings may be
due to Hawthorne Effects, and that gaming behavior may
increase over time as employees become more familiar with
the scheme and learn to manipulate it. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Hasnain, Zahid Manning, Nick Pierskalla, Jan Henryk |
| author_facet |
Hasnain, Zahid Manning, Nick Pierskalla, Jan Henryk |
| author_sort |
Hasnain, Zahid |
| title |
Performance-related Pay in the
Public Sector : A Review of Theory and Evidence |
| title_short |
Performance-related Pay in the
Public Sector : A Review of Theory and Evidence |
| title_full |
Performance-related Pay in the
Public Sector : A Review of Theory and Evidence |
| title_fullStr |
Performance-related Pay in the
Public Sector : A Review of Theory and Evidence |
| title_full_unstemmed |
Performance-related Pay in the
Public Sector : A Review of Theory and Evidence |
| title_sort |
performance-related pay in the
public sector : a review of theory and evidence |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/2012/04/16235004/performance-related-pay-public-sector-review-theory-evidence http://hdl.handle.net/10986/6046 |
| _version_ |
1764397228555763712 |
| spelling |
okr-10986-60462021-04-23T14:02:24Z Performance-related Pay in the Public Sector : A Review of Theory and Evidence Hasnain, Zahid Manning, Nick Pierskalla, Jan Henryk ABSENTEEISM ACHIEVEMENT ADJUSTMENT ADVERSE SELECTION ATTENTION ATTRIBUTION BARGAINING BENCHMARK BORROWING BUSINESSES CAPABILITIES CAREER CASH FLOWS CIVIL SERVICE COGNITIVE ABILITY COLLEGE STUDENTS COLLEGES COMPETITIVENESS CONTROL GROUPS CREATIVITY DECENTRALIZATION DEVELOPMENT POLICY DRIVERS DROPOUT RATES ECONOMIC THEORIES ECONOMICS ECONOMICS LITERATURE EMPLOYEE INVOLVEMENT EMPLOYMENT EXTERNALITIES EXTRINSIC INCENTIVES FINAL OUTCOMES FUTURE RESEARCH GENDER GENDER EQUITY GENERAL POPULATION GENERAL PUBLIC GOVERNMENT EMPLOYEES HUMAN CAPITAL HUMAN RESOURCE IMAGE INCENTIVE EFFECTS INCENTIVE PLANS INCOME INFERENCE INNOVATION INSPECTION INSPECTIONS INSTRUCTION INSURANCE INSURANCE SYSTEMS INTRINSIC MOTIVATION JOB SATISFACTION JOB SECURITY KNOWLEDGE WORKERS LABOR MARKET LABOR RELATIONS LABOR SUPPLY LEARNING LEARNING OUTCOMES LITERATURE LOTTERIES MANAGERIAL DISCRETION MANUFACTURING MATHEMATICS MENU MIDDLE INCOME COUNTRIES MORAL HAZARD MOTIVATION NEGATIVE EXTERNALITIES NETWORKS OCCUPATIONS OPEN ACCESS ORGANIZATIONAL GOALS ORGANIZATIONAL MANAGEMENT OUTPUTS PAPERS PERCEPTION PERFORMANCE MEASURE PERFORMANCE MEASURES PERFORMANCE PAY PILOT PROJECT POSITIVE EFFECTS PRINCIPAL-AGENT RELATIONSHIPS PRIVATE INFORMATION PRIVATE SCHOOLS PRIVATE SECTOR PRIVATE SECTOR FIRMS PRODUCTION PROCESS PRODUCTION PROCESSES PRODUCTIVITY PROFESSIONAL STAFF PROFESSIONAL STANDARDS PROFIT SHARING PSYCHOLOGY PUBLIC ADMINISTRATION QUALIFIED TEACHERS RECOGNITION RESEARCH LITERATURE RESEARCHERS RESULT RESULTS RETENTION SAFETY SCHOOLS SCIENTISTS SERVANTS SIDE EFFECTS SOCIAL COSTS STAFF MORALE STAFF SALARIES STATISTICAL DATA STUDENT GROUPS STUDENT LEARNING SUPERVISION SUPPLIERS TARGETS TEACHER TEACHERS TEACHING TIME FRAME TIME PERIOD TRAINING PROGRAMS TRANSACTION UNIVERSITY STUDENTS USES WAGES WEB WORKER PRODUCTIVITY The objective of this paper is to provide a review of the theoretical and, in particular, empirical literature on performance-related pay in the public sector spanning the fields of public administration, psychology, economics, education, and health with the aim of distilling useful lessons for policy-makers in developing countries. This study to our knowledge is the first that aims to disaggregate the available evidence by: (i) the quality of the empirical study; (ii) the different public sector contexts, in particular the different types of public sector jobs; and (iii) geographical context (developing country or OECD settings). The paper's main findings, based on a comprehensive review of 110 studies of public sector and relevant private sector jobs are as follows. First, we find that overall a majority (65 of 110) of studies find a positive effect of performance-related pay, with higher quality empirical studies (68 of the 110) generally more positive in their findings (46 of the 68). These show that explicit performance standards linked to some form of bonus pay can improve, at times dramatically, desired service outcomes. Second, however, these more rigorous studies are overwhelmingly for jobs where the outputs or outcomes are more readily observable, such as teaching, health care, and revenue collection (66 of the 68). There is insufficient evidence, positive or negative, of the effect of performance-related pay in organizational contexts that that are similar to that of the core civil service, characterized by task complexity and the difficulty of measuring outcomes, to reach a generalized conclusion concerning such reforms. Third, while some of these studies have shown that performance-related pay can work even in the most dysfunctional bureaucracies in developing countries, there are too few cases to draw firm conclusions. Fourth, several observational studies identify problems with unintended consequences and gaming of the incentive scheme, although it is unclear whether the gaming results in an overall decline in productivity compared to the counterfactual. Finally, few studies follow up performance-related pay effects over a long period of time, leaving the possibility that the positive findings may be due to Hawthorne Effects, and that gaming behavior may increase over time as employees become more familiar with the scheme and learn to manipulate it. 2012-04-27T07:44:31Z 2012-04-27T07:44:31Z 2012-04 http://documents.worldbank.org/curated/en/2012/04/16235004/performance-related-pay-public-sector-review-theory-evidence http://hdl.handle.net/10986/6046 English Policy Research Working Paper ; No. 6043 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |