Monetary incentives in public administration: Does recent theory support the practice of performance-related pay in the public sector?
Type
presentation
Date Issued
2008-06-03
Author(s)
Helmuth, Utz
Abstract
This article examines the effect of monetary incentives in the public sector. Apart from traditional seniority-based pay, performance-related pay models are widely prevalent in many industrial states' administrations as a result of the New Public Management movement. But does the adoption of this instrument, which was developed for industry, make sense in the public sector? A comparison of various empiric studies on motivation shows rather marginal differences in the effect of extrinsic incentives between public and private sector employees. Conversely, several studies link public employees with an increased intrinsic motivation which increases the potential danger of the suppression of this part of their motivation by monetary incentives. On the basis of more recent experimental economic research results it can be theoretically shown that both the selected contract type and the low level of monetary incentives further increase this danger, and as a result it can be assumed that performance-related pay models in their current form for public administrations have a motivation-destroying effect.
Language
English
Keywords
performance-related pay
incentives
public management
new public management
npm
HSG Classification
contribution to scientific community
Refereed
No
Event Title
Economics challenge of XXI Century
Event Location
Miedzyzdroje, Poland
Subject(s)
Division(s)
Eprints ID
45601