Performance pay for the public sector?

By James Zuccollo 22/01/2015 1

In December last year The Work Foundation released a comprehensive review of performance-related pay in the public sector:

PRP schemes can be effective in improving outcomes across the three public services for which evidence is available (health, education and the civil service), although the central conclusion is that the outcomes from PRP are mixed, which much dependent upon organisational and occupational context and scheme design and implementation. Where positive effects have been found, effect sizes are sometimes small and may also be short-lived. As well as evidence gaps across much of the public services, the weight of evidence also varies, with the more robust evidence coming from education and health rather than the civil service. Cost-effectiveness data to assess the value for money of PRP interventions is also rare.

The implication is that performance-related pay isn’t a quick fix: it requires careful development to fit it to the context, and organisations might take a while to adapt to it and see benefits. Without more examples in the public sector it isn’t possible to say whether it will prove cost-effective.

One Response to “Performance pay for the public sector?”

  • Perhaps peruse the Harvard Business Review. They have some good articles on performance pay – key takeaway is that any observed effect is at best minor, generally it doesn’t work, and it’s very very easy to create a PRP system that creates perverse incentives that are counter to the organisation’s goals.
    This is due to the fact that essentially, in any complex field of work, it’s impossible to properly design and measure all the attributes of performance that you think are required as many of them are not amenable to measurement.