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The role of performance-related pay in renegotiating the "effort bargain": The case of the British public service

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Author Info
David Marsden

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Abstract

Much of the academic and policy literature on performance-related pay (PRP) focuses on its role as an incentive system. Its role as a means for renegotiating performance norms has been largely neglected. This study examines the introduction of performance-related pay, based mostly on appraisals by line managers, in Britain's public services during the 1990s. Previous research indicates that PRP failed to motivate many of the staff and that its operation was divisive. Nevertheless, other information suggests that productivity rose. This article seeks to resolve the paradox using contract theory to show that performance pay was the instrument of a major renegotiation of performance norms, and that this rather than motivation was the principal dynamic. Goal-setting and appraisal by line managers played a key role in this process. (Author's abstract.) (Free full-text download available at http://digitalcommons.ilr.cornell.edu/ilrreview/.)

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Article provided by ILR Review, ILR School, Cornell University in its journal ILR Review.

Volume (Year): 57 (2004)
Issue (Month): 3 (April)
Pages: 350-370
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Handle: RePEc:ilr:articl:v:57:y:2004:i:3:p:350-370

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  1. Antti Kauhanen & Hannu Piekkola, 2004. "What Makes Performance-related Pay Schemes Work? Finnish Evidence," Discussion Papers 929, The Research Institute of the Finnish Economy. [Downloadable!]
  2. Richard Belfield & David Marsden, 2004. "Unions, Performance-Related Pay and Procedural Justice: the Case of Classroom Teachers," CEP Discussion Papers dp0660, Centre for Economic Performance, LSE. [Downloadable!]
  3. Richard Belfield & David Marsden, 2005. "Performance Pay for Teachers: Linking Individual and Organisational Level Targets," CEP Discussion Papers dp0703, Centre for Economic Performance, LSE. [Downloadable!]
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