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Incentives and their dynamics in public sector performance management systems

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  • Carolyn J. Heinrich

    (Professor and Director, La Follette School of Public Affairs, University of Wisconsin-Madison)

  • Gerald Marschke

    (Associate Professor, Department of Public Administration and Policy and Department of Economics, State University of New York at Albany, Faculty Research Fellow at NBER, and Research Fellow at IZA)

Abstract

We use the principal-agent model as a focal theoretical frame for synthesizing what we know, both theoretically and empirically, about the design and dynamics of the implementation of performance management systems in the public sector. In this context, we review the growing body of evidence about how performance measurement and incentive systems function in practice and how individuals and organizations respond and adapt to them over time, drawing primarily on examples from performance measurement systems in public education and social welfare programs. We also describe a dynamic framework for performance measurement systems that takes into account strategic behavior of individuals over time, learning about production functions and individual responses, accountability pressures, and the use of information about the relationship of measured performance to value added. Implications are discussed and recommendations derived for improving public sector performance measurement systems. © 2010 by the Association for Public Policy Analysis and Management.

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File URL: http://hdl.handle.net/10.1002/pam.20484
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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Journal of Policy Analysis and Management.

Volume (Year): 29 (2010)
Issue (Month): 1 ()
Pages: 183-208

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Handle: RePEc:wly:jpamgt:v:29:y:2010:i:1:p:183-208

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Web page: http://www3.interscience.wiley.com/journal/34787/home

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References

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Citations

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Cited by:
  1. Kato, Takao & Kauhanen, Antti & Salmi, Julia, 2013. "Empirical Evidence on the Dynamics of Incentive Plans," ETLA Working Papers, The Research Institute of the Finnish Economy 20, The Research Institute of the Finnish Economy.
  2. Pierre Koning & C.J. Heinrich, 2009. "Cream-skimming, parking and other intended and unintended effects of performance-based contracting in social welfare services," CPB Discussion Paper, CPB Netherlands Bureau for Economic Policy Analysis 134, CPB Netherlands Bureau for Economic Policy Analysis.
  3. Gregory F. Branch & Eric A. Hanushek & Steven G. Rivkin, 2012. "Estimating the Effect of Leaders on Public Sector Productivity: The Case of School Principals," NBER Working Papers 17803, National Bureau of Economic Research, Inc.
  4. Kirsten Bregn, 2013. "Detrimental Effects of Performance-Related Pay in the Public Sector? On the Need for a Broader Theoretical Perspective," Public Organization Review, Springer, Springer, vol. 13(1), pages 21-35, March.
  5. Christian Bøtcher Jacobsen & Lotte Bøgh Andersen, 2014. "Leading public service organizations: How to obtain employees with high self-efficacy," Study Papers, Rockwool Foundation Research Unit 72, Rockwool Foundation Research Unit.
  6. Dietrichson, Jens, 2013. "Coordination Incentives, Performance Measurement and Resource Allocation in Public Sector Organizations," Working Papers, Lund University, Department of Economics 2013:26, Lund University, Department of Economics.
  7. Hicks, Diana, 2012. "Performance-based university research funding systems," Research Policy, Elsevier, Elsevier, vol. 41(2), pages 251-261.

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