Why Does Performance Pay De-Motivate: Financial Incentives versus Perfrormance Appraisal
AbstractThe sheer scale and speed of the shift of payment system from time-based salaries to performance-related pay, PRP, in the British public services provides a unique opportunity to test the effects of incentive pay schemes. This study is based on the first large scale survey designed to measure the effects of performance related pay on employee motivation and work behaviour across the British public services. While there is evidence of a clear incentive effect for those gaining above average PRP, it is likely that it is offset by a more widespread demotivating effect arising from difficulties of measuring performance fairly. Organisational commitment appears to offset some of the negative effects of PRP.
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Bibliographic InfoPaper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0476.
Date of creation: Nov 2000
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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP
Performance related pay; incentives; performance measurement; organisational commitment; public sector;
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