The Paradox of Performance Related Pay Systems: 'Why Do We Keep Adopting Them in the Face of Evidence that they Fail to Motivate?'
This paper considers one of the paradoxes of incentive pay used in Britain's public services, namely that despite much evidence that it does not motivate employees, it continues to be widely used. It is argued that behind this evidence, there are significant examples in which its use has been associated with improved performance. A good part of this is to be explained by the way performance pay links pay and appraisal, and the pressure this puts on line managers to set clearer goals for their staff. There is also some evidence that the goal setting is the outcome of a form of integrative, or positive sum, negotiation between individual employees and their managers, and that it is not just 'top down'.
|Date of creation:||Aug 2009|
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- Adele Atkinson & Simon Burgess & Bronwyn Croxson & Paul Gregg, 2004.
"Evaluating the Impact of Performance-related Pay for Teachers in England,"
The Centre for Market and Public Organisation
04/113, Department of Economics, University of Bristol, UK.
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"Pay for Performance Where Output is Hard to Measure: the Case of Performance Pay for School Teachers,"
CEP Discussion Papers
dp0747, Centre for Economic Performance, LSE.
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- Tirole, J., 1993.
"The Internal Organization of Government,"
93-11, Massachusetts Institute of Technology (MIT), Department of Economics.
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