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Organizational Control Systems and Pay-for-Performance in the Public Service

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  • Bruno S. Frey
  • Fabian Homberg
  • Margit Osterloh

Abstract

Under certain conditions, output related performance measurement and pay-for-performance produce negative outcomes. We argue that in public service, these negative effects are stronger than in the private sector. We combine Behavioural Economics and Management Control Theory to determine under which conditions this is the case. We suggest as alternatives to the dominant output related pay-for-performance systems selection and socialization, exploratory use of output performance measures, and awards.

Suggested Citation

  • Bruno S. Frey & Fabian Homberg & Margit Osterloh, 2013. "Organizational Control Systems and Pay-for-Performance in the Public Service," CREMA Working Paper Series 2013-11, Center for Research in Economics, Management and the Arts (CREMA).
    • Handle: RePEc:cra:wpaper:2013-11
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    References listed on IDEAS

    as
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    5. Unknown, 2001. "2001 Spring," CWAE Newsletter, Agricultural and Applied Economics Association, Committee on Women in Agricultural Economics (CWAE), pages 1-17.
    6. Roland Bénabou & Jean Tirole, 2003. "Intrinsic and Extrinsic Motivation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(3), pages 489-520.
    7. Unknown, 2002. "2002 Summer," CWAE Newsletter, Agricultural and Applied Economics Association, Committee on Women in Agricultural Economics (CWAE), pages 1-13.
    8. Simon Burgess & Marisa Ratto, 2003. "The Role of Incentives in the Public Sector: Issues and Evidence," The Centre for Market and Public Organisation 03/071, The Centre for Market and Public Organisation, University of Bristol, UK.
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