City Research Online

Abstract

Theory suggests that performance pay (PP) can align employees' interests with those of the employer and attract high‐ability workers and incentivise effort but that it may be less effective in the public sector. However, empirical evidence on its incidence and effects is largely confined to the private sector. We find that half the 20 percentage point gap in PP incidence in Britain between the public and private sectors is accounted for by differences in occupational composition. The gap falls to 8 percentage points when ‘matching’ employees in both sectors on their demographic and job characteristics. PP is linked to positive job attitudes among private sector employees, but not among observationally equivalent public sector employees. Furthermore, PP is negatively correlated with workplace performance in the public sector. These findings raise important questions about public policies promoting PP in the public sector.

Publication Type:	Article
Additional Information:	This is the peer reviewed version of the following article: Bryson, A., Forth, J., and Stokes, L. (2017) How much performance pay is there in the public sector and what are its effects?. Human Resource Management Journal, 27: 581–597, which has been published in final form at https://doi.org/10.1111/1748-8583.12153. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.
Subjects:	H Social Sciences > HD Industries. Land use. Labor
Departments:	Bayes Business School > Management
SWORD Depositor:	Symplectic Administrator

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