Ciara Deeny 20168596
HR408 Open-Book Exam
1. What problems have been associated with the introduction of performance-related pay (PRP)
in public services? Can PRP be understood as an example of the attempt to transfer ‘best
practice’ from the private sector to public services under NPM?
Word Count: 1,480
Introduction
The introduction of Performance-Related-Pay (PRP) can be viewed as broader key theme of New
Public Management (NPM). Key themes pertaining to HR reforms consider performance management
measured against outcomes including, appraisal, control and performance-related-pay (Bach &
Kessler, 2007). PRP pertains to periodic increases in pay, determined by an assessment of an
individual’s organisational performance and overall value (Murlis, 1987).
Characteristics of the Performance Paradigm address efforts to incentivise, then leading to the driving
up of performance through targets, rewards and competition. For example, PRP or ‘earned autonomy.’
The ability to corroborate pay increases to individual performance was once a concept which was only
seen as achievable in the private sector. However, since the late 1970s, a significant proportion of
government organisations have adopted PRP practices for public service employees (Belle, 2015).
It has been previously argued that PRP within public services was introduced to act as a motivator for
public services employees. Although, it has been uncovered that this introduction may incur the
opposite effect on employees. Moreover, an underlying theme of PRP within public services is the
shift from incremental pay and reward for seniority towards a focus on individual contribution relative
to the attainment of organisational objectives.
This paper will demonstrate benefits of PRP within the public sector, as well as the challenges faced
by such an implementation. Furthermore, PRP will be discussed relative to NPM’s focus on
performance management as means to improve public services.
Benefits of PRP
In the simplest of terms, PRP was implemented in hopes of “strengthening the link between employee
input of effort and the incentives they receive in terms of pay,” (The Work Foundation, 2014). When
put into practice, PRP was found to have several benefits surrounding public service employees.
Advocates of PRP argue it offers a fairer way of linking reward to the extent of effort and
performance an employee contributes, alongside providing an effective mechanism to communicate
‘what matters’ within the scope of public services.
OECD (2005) details PRP as offering a considerable degree of fairness, relative to the underlying
concept of the ‘reward’ being based on extent of contribution, rather than based solely on length of
, time served. This acts as a motivator for all employees across governmental bodies, as the degree of
employee outputs and contribution can be recognised by managerial personnel and rewarded
accordingly.
A shift towards PRP can be seen in work flexibility strategies. From national bargaining for central
government to numerous bargaining units, which offer some more flexibility and variation in
structures and grading (Bach & Girvan, 2011; Bach & Kessler, 2012). PRP can be related to
expectancy theory, in which a desired behaviour is selected as a conscious choice, amongst
alternatives, with the aim of maximising pleasure and minimising pain. Such behaviours contribute to
the belief that increased effort will lead to increased performance, and ultimately, will lead to a
reward. In this instance, the reward being monetary (Lavy 2007; Perry et al., 2006).
Moreover, the Work Foundation (2014) illustrates PRP as having the capability to recruit and retain
high-performing employees within the scope of public services, who are attracted to incentive relative
to the definitive characteristics of PRP. This establishes an organisational culture wherein employees
are continuously striving to perform well, improve working practices and achieve government-set
targets. Ultimately, this will improve the outputs relative to the deliverance of public services.
The institutionalisation of PRP within the public service landscape illustrates a shift away from the
‘traditional civil service model,’ (White, 2011), alongside the attempt by governmental bodies to
employ pay flexibility through premia for ‘hard to fill’ jobs in public service bodies, including the
NHS and teaching. Incentives were established in order to encourage public servants to remain on the
frontline, rather than move to managerial positions (Perkins and White 2010; Bach and Kessler 2012).
PRP conveys to public service workers the features work efforts are to be largely focused on.
Therefore, the literature consulted illustrates PRP as positively contributing to employee motivation,
increase in outputs and facilitating a culture of high productivity within public service bodies.
Challenges of PRP
It is arguable to state the penetration of PRP is limited. Current reforms in the public sector can be
characterised by the adoption of private sector incentive structures. However, the integration of these
private sector behaviours may be hindered by the institutionalised public sector structures (Weibel et
al., 2009). Bryson et al., (2017) details, “Public sector workplaces using PRP perform more poorly
than their matched counterparts that do not use PRP.” Thus, conveying PRP’s practical
ineffectiveness. Moreover, broader performance management outcomes may be difficult to align with
public service values and ethos.
Marsden (2004) draws on the perspective of PRP being ineffective in practice resultant of expectancy
problems, if belief surrounding performance-reward is not linked; or if effort-performance is not
linked; or if reward is not valued by the employee. Moreover, ‘gaming’ occurs when employees
HR408 Open-Book Exam
1. What problems have been associated with the introduction of performance-related pay (PRP)
in public services? Can PRP be understood as an example of the attempt to transfer ‘best
practice’ from the private sector to public services under NPM?
Word Count: 1,480
Introduction
The introduction of Performance-Related-Pay (PRP) can be viewed as broader key theme of New
Public Management (NPM). Key themes pertaining to HR reforms consider performance management
measured against outcomes including, appraisal, control and performance-related-pay (Bach &
Kessler, 2007). PRP pertains to periodic increases in pay, determined by an assessment of an
individual’s organisational performance and overall value (Murlis, 1987).
Characteristics of the Performance Paradigm address efforts to incentivise, then leading to the driving
up of performance through targets, rewards and competition. For example, PRP or ‘earned autonomy.’
The ability to corroborate pay increases to individual performance was once a concept which was only
seen as achievable in the private sector. However, since the late 1970s, a significant proportion of
government organisations have adopted PRP practices for public service employees (Belle, 2015).
It has been previously argued that PRP within public services was introduced to act as a motivator for
public services employees. Although, it has been uncovered that this introduction may incur the
opposite effect on employees. Moreover, an underlying theme of PRP within public services is the
shift from incremental pay and reward for seniority towards a focus on individual contribution relative
to the attainment of organisational objectives.
This paper will demonstrate benefits of PRP within the public sector, as well as the challenges faced
by such an implementation. Furthermore, PRP will be discussed relative to NPM’s focus on
performance management as means to improve public services.
Benefits of PRP
In the simplest of terms, PRP was implemented in hopes of “strengthening the link between employee
input of effort and the incentives they receive in terms of pay,” (The Work Foundation, 2014). When
put into practice, PRP was found to have several benefits surrounding public service employees.
Advocates of PRP argue it offers a fairer way of linking reward to the extent of effort and
performance an employee contributes, alongside providing an effective mechanism to communicate
‘what matters’ within the scope of public services.
OECD (2005) details PRP as offering a considerable degree of fairness, relative to the underlying
concept of the ‘reward’ being based on extent of contribution, rather than based solely on length of
, time served. This acts as a motivator for all employees across governmental bodies, as the degree of
employee outputs and contribution can be recognised by managerial personnel and rewarded
accordingly.
A shift towards PRP can be seen in work flexibility strategies. From national bargaining for central
government to numerous bargaining units, which offer some more flexibility and variation in
structures and grading (Bach & Girvan, 2011; Bach & Kessler, 2012). PRP can be related to
expectancy theory, in which a desired behaviour is selected as a conscious choice, amongst
alternatives, with the aim of maximising pleasure and minimising pain. Such behaviours contribute to
the belief that increased effort will lead to increased performance, and ultimately, will lead to a
reward. In this instance, the reward being monetary (Lavy 2007; Perry et al., 2006).
Moreover, the Work Foundation (2014) illustrates PRP as having the capability to recruit and retain
high-performing employees within the scope of public services, who are attracted to incentive relative
to the definitive characteristics of PRP. This establishes an organisational culture wherein employees
are continuously striving to perform well, improve working practices and achieve government-set
targets. Ultimately, this will improve the outputs relative to the deliverance of public services.
The institutionalisation of PRP within the public service landscape illustrates a shift away from the
‘traditional civil service model,’ (White, 2011), alongside the attempt by governmental bodies to
employ pay flexibility through premia for ‘hard to fill’ jobs in public service bodies, including the
NHS and teaching. Incentives were established in order to encourage public servants to remain on the
frontline, rather than move to managerial positions (Perkins and White 2010; Bach and Kessler 2012).
PRP conveys to public service workers the features work efforts are to be largely focused on.
Therefore, the literature consulted illustrates PRP as positively contributing to employee motivation,
increase in outputs and facilitating a culture of high productivity within public service bodies.
Challenges of PRP
It is arguable to state the penetration of PRP is limited. Current reforms in the public sector can be
characterised by the adoption of private sector incentive structures. However, the integration of these
private sector behaviours may be hindered by the institutionalised public sector structures (Weibel et
al., 2009). Bryson et al., (2017) details, “Public sector workplaces using PRP perform more poorly
than their matched counterparts that do not use PRP.” Thus, conveying PRP’s practical
ineffectiveness. Moreover, broader performance management outcomes may be difficult to align with
public service values and ethos.
Marsden (2004) draws on the perspective of PRP being ineffective in practice resultant of expectancy
problems, if belief surrounding performance-reward is not linked; or if effort-performance is not
linked; or if reward is not valued by the employee. Moreover, ‘gaming’ occurs when employees
