Making performance Pay Work
- Performance pay has been one of the main trends in public sector reform over the last decade and aims to increase employees’ motivation. However, positive results are sparse. In a majority of cases, pay scheme designers neglect that intrinsic motivation may be distorted by the introduction of extrinsic rewards (crowding out). Nevertheless, under certain conditions, performance pay schemes may also enhance intrinsic motivation (crowding-in). The perception of rewards has proven to be an especially crucial factor for the outcome of performance pay. Based on psychological contract theory, this paper analyzes the relationships between intrinsic motivation, public service motivation (PSM), personality characteristics, and the design of the performance- appraisal scheme. The empirical analysis relies on a structural equation modeling (SEM) approach. Model findings reveal that a fair, participatory, and transparent design reduces the controlling perception while fostering the intrinsic motivation of employees. In addition, participants whoPerformance pay has been one of the main trends in public sector reform over the last decade and aims to increase employees’ motivation. However, positive results are sparse. In a majority of cases, pay scheme designers neglect that intrinsic motivation may be distorted by the introduction of extrinsic rewards (crowding out). Nevertheless, under certain conditions, performance pay schemes may also enhance intrinsic motivation (crowding-in). The perception of rewards has proven to be an especially crucial factor for the outcome of performance pay. Based on psychological contract theory, this paper analyzes the relationships between intrinsic motivation, public service motivation (PSM), personality characteristics, and the design of the performance- appraisal scheme. The empirical analysis relies on a structural equation modeling (SEM) approach. Model findings reveal that a fair, participatory, and transparent design reduces the controlling perception while fostering the intrinsic motivation of employees. In addition, participants who score high on neuroticism perceive performance pay schemes to be more controlling and have lower values of intrinsic motivation.…
Author details: | Anne-Kathrin Wenzel, Tobias A. Krause, Dominik VogelORCiDGND |
---|---|
DOI: | https://doi.org/10.1177/0734371X17715502 |
ISSN: | 0734-371X |
ISSN: | 1552-759X |
Title of parent work (English): | Review of Public Personnel Administration |
Subtitle (English): | The Impact of Transparency, Participation, and Fairness on Controlling Perception and Intrinsic Motivation |
Publisher: | Sage Publ. |
Place of publishing: | Thousand Oaks |
Publication type: | Article |
Language: | English |
Date of first publication: | 2017/07/01 |
Publication year: | 2019 |
Release date: | 2021/02/02 |
Tag: | motivation crowding; performance appraisals; performance pay; performance rating; performance-related pay; rewards |
Volume: | 39 |
Issue: | 2 |
Number of pages: | 24 |
First page: | 232 |
Last Page: | 255 |
Organizational units: | Wirtschafts- und Sozialwissenschaftliche Fakultät / Sozialwissenschaften |
DDC classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
Peer review: | Referiert |
Publishing method: | Open Access / Green Open-Access |