TY  - JOUR
A1  - Wenzel, Anne-Kathrin
A1  - Krause, Tobias A.
A1  - Vogel, Dominik
T1  - Making performance Pay Work
BT  - The Impact of Transparency, Participation, and Fairness on Controlling Perception and Intrinsic Motivation
JF  - Review of Public Personnel Administration
N2  - 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 who score high on neuroticism perceive performance pay schemes to be more controlling and have lower values of intrinsic motivation.
KW  - performance pay
KW  - motivation crowding
KW  - performance-related pay
KW  - rewards
KW  - performance rating
KW  - performance appraisals
Y1  - 2017
U6  - https://doi.org/10.1177/0734371X17715502
SN  - 0734-371X
SN  - 1552-759X
VL  - 39
IS  - 2
SP  - 232
EP  - 255
PB  - Sage Publ.
CY  - Thousand Oaks
ER  -