Pay for Performance in the Public Sector—Benefits and (Hidden) Costs

Weibel, Antoinette; Rost, Katja; Osterloh, Margit
April 2010
Journal of Public Administration Research & Theory;Apr2010, Vol. 20 Issue 2, p387
Academic Journal
The article discusses the benefits and costs of pay for performance schemes in the public institution. It explores the said contingency in a meta-analytic review of previous experimental studies on the effects of pay for performance on performance, and shows why pay for performance sometimes negatively affects personal efforts. The experimental vignette study demonstrates that motivation is likely to be a key influence on the effect of performance-related pay on performance, and that pay for performance is generally more costly as it appears because it almost always produces hidden costs of rewards.


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