Performance‐Related Pay and the Crowding Out of Motivation in the Public Sector: A Randomized Field Experiment

Date01 March 2015
Published date01 March 2015
Nicola Bellé is assistant professor in the
Department of Policy Analysis and Public
Management at Bocconi University in Milan,
Italy. His research focuses on work motiva-
tion, public employee attitudes, job design,
and leadership.
230 Public Administration Review • March | April 2015
Public Administration Review,
Vol. 75, Iss. 2, pp. 230–241. © 2015 by
The American Society for Public Administration.
DOI: 10.1111/puar.12313.
Nicola Bellé
Bocconi University, Italy
Abstract: is article advances our understanding of the ef‌f ects of monetary rewards on public employee
performance and of the contingencies that may moderate these ef‌f ects. In a randomized control-group experiment
with nurses working at a local health authority in Italy, performance-related pay (PRP) had a larger ef‌f ect on task
performance when the rewards were kept secret than when they were disclosed.  e negative interaction between
PRP and visibility was stronger among participants who were exposed to direct contact with a benef‌i ciary of their
ef‌f orts, which heightened their perception of making a positive dif‌f erence in other people’s lives.  ese results are
consistent with theoretical predictions that monetary incentives for activities with a prosocial impact may crowd
out employee image motivation.  ere were no crowding-out ef‌f ects when a symbolic reward was substituted for
the monetary incentive.
Practitioner Points
For activities with a prosocial impact, monetary incentives tend to have a larger performance ef‌f ect when
they are secret rather than disclosed.
Nonmonetary rewards may be immune—or at least less prone—to some of the motivational drawbacks
encountered when using monetary incentives for activities with a prosocial impact.
Public organizations and their managers should take full advantage of nonmonetary incentive options in this
time of budget restraints, which make it impossible to of‌f er bonuses that are large enough to be ef‌f ective.
moderate the ef‌f ectiveness of performance-related
pay systems” (Perry, Engbers, and Jun 2009, 44), and
this review identif‌i es only occasional PRP successes,
which appear to be associated with particular types
of public service industries and certain organizational
levels. In particular, the few positive studies tend to be
concentrated in the medical context and involve lower
organizational levels.
Unfortunately, the literature on the ef‌f ectiveness of
contingent pay plans in the public sector is sparse
and relies primarily on correlational designs, which
are well suited for testing theoretical predictions in
a broad range of populations but do not perform
particularly well with respect to their internal validity
(McGrath 1981).  e absence of sound experimental
research has precluded rigor-
ous causal inferences about the
ef‌f ects of monetary rewards on
public employee motivation
and performance and about the
contingencies that may moder-
ate these ef‌f ects. Filling this gap
in the literature seems particu-
larly important because of the
Performance-Related Pay and the Crowding
Out of Motivation in the Public Sector:
A Randomized Field Experiment
“More pay for better performance” has long been
the mantra behind the public sector personnel
reforms inspired by New Public Management. Since
the late 1970s, the vast majority of countries in
the Organisation for Economic Co-operation and
Development have adopted performance-related pay
(PRP) provisions for government employees (Lah
and Perry 2008; OECD 2005).  e use of monetary
incentives in the public sector does not seem to be
declining; on the contrary, it seems to have enjoyed
a recent resurgence in interest and popularity (Bellé
and Cantarelli 2014; Bellé and Ongaro 2014; Perry,
Engbers, and Jun 2009).
PRP continues to be adopted by public jurisdictions,
although research on its ef‌f ectiveness in the public
sector is inconclusive (Bellé
2010; Ingraham 1993; Kellough
and Lu 1993; Milkovich and
Wigdor 1991; Perry 1986). In
fact, the most recent compre-
hensive review of studies on
this topic reports mixed results
and suggests that “a variety of
contextual factors appear to
e absence of sound
experimental research has
precluded rigorous causal infer-
ences about the ef‌f ects of mone-
tary rewards on public employee
motivation and performance.

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT