Reward Systems in Managing Public Sector Organisations

Adoption of performance-related pay (PRP)schemes is part of the wider market-type reforms engrained in public services. However, this 'managerial revolution' has prompted an academic debate for and against these practices. Concerns relate to the novelty, objectivity and compatibility of such practices to which this study responds. The author argues that the value of an incentive scheme policy is a function of the organisational environment, objectivity of performance measurement processes and perceived equity of the installed scheme. The research uses data from in-depth interviews, questionnaires, and desk research based on a case study of performance-related pay schemes in UK local authorities. The evidence indicates strong policy level support for the adoption of market-type managerial reforms, but less on the ground for the performance-pay study. The evidence perceives PRP schemes to be vulnerable to failure because they are installed as 'off-the-shelf' 'stand-alone' rather than organisation specific motivational devices. The study looks at the 'new' role of management accounting systems in meeting 'public performance information needs' as a potential area for further research