In the article "Cross-Country difference in Performance-Related Pay in the Public Sector" discusses the effect on compensation if there is a clear and defined career difference between politicians and high officials. Performance-related pay (PRP) is based on performance evaluation and individuality whereas the traditional public administration (TPA) is based on loyalty and years of commitment (rank). The central emphasis is to understand the implementation of the performance-related pay within the public sector and what is most convenient. This is a significant subject matter as public officials are the business leaders in the community and as such, they’re accountable for the distribution of funds and the ability to explain how and why these are implemented.
In this model building research you find 25 Organization for Economic Co-operation and development (OECD) countries that participated. The incentive theory and how it works. A well-structured performance-related pay will allow compensation distribution without much difficulties and trust issues. In example, most people see cities just as places that have to offer services to its community which in part is accurate. The actual picture is that cities should be conducted just like any other business, granting they have a mayor (chief executive officer) elected by the community and the city manager (president) appointed and approved by the governing board. In the case study shows that one of the main issues with the TCE is the lack of trust between officials and employees. In many cases the politicians take office and the money allocated for incentive pay is redirected, leaving the employees deprived of promised incentives.
The key findings are how the separation between public employees and elected officials are defined. It’s noted that if there is a separation then the likelihood for the performance-related pay is used. Meaning for the public employee values the career than they are more structure and are committed to the employee. On the other hand where there is no separation and the public employee depends on the elected official for the job then they become an instrument and, will be played in the direction of the wind.
The 25 OECD countries that were included in the article had a very well defined written PRP plan. It was difficult to implement and in some cases it was noted that the traditional approached was being used. The PRP systems are best, but must meet three key elements transparency, trust and clear promotions. In this case, executives and managers need to continuously review, implement and update the plan. As well as taking the time to do the actual performances evaluation as the plan states. This will allow everyone to see how well and in what areas performance is need to improve thus, helping both the employee and the employer to succeed.
Works Cited:
Dahlström, Carl, and Victor Lapuente. "Explaining Cross-Country Differences In
Performance-Related Pay In The Public Sector." Journal Of Public Administration Research & Theory 20.3 (2010): 577-600. Business Source Complete. Web. 23 June 2012.
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Incentives in the public sector should implement a system of separation of interest. In order for incentives to be credible, interest of the politicians should be different from the senior civil servants managing the incentive system. Interests from the politicians and senior civil servants in career aspects should intertwine. PRP should be more effective in clearly separating both parties’ interests. PRP is beneficial to both parties because they are benefiting from there performance evaluation and individuality. TPA can be easily biased and confuse the parties interest in their career compensations.
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