Publication: Public Sector Human Resource Practices to Drive Performance
Loading...
Published
2012-10
ISSN
Date
2016-11-29
Author(s)
Editor(s)
Abstract
Many Governments wrestle with the issue of designing an appropriate set of human resource practices to motivate public servants to perform. Identifying the right set of practices for the public sector is a source of some controversy, and passions run high particularly in relation to the use of monetary incentives, often referred to as performance-related pay or performance based pay. This GET note reviews recent research on a range of practices Governments utilize to drive employee performance, which rest on the assumptions that public servants are motivated in two ways: (i) ‘intrinsically’ (i.e. internal factors motivated by ‘the right thing to do’), and (ii) ‘extrinsically’ (i.e., external validation from rewards offered by others). Generally, a Human Resource Management (HRM) system designed to motivate employee performance will utilize practices in two broad categories related to: (i) ‘external incentives’ (e.g., financial incentives), and (ii) ‘opportunities to perform’ focusing on ‘intrinsic’ factors (i.e. self-directed work). Within ‘external incentives,’ a financial incentive may either act over the long term (e.g., deferred compensation) or in the short term (e.g., performance-related pay). This note applies this conceptual framework to more clearly understand the range of practices Governments are using to improve staff performance, as well as the pre-conditions for their success. Given the recent attention on performance-related pay, we take a deeper look at the evidence underlying the shorter term performance-related pay, reviewing evidence from both OECD and middle income countries. Annex one provides a brief overview on the theories of motivation for those interested in the theoretical underpinnings of the work, and annex two presents’ experiences of performance pay in practice. This Note draws heavily from performance-related pay in the public sector: A review of theory and evidence (Hasnain and others 2012), a recent review of the literature in fields including political science, public administration, business management, and psychology.
Link to Data Set
Citation
“Pierskalla, Jan Henryk; Manning, Nick; Hasnain, Zahid. 2012. Public Sector Human Resource Practices to Drive Performance. GET Note;. © World Bank. http://hdl.handle.net/10986/25489 License: CC BY 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Performance-related Pay in the Public Sector : A Review of Theory and Evidence(World Bank, Washington, DC, 2012-04)The objective of this paper is to provide a review of the theoretical and, in particular, empirical literature on performance-related pay in the public sector spanning the fields of public administration, psychology, economics, education, and health with the aim of distilling useful lessons for policy-makers in developing countries. This study to our knowledge is the first that aims to disaggregate the available evidence by: (i) the quality of the empirical study; (ii) the different public sector contexts, in particular the different types of public sector jobs; and (iii) geographical context (developing country or OECD settings). The paper's main findings, based on a comprehensive review of 110 studies of public sector and relevant private sector jobs are as follows. First, we find that overall a majority (65 of 110) of studies find a positive effect of performance-related pay, with higher quality empirical studies (68 of the 110) generally more positive in their findings (46 of the 68). These show that explicit performance standards linked to some form of bonus pay can improve, at times dramatically, desired service outcomes. Second, however, these more rigorous studies are overwhelmingly for jobs where the outputs or outcomes are more readily observable, such as teaching, health care, and revenue collection (66 of the 68). There is insufficient evidence, positive or negative, of the effect of performance-related pay in organizational contexts that that are similar to that of the core civil service, characterized by task complexity and the difficulty of measuring outcomes, to reach a generalized conclusion concerning such reforms. Third, while some of these studies have shown that performance-related pay can work even in the most dysfunctional bureaucracies in developing countries, there are too few cases to draw firm conclusions. Fourth, several observational studies identify problems with unintended consequences and gaming of the incentive scheme, although it is unclear whether the gaming results in an overall decline in productivity compared to the counterfactual. Finally, few studies follow up performance-related pay effects over a long period of time, leaving the possibility that the positive findings may be due to Hawthorne Effects, and that gaming behavior may increase over time as employees become more familiar with the scheme and learn to manipulate it.Publication Greening Global Value Chains : Some Implementation Challenges(World Bank, Washington, DC, 2013-09)The paper aims to highlight some of the most important implementation issues associated with the greening of global value chains with special attention given to how public policies and business strategies can support each other in meeting the challenge, particularly in developing countries. This requires a systemic view of global value chains that includes downstream supply chains and explicitly takes into account the relationships between regular members (raw materials providers, component manufacturers, and assembly plants, notably) and their clean-tech suppliers. It also involves a careful description of the business landscapes of global value chains as well as reliable environmental metrics and data, carefully examining how these can be shared among global value chain members and their stakeholders. Certain incentives must be set within member firms and throughout the supply chain and this involves reviewing managerial practices -- monitoring and auditing of environmental performance, compensation and rewards, transfer prices, task design and allocation, decision making processes, employee selection and training, and organizational culture -- and framing outsourcing contracts appropriately. To be effective, however, these initiatives need to be encouraged by credible national policies (which include environmental but also social policies targeting informal businesses) and international agreements, revealing disclosure programs, and a vigilant civil society. On a global level, the coordination of business and public policies is crucial as the greening of a global value chain will certainly work best if its members and stakeholders move in tandem.Publication Motivations, Monitoring Technologies, and Pay for Performance(World Bank Group, Washington, DC, 2014-12)Monitoring technologies and pay for performance contracts are becoming popular solutions to improve public services delivery. Their track record is however mixed. To show why this may be the case, this paper develops a principal agent model where agents' motivations vary and so does the effectiveness of monitoring technologies. In such a set-up the model shows that: (i) monitoring technologies should be introduced only if agents' motivations are poor; (ii) optimal pay for performance contracts are nonlinear/non-monotonic in agents' motivations and monitoring effectiveness; (iii) investments aimed at improving agents' motivations and monitoring quality are substitutes when agents are motivated, complements otherwise; and (iv) if the agents' "type" is private information, the more and less motivated agents could be separated through a menu of pay for performance/non pay for performance contracts, such that only the less motivated choose the pay for performance ones.Publication Developing Strategies for Improving Health Care Delivery : Guide to Concepts, Determinants, Measurement, and Intervention Design(World Bank, Washington, DC, 2010-06)This report is a user's guide for defining, measuring, and improving the performance of health service delivery organizations. The authors define six core performance domains: quality, efficiency, utilization, access, learning, and sustainability and provide a compendium of metrics that have been used to measure organizational performance in each of these six domains. The compendium, which includes 116 distinct categories of metrics, is based on a detailed literature review of peer-reviewed empirical studies of health care organizational performance in World Bank client countries. Based on reading of the literature, the authors define seven major strategy areas potentially useful for improving performance among health care organizations: 1) standards and guidelines, 2) organizational design, 3) education and training, 4) process improvement and technology and tool development, 5) incentives, 6) organizational culture, and 7) leadership and management. The authors provide illustrations of facility-level interventions within each of the strategy areas and highlight the conditions under which certain strategies may be more effective than others. The authors propose that the choice of strategy targeted at organizational level to improve performance should be informed by the identified root causes of the problem, the implementation capabilities of the organization, and the environmental conditions faced by the organization.Publication Health Provider Payment Reforms in China(Washington, DC, 2010)This paper examines health provider payment reforms in China the present system and how it evolved, and changes that will improve it in the context of ongoing health reform. The paper begins with a brief introduction and background discussion followed by two substantive sections experiments with case-based payment systems, and experiments with alternative government budget payment methods. This is followed by an examination of what has worked in China and elsewhere. The concluding discussion considers lessons for China and next steps. Many policy instruments and reforms have been implemented to use National Cooperative Medical System (NCMS), Basic Medical Insurance (BMI), and government health budgets more efficiently. These include alternative payment systems, reduced drug prices, essential drug lists, controlled use of high technologies, and strengthening the primary healthcare system.
Users also downloaded
Showing related downloaded files
Publication Global Economic Prospects, June 2025(Washington, DC: World Bank, 2025-06-10)The global economy is facing another substantial headwind, emanating largely from an increase in trade tensions and heightened global policy uncertainty. For emerging market and developing economies (EMDEs), the ability to boost job creation and reduce extreme poverty has declined. Key downside risks include a further escalation of trade barriers and continued policy uncertainty. These challenges are exacerbated by subdued foreign direct investment into EMDEs. Global cooperation is needed to restore a more stable international trade environment and scale up support for vulnerable countries grappling with conflict, debt burdens, and climate change. Domestic policy action is also critical to contain inflation risks and strengthen fiscal resilience. To accelerate job creation and long-term growth, structural reforms must focus on raising institutional quality, attracting private investment, and strengthening human capital and labor markets. Countries in fragile and conflict situations face daunting development challenges that will require tailored domestic policy reforms and well-coordinated multilateral support.Publication The Container Port Performance Index 2023(Washington, DC: World Bank, 2024-07-18)The Container Port Performance Index (CPPI) measures the time container ships spend in port, making it an important point of reference for stakeholders in the global economy. These stakeholders include port authorities and operators, national governments, supranational organizations, development agencies, and other public and private players in trade and logistics. The index highlights where vessel time in container ports could be improved. Streamlining these processes would benefit all parties involved, including shipping lines, national governments, and consumers. This fourth edition of the CPPI relies on data from 405 container ports with at least 24 container ship port calls in the calendar year 2023. As in earlier editions of the CPPI, the ranking employs two different methodological approaches: an administrative (technical) approach and a statistical approach (using matrix factorization). Combining these two approaches ensures that the overall ranking of container ports reflects actual port performance as closely as possible while also being statistically robust. The CPPI methodology assesses the sequential steps of a container ship port call. ‘Total port hours’ refers to the total time elapsed from the moment a ship arrives at the port until the vessel leaves the berth after completing its cargo operations. The CPPI uses time as an indicator because time is very important to shipping lines, ports, and the entire logistics chain. However, time, as captured by the CPPI, is not the only way to measure port efficiency, so it does not tell the entire story of a port’s performance. Factors that can influence the time vessels spend in ports can be location-specific and under the port’s control (endogenous) or external and beyond the control of the port (exogenous). The CPPI measures time spent in container ports, strictly based on quantitative data only, which do not reveal the underlying factors or root causes of extended port times. A detailed port-specific diagnostic would be required to assess the contribution of underlying factors to the time a vessel spends in port. A very low ranking or a significant change in ranking may warrant special attention, for which the World Bank generally recommends a detailed diagnostic.Publication Business Ready 2024(Washington, DC: World Bank, 2024-10-03)Business Ready (B-READY) is a new World Bank Group corporate flagship report that evaluates the business and investment climate worldwide. It replaces and improves upon the Doing Business project. B-READY provides a comprehensive data set and description of the factors that strengthen the private sector, not only by advancing the interests of individual firms but also by elevating the interests of workers, consumers, potential new enterprises, and the natural environment. This 2024 report introduces a new analytical framework that benchmarks economies based on three pillars: Regulatory Framework, Public Services, and Operational Efficiency. The analysis centers on 10 topics essential for private sector development that correspond to various stages of the life cycle of a firm. The report also offers insights into three cross-cutting themes that are relevant for modern economies: digital adoption, environmental sustainability, and gender. B-READY draws on a robust data collection process that includes specially tailored expert questionnaires and firm-level surveys. The 2024 report, which covers 50 economies, serves as the first in a series that will expand in geographical coverage and refine its methodology over time, supporting reform advocacy, policy guidance, and further analysis and research.Publication Digital Progress and Trends Report 2023(Washington, DC: World Bank, 2024-03-05)Digitalization is the transformational opportunity of our time. The digital sector has become a powerhouse of innovation, economic growth, and job creation. Value added in the IT services sector grew at 8 percent annually during 2000–22, nearly twice as fast as the global economy. Employment growth in IT services reached 7 percent annually, six times higher than total employment growth. The diffusion and adoption of digital technologies are just as critical as their invention. Digital uptake has accelerated since the COVID-19 pandemic, with 1.5 billion new internet users added from 2018 to 2022. The share of firms investing in digital solutions around the world has more than doubled from 2020 to 2022. Low-income countries, vulnerable populations, and small firms, however, have been falling behind, while transformative digital innovations such as artificial intelligence (AI) have been accelerating in higher-income countries. Although more than 90 percent of the population in high-income countries was online in 2022, only one in four people in low-income countries used the internet, and the speed of their connection was typically only a small fraction of that in wealthier countries. As businesses in technologically advanced countries integrate generative AI into their products and services, less than half of the businesses in many low- and middle-income countries have an internet connection. The growing digital divide is exacerbating the poverty and productivity gaps between richer and poorer economies. The Digital Progress and Trends Report series will track global digitalization progress and highlight policy trends, debates, and implications for low- and middle-income countries. The series adds to the global efforts to study the progress and trends of digitalization in two main ways: · By compiling, curating, and analyzing data from diverse sources to present a comprehensive picture of digitalization in low- and middle-income countries, including in-depth analyses on understudied topics. · By developing insights on policy opportunities, challenges, and debates and reflecting the perspectives of various stakeholders and the World Bank’s operational experiences. This report, the first in the series, aims to inform evidence-based policy making and motivate action among internal and external audiences and stakeholders. The report will bring global attention to high-performing countries that have valuable experience to share as well as to areas where efforts will need to be redoubled.Publication Global Economic Prospects, January 2025(Washington, DC: World Bank, 2025-01-16)Global growth is expected to hold steady at 2.7 percent in 2025-26. However, the global economy appears to be settling at a low growth rate that will be insufficient to foster sustained economic development—with the possibility of further headwinds from heightened policy uncertainty and adverse trade policy shifts, geopolitical tensions, persistent inflation, and climate-related natural disasters. Against this backdrop, emerging market and developing economies are set to enter the second quarter of the twenty-first century with per capita incomes on a trajectory that implies substantially slower catch-up toward advanced-economy living standards than they previously experienced. Without course corrections, most low-income countries are unlikely to graduate to middle-income status by the middle of the century. Policy action at both global and national levels is needed to foster a more favorable external environment, enhance macroeconomic stability, reduce structural constraints, address the effects of climate change, and thus accelerate long-term growth and development.