The success of failure: The paradox of performance pay

From Review of Public Personnel Administration

Although pay for performance seems theoretically and intuitively appealing and fair, the reality is very different for many.  It is claimed that “people tend to believe things they want to believe”. This article discusses how a system based on merit may in fact be seen as a punishment as it: can focus on the short term; encourage mediocrity; reduce creativity; promote self-interest; and destroy teamwork.

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This normative article examines the contemporary record of pay-for-performance plans in the federal government. These programs, extending back nearly two generations, have consistently malfunctioned. Nonetheless, the state of the field today is one of continued attempts to use the technique despite agency history and research data that document its problematic nature. Based on scholarly literature, news media reports, and interview data, the analysis assesses the practical experience, policy findings, and political realities of this compensation method. The discussion raises questions about rational decision-making models and suggests that belief in performance pay is akin to an urban legend.

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Article details:

Title: The Success of Failure: The Paradox of Performance Pay

Authors: James S. Bowman

From: Review of Public Personnel Administration, Vol. 30, No. 1, 70-88 (2010)

DOI: 10.1177/0734371X09351824

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