Using performance-related incentives

Context

While greater rewards do not automatically produce better performance, it is helpful to establish some link between the two. This is seldom easy to do because public bureaucracies are expected to serve social and political objectives that are inherently hard to quantify. In addition, informal social relations between managers and their subordinates are often so strong that, even where "output" can be measured, supervisors are reluctant to jeopardize loyalties and friendships.

Implementation

These considerations notwithstanding, some developing countries are starting to devise appraisal systems that link promotion and pay increases to individual performance. This requires, first, strengthening the capacity of personnel offices to work out such systems. Second, red tape can often be reduced.

Claim

Research shows that rewarding performance with enhanced prestige or considerate supervisory behaviour is often an effective way of motivating staff. The same is true of job enlargement-giving people greater responsibility and challenge. Finally, productivity and job satisfaction can often be improved if employees are involved in designing the organization of their work.

Counter-claim

Performance appraisal systems are difficult to implement objectively. In view of this, developing countries should install them only gradually, while laying stress on non-material rewards for good performance. In some countries where there is strong loyalty among employers and employees, staff may require fewer pecuniary incentives.