fedworkers_lunch001
Report

Merit-based Pay and Employee Motivation in Federal Agencies

Andrew B. Whitford and Sungjoo Choi

The movement toward merit-based pay systems in the federal government, such as those seen in the Department of Homeland Security (DHS) and the Department of Defense (DOD), is rooted in a desire to
better align pay and performance. Yet, governments have often failed in
such
attempts
and
many conclude that merit-based pay may not work in public organizations. Public administration scholars have sought to understand those implementation failures.

[i]

Most research has focused on the effects of merit-based pay on individual and o
rganizational performance. Choi and Whitford focus here on the effects on job satisfaction. Job satisfaction is often a good predictor of performance, so understanding the effects of merit-based pay
helps us better understand
whether it
makes
government more effective.

Federal Employees Subject to Merit-based Pay

This paper analyzes finding
s
from the federal government that federal employees subject to merit-based pay are consistently less happy with their job, with their organization, and with their pay than those in agencies with traditional compensation systems.
S
uch employees are most negative about their own organization.

This leads to questions about the long-term effects of merit-based pay systems in public organizations. Despite efforts over more than three decades, there are very few signs of desirable outcomes from merit-based pay in government. It is time to reconsider the effectiveness of merit-based pay in the public sector. 


[i] Perry, J. L., T. Engbers, and S. Y. Jun. 2009. Back to the future? Performance-related pay, empirical research, and the perils of persistence. Public Administration Review, 69(1): 1-31.

Related Books