Of Pigs in Pokes and Policy Diffusion: Another Look at Pay-for-Performance

What is the rationale for the adoption, diffusion, and implementation ofpay-for-performance programs in the public sector? Patricia Ingraham questions the basisfor the common view that private sector experience with pay-for-performance has been successful. She explores the additionalproblems posed by public management and compensation systems. An examination of implementation ofpay-for-performance in the United States and in other OECD nations demonstrates gaps between expectations and realities in public settings. Despite obvious problems, the effort continues to appeal to both elected officials and many public managers. More careful attention to design, resource commitment, and evaluation in public organizations is recommended. During the past 30 years, performance appraisal and pay-for-performance systems have become widespread in the United States. Over 90 percent of private sector firms operate with some form of pay-for-performance (Wyatt Company, 1989). The Civil Service Reform Act of 1978 created pay-for-performance systems for members of the Senior Executive Service (SES) and for midlevel managers in the federal government. The Federal Employees Pay Comparability Act of 1990 established a joint labor-management committee to investigate the possibility of extending the systems government-wide. Over 20 states currently have pay-for-performance systems on the books, and several more are considering adoption in the near future (U.S. General Accounting Office, 1990). Many counties and cities also have such systems, although data are limited on these schemes (Ammons and Rodriguez, 1986). The diffusion has also been cross-national; 13 member nations of the international Organization for Economic Cooperation and Development (OECD) now have some form of pay-forperformance (Organization for Economic Cooperation and Development, 1992).1