The Rise in Pay for Performance Among Higher Managerial and Professional Occupations in Britain: Eroding or Enhancing the Service Relationship?

Abstract

Higher managerial and professional occupations are now the most incentivized occupational class in Britain. It is not yet known whether the rise in pay for performance (PFP) signifies an erosion or enhancement in the ‘service relationship’ that purportedly characterizes these occupations. Taking an occupational class perspective, this article investigates the implications of the rise in PFP for the employment relationship and conditions of work across the occupational structure using two nationally representative datasets. In fixed-effects estimates, PFP is found to heavily substitute base earnings in non-service class occupations, but not in service class occupations. PFP jobs generally have no worse conditions relative to non-PFP jobs within occupational classes. The article concludes the rise in PFP should be conceptualized more as a form of ‘rent sharing’ for service class occupations, enhancing the service relationship, and as a form of ‘risk sharing’ for non-service class occupations.