Pay-for-Performance Systems in State Government

Abstract

Pay for performance has been a widely used method of compensation in the public sector since the early 1980s, but a growing body of research has indicated that numerous problems can be associated with the application of performance-based compensation systems In late 1993, the federal government, after years of difficulty experienced with its merit pay program, took a significant step back from pay for performance through passage of the Performance Management and Recognition System Termination Act This research seeks to determine whether state governments are becoming similarly disenchanted with pay for performance To gain insight into this question, a survey was administered to a nationwide random sample of state agency personnel management executives Results indicate that pay for performance remains as popular as ever in state government, and that nearly all of the systems in the states utilize merit pay despite difficulties often associated with that approach to pay for performance.