Performance-Based Pay: Investigating its International Prevalence in Light of National Contexts

Abstract

Performance-based pay is a popular technique in public management, but its international prevalence remains poorly evidenced. This study asks to what extent countries are using performance-based pay and how local contexts matter to its adoption status. Focusing on the education sector, we report on the varying degrees to which teacher appraisals have been used and linked with monetary rewards across countries as of 2012. We found that performance-based pay tended to be used more in less liberal economies, in cultures with a lower degree of uncertainty avoidance and a higher degree of individualism, in those with more decentralized educational systems, and surprisingly, in places where teachers exert greater influence. Our results suggest that some country contexts matter to the prevalence pattern of performance-based pay, and they offer policy makers some insights into the debate on whether a managerial technique like this, used in other countries, is transferrable to their own national context.