(Cardona 2007) reviews incentive programs in the US, particularly the Performance Management and Recognition System, the UK's Inland Revenue Service performance scheme and similar attempts in Australia. The study documents several common issues in the implementation of performance pay: employees are hardly ever scored less than satisfactory in their evaluations, bonus systems were designed so that only very few employees actually received any payments and the majority of staff found the system de-motivating and inciting jealousies. (Straberg 2010) highlights the problem of perceived unfairness following the introduction of performance pay in an OECD country, although also notes that there was no empirical linkage between pay justice perceptions and workplace behaviors. Managers equally found little positive changes resulting from the introduction of performance pay. As context, multiple studies confirm the political and operational difficulties of successfully introducing any major program of pay reform within the public service (World Bank 1999; Kiragu and Mukandala 2003; Independent Evaluation Group 2008).

Brudney and Condrey present a pair of typical studies drawing on non-representative surveys of federal managers and government employees in the US, that were subject to performance-pay arrangements (Condrey and Brudney 1992; Brudney and Condrey 1993). While largely descriptive in nature, they find that 17% of managers report an increase in motivation, but prior attitudes about merit pay affect this result. It is unclear though whether the documented increase of motivation is solely an effect of performance pay, since no control units are used to rule out the influence of other possible confounders or if self-reported motivation is in any way linked to actual work outputs. Similar work on performance pay for civil servants in the US state of Georgia also finds highly critical opinions of staff members with regard to explicit evaluation and selective bonus pay (Kellough and Nigro 2002). More recent studies using survey data of US city managers finds higher satisfaction of employees when performance pay is used (Stazyk 2010). The research does however highlight the complexity of the issue as it suggests that there is a crowding-out effect on extrinsic motivation for staff with a distinctively high level of intrinsic motivation — but ultimately this does no harm to effort or to job satisfaction.

(Dowling and Richardson 1997) evaluate the effect of performance pay on UK National Health Service managers, a study, since it focuses on management rather than physicians, that is more closely related to core public administration jobs than healthcare jobs. Using self-reported data from a survey, they find a modest positive effect of pay incentives on manager motivation and effort.

Whether PRP should be used is one thing — when and where it can be used is another. (Dahlstrom and Lapuente 2009) theorizes, using transaction cost economics, that when senior officials share a career path with elected politicians and thus are unlikely to act impartially, then PRP is less often used as those officials are unable to provide credible commitments to their staff. Why would one work hard to achieve a goal if it transpires that the goalposts might be arbitrarily moved for political reasons at the last moment? They find empirical support for this prediction.

# **_Public sector craft jobs_**

Observational studies about performance-related pay for public sector craft jobs are more optimistic concerning their effectiveness. There is more evidence to draw on from developing countries, particularly in relation to teaching and health care.

# **Tax administration, job placement**

Revenue authorities are examples of public sector agencies that can be classified as craft organizations where outputs — number of audits conducted and tax fines collected — are more easily measurable and there is a clearer link between the efforts of, for example, individual tax auditors and revenue collection.

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