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PublicServiceMotivationandperformanceincentives:aliterature

review
JerrettMyers1
June2008
Introduction
Thereisagrowingbodyofworkoninstitutions,incentivesandpublicsector
performance.Animportantaspectofthisfieldseekstounderstandhowto
structureincentivessothatemployeesarewellmotivatedtoperform
effectively(forexample,seeLeGrand2003).Theapplicationofvarious
reformssuchasperformancerelatedpaytogetherwithincreasing
dissatisfactionwithpublicservicesandtighteningbudgetconstraintsfacing
publicauthoritieshasstimulatednewdebateontheextenttowhichintrinsic
andextrinsicincentivescanmotivategoodperformance.TheQualityand
OutcomesFrameworkusedbytheGeneralMedicalServicesContract,the
StarRatingsusedtoevaluatetheperformanceofEnglishNHStrustsand
theComprehensivePerformanceAuditusedbycentralgovernmentto
measuretheperformanceoflocalauthoritiesareafewexamplesofrecent
policyinitiatives intheUKwhichseektoencouragebetterpublicsector
performancethroughavarietyofextrinsicincentivemechanisms.In
contrast,initiativesdesignedtoimproveperformancethroughtheuseof
2
nonfinancialandinformalincentivesarenotaswidelyreported.
Thisreviewfocusesontheintrinsic,nonfinancialconsiderationsfoundin
publicservice,commonlytermedpublicservicemotivation(PSM).Perry
andWise(1990:368)definethisas'anindividual'spredispositionto
respondtomotivesgroundedprimarilyoruniquelyinpublicinstitutions'.
Othercommonlyciteddefinitionsinclude:

themotivationalforcethatinducesindividualstoperform
meaningfulpublicservice(i.e.public,community,andsocial
service)(BrewerandSelden,1998:417)
ageneral,altruisticmotivationtoservetheinterestsofa
communityofpeople,astate,anationorhumankind(Raineyand
Steinbauer,1999:23)
thebelief,valuesandattitudesthatgobeyondselfinterestand
organizationalinterest,thatconcerntheinterestofalargerpolitical
entityandthatmotivateindividualstoactaccordinglywhenever
appropriate(Vandenabeele,2007:547)

Perry&Hondegem(2008:3)pointoutthatthemeaningofpublicservice
motivationvariesacrossdisciplinesandfields,butitsdefinitionhasa
commonfocusonmotivesandactioninthepublicdomainthatareintended
todogoodforothersandshapethewellbeingofsociety. Forexample,
teachersmaycareabouttheperformanceoftheirstudents,doctorsand
nursesabouttheirpatientshealthpoliceofficers maybeconcernedabout

1
2

JerrettMyersisResearchCoordinatoratOxfordPolicyInstitutejmyers@opi.org.uk
Thismaybebecausetheyhavealowerprofile,areconductedinformallyorareinfactless
common.
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thesafetyofacommunityandsocialworkersaboutthewelfareoftheir
clients.
Insomeanalyses,itistheorisedthatwhenanorganisationproducesoutput
thatanemployeedeemssociallyvaluable,theindividualmayobtaina
degreeofaddedutilitybycontributingtotheorganisationanditsobjectives.
Forexample,auniversitylecturermaybemotivatedbytheroleofher
institutionincontributingtosociety,itsregardfortrainingfuturegenerations
oritsabilitytoimprovetheemploymentandincomeprospectsofits
students. Asimilar,yetdistinctapproachemphasisestheimportanceofthe
specificactivitiesofatask.Forinstance,auniversitylecturermaygain
utilityfromconductingteachingandresearchthatcontributestothestateof
knowledgeonasubject.Thedistinctionbetweentheprimarybasisfor
publicservicemotivation,eitherfrommissionvalenceandmotivationor
taskactivity,highlightssomeofthecomplexityinthisconcept.Italso
suggestsavarietyofincentivesexistatdifferentlevelswithinorganisations
andunderscorestheimportanceofconnectingspecifictaskactivitiesto
broadermissionobjectives.
Respondingtoincentives
Afrequentlycitedinstrumentformodelingbehaviourarisingfromvaried
interestsisprincipalagenttheorywhichpositsthattheinterestsofthe
principal(s)(thepublic,governments,etc.)andthoseofagent(s)(service
providers,publicemployees,etc.)maydivergeandthatincentivesneedto
beusedtoaligntheseinterests.Classicaleconomictheorysuggeststhat
workersderiveutilityfromtheamountofincometheyreceiveforthe
performanceoftheirwork.Therefore,paymentthatislinkedto
performanceisexpectedtoinducetightlyalignedpreferencesbetween
principalandagentwhereascompensationthatisnotlinkeddirectlyto
performancecancreateincentivestoshirkresponsibilitiesand
underperform.However,thereisconsiderableevidencethatagentsgain
utilityfromnonmonetaryvaluesthroughbuildingrelationships(Windebank
2001),performinggoodworkthatisprofessionallyrewarded(Freidson
2001)orotherintrinsicconcerns(Kirton2001)suchastrust,altruismand
goodwillthatcanbeproducedthroughinteractionandexchange(Mahoney
1992).
AsBloor(2008)pointsoutinanarticleonproductivityinthemedicallabour
market,doctorsdonotrespondsimplytofinancialincentivesallkindsof
nonfinancialincentivesalsoaffectbehaviour,includingtrust,duty,altruism,
reputationwithinpeergroupsandcommunities,andmanyotherconcerns.
Thisisconsistentwithotherempiricalstudiescomparingpublicandprivate
sectorworkerreportsofrewardmotivation'thatsuggestpublicsector
workerstendtobemorehighlymotivatedbyintrinsicrewardssuchas
ideologicalgoalsratherthanextrinsicincentivessuchasfinancial
compensation(Rainey1982,Jabes&Zussman1989).
Frant(1996)observesthatbothhighpoweredincentives,accruingfrom
markettransactionsandlowpoweredincentives,typicallyfoundinthe
bureaucraticsettingcaneachproduceunintendedconsequences.Higher
poweredincentives maybeoverwhelming,resultinginagreatertendency
towardsdishonestbehaviour,whilelowerpoweredincentivesmaybe
underwhelming,resultinginapropensityforshirking.Similarly,Scott
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(2000)reviewsthedifferenteffectsthatGPpaymentsystemshaveon
professionalbehaviour.SalarybasedcontractsinwhichaGPispaida
fixedamountforservicecancreateincentivestoundertreatpatients
whereasafeeforservicearrangementwhereaGPispaidbasedonthe
volumeofservicesprovidedcancreateincentivestoovertreat,resultingin
supplierinduceddemand. Acapitationsystem,inwhichaGPispaid
basedonthenumberofpatientsenrolledinapracticecancreateincentives
toattractandcompeteforpatients.However,itmayalsocreateincentives
toattractlowcostpatients,commonlyreferredtoascreamskimming,as
wellasproducingincentivesforincreasingreferralsorprescriptionsinan
efforttominimiseworkload.
Godageretal(2007)lookatlevelsofcommunityserviceamongphysicians
inNorwaywitharemunerationrateestimatedat38%66%oftheequivalent
privatepracticerate. Theyfindthatdespitetheirlowerremunerations,
communityservicesareundertakenbyasignificantfractionofphysicians
beyondtheminimumrequiredamount(Godageretal,2007:30). The
willingnesstoperformagreateramountofcommunityservicethanthe
minimumrequiredmaybeevidenceofaconformitytocollectivityoriented
behaviour,atraitthatArrow(1963:951)suggesteddistinguishesthe
behaviourofphysiciansfromotherbusinessprofessionals.TheGodageret
alstudyalsofindsthatbothgrossincomeandgrossdebthadnegative
effectsonlevelsofcommunityservice,highlightingtheheterogeneityof
preferencesamongphysicians.
AsMurray(2008:8)pointsout,therelationshipsbetweenincentivesand
agentbehaviourarecomplexandmultifacetedthereisnoeasywayto
constructanincentivestructurethatwilldeliverhighqualitypublicservices
atleastcostthereisnoonesizefitsall. Althoughitmaynotbepossible
toguaranteeanoptimalsetofincentivesinallcircumstances,througha
clearerunderstandingofhowagentsrespondtovariousincentives,
policymakersareinamoreinformedpositiontostructurecontractsand
adjustmanagerialpracticesforimprovedperformance.
TheresultsofPublicServiceMotivation
Publicservicemotivation(PSM)isclaimedtopromoteprosocial
behaviourbyincreasingeffortto furtherthewellbeingofatargetgroup,
suchaspupils,patients,orsocialwelfareapplicants. Thisprosocial
behaviourisoftencharacterisedbyselfsacrifice,commitmenttothepublic
interestandcompassiontowardsothers.Examplesofsuchprosocial
behaviourcommonlycitedincludevarioustypesofethicalbehaviour,
workerswhodonatelabourbyworkinginexcessofcontractedhours,or
theprovisionofadditionalsupporttocoworkersthatisnotcoercedor
rewardedextrinsically.
EmpiricalworkintheUnitedStates,Canada,GermanyandtheUKhas
foundevidenceofthismotivationamongpublicservants(Perry1996,
Houston2000,Duxbury,Dyke&Lam1999,Vandenabeeleetal2006).
SubsequentworkhasestablishedthatemployeeswhopossessPSMhave
greaterjobsatisfaction,betterperformance(Grant2008),aremorelikelyto
lookforotherworkinsidegovernmentandmorelikelytobesupportiveof
reforms(Naff1999).Pandeyetal(2008)identifythatPSMiscorrelated
withorganisationalcitizenship,ineffectbeingmoreconsideratetoward
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theirfellowemployeesandmorelikelytohelptheirfellowemployeeswith
worktasks.Taylor(2008)findsadirectassociationbetweenPSMandjob
satisfactionandorganisationalcommitment.BesleyandGhatak(2005,
2007)pointtotheefficiencygainsfrommatchingagentsthatpossessPSM
withmissionorientedpublicandnonprofitorganisations.Inastudyon
personenvironmentfit,Steijn(2008)findsthatemployeeswithhigher
levelsofPSMaremorelikelytolookforworkinthepublicsector.
SourcesofPublicServiceMotivation
TwoprimarysourcesofPSMhavebeenidentifiedintheliterature.First,it
hasbeenreportedthatPSMisconstructedthroughindividualexperiences
includinglifeevents,socialisationfromfamilyinfluencesandeducationand
professionaltraining(Perry2000).IthasalsobeenreportedthatPSMis
cultivatedbyorganisationalculturethroughjobcharacteristics,
organisationalincentivesandtheworkenvironment(Camilleri2007,
MoynihanandPandey2007).Grant(2008)reportsastudythatexposed
callerssolicitingcharitabledonationsfromalumniforanAmerican
universitytoarecipientofthecharitabledonations.Therecipientprovided
afirsthanddescriptionofthebenefitsthataccruedfromtheworkthe
callerswereengagedin.Thisgroupofcallersdoubledthenumberof
weeklypledgesthattheyobtainedandincreasedtheamountofweekly
donationmoneyobtainedbymorethanfivefold,whereastherewasno
changeinthecontrolgroup.Thisresultsuggeststhatmanagerial
arrangementscaninfluencetheeffectsofPSM.Asleadership,policy
initiativesandmanagerialpracticescanbeusedtoinfluencebothindividual
valuesandthewaytasksarecarriedout,theseresultssuggestthat
authoritiescouldenhancelevelsofpublicservicemotivationamongagroup
orwithinanorganisation.
ThelinkbetweenPublicServiceMotivationandthechoicesof
entrantsintothelabourmarket
Employeesthatcareabouttheoutputsoftheorganisationaccruegreater
compensationfortheirefforts,thusraisingtheexpectedintensityofeffort.
Giventhattheprovisionofpublicservicescandependsignificantlyonthe
effortputforthbyemployees,therehasbeenconsiderableattention
devotedtothelinksbetweenPSMandmatchingemployeeswithpublic
serviceemployers.EmpiricalworkhasreportedthathighscoringPSM
typeswillchoosepublicratherthanprivatesectorwork(Steijn2008).This
findingistypicallybasedondatafrompublicemployeeswithhighlevelsof
PSMwhoreportthattheyaremorelikelytolookforapublicratherthan
privatesectorposition.Studiesexaminingthesechoicesareoftenrestricted
bytheavailabilityofdataanddonotdrilldownintomorerealistic
scenariossuchasthetradeoffsbetweenvariousoccupations. Asituation
thatmanyjobseekersencounteristhepossibilityofattainingamore
lucrativepositionatanorganisationwithfeweropportunitiestoengagein
prosocialbehaviour.ArehighscoringPSMtypeswillingtoforegowork
thathasapublicserviceorientationinreturnforahighersalary? Besley
andGhatak(2005)reportamodelthatconsiders(interalia)howthe
outsideoptionforworkersmayaffectthetypeandlevelofincentives
utilisedbyemployerstoattractandretainemployees.Withfullemployment
andariseintheprivatesectorwage,theirmodelpredictsthatthepublic
sectorwillneedtoconsiderschemesthat mimicprivatesector
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incentives(BesleyandGhatak,2005:629). Thearticlepointsoutthat
althoughNewPublicManagementreforms intheUKwerepopularduring
the1980s,widespreadinterestintheuseofmorehigherpowered
incentivesdidnotoccuruntilthe1990swhentherewasareturntofull
employmentandariseinprivatesectorwages. Thisoccurrencemaybe
attributedtothetendencyofworkerstomovefromonesectortoanotherin
searchofhigherpayoffs. This maymeanthatworkersarewillingtoforego
publicserviceorientedworkforhigherpay.However,itremainsunclear
whatvaluationhighscoringPSMtypesplaceonworkthathasapublic
serviceorientationandhowthisvaluationdiffersbyworkertype.
Resolvingthisissuewouldassistinunderstandingthestrengthofinformal
incentivessuchasPSMandhowitrelatestomorehigherpowered
incentivessuchasfinancialremuneration.
ProfilinghighscoringPublicServiceMotivationtypes
ResearchonPSMcitestheimportanceofavarietyofcharacteristics
includingaltruism,aninterestinprosocialbehaviour,andselfsacrifice.
Evidencesuggeststhatpublicsectoremployeesaremorelikelyto votein
elections(Garand,Parkhurst,andSeoud1991aWatson1997Wolfinger
andRosenstone1980citedinHouston2006),engagewithcivicgroups
(Brewer2003)andselfreportcharitabledonationsoftime,bloodand
moneythanprivatesectorcounterparts(Houston2006).However,existing
studiesonPSMmeasuretheconstructinrelativeisolationratherthan
relatinglevelsofPSMtootherpersonalorpsychologicalcharacteristics.
Thecriticalissuethatthesestudiesdonotreportiswhetherhighscoring
PSMtypeshaveparticularmeasurablecharacteristicsthatarestableover
time.Asaresult,itisunclearwhetherPSMcouldbeaccuratelymeasured
throughapsychometricprofilingtestsuchastheMotivation,Valuesand
PreferencesInventory.
Asthevaluesunderlyingmotivationstendtobestableovertime,this
meansthatit ispossiblewithareasonabledegreeofaccuracytopredict
thewayanindividualwithparticulartraitscanbeexpectedtoperformunder
certainconditions. IfarobustlinkbetweenthehighPSMtypeandacertain
psychometricprofilecouldbeestablisheditmightbepossibletofacilitate
bettermatchingbetweenhighPSMtypesandpublicserviceoriented
organisations.
TherelationshipbetweenPublicServiceMotivationandextrinsic
incentives
Thereisanongoingdebateaboutthewayfinancialincentivessuchas
performancerelatedpaycanaffectintrinsicmotivationssuchasPSM.
Theextensiveliteratureinbothpsychologyandeconomicsonthe
crowdingouteffectofvariousincentives,suggeststhatthereisatradeoff
betweenthesetwotypesofmotivations.OsterlohandFrey(2000)identify
alargenumberofscholarswhohavestudiedandfoundsupportforthis
phenomenon,whichmaybecausedbyatleastthreereasons. First,the
externalmotivationmayundermineselfdeterminationofthetaskbecause
theemployeefeelsthattheexternalpressureisthemainmotivator.Inthis
scenario,theemployeedoesnotfeelthattheactivitieswouldwarrantthe
intrinsicmotivationaswellastheextrinsicmotivation,therebyreducing
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onesintrinsicattachmenttotheactivity. Asimilarpointismadeby
Prenticeetal(2007:11)whopointout,itispossiblethatexternalfinancial
incentivescouldoverwhelmpublicservicemotivation,sinceitsuggeststo
theemployeethattheiremployerrecognisesnoassociationbetweenoutput
andeffortotherthanapure,marketrelationship. Second,theintroduction
ofacontractualrelationshipmayunderminetheoriginalrelationshipthat
theworkerfeltwiththeactivities.Whileintrinsicallyrewarding,the
employeemayfeelacertainloyaltyandemotionalattachmenttothe
activities,however,whenacontractualobligationisintroduced,itmay
underminethesebonds. Third,incasessuchaspayingforovertimework,
itmaybethatbycommodifyingthetask,theemployeehasamoredirect
measureoftheopportunitycostandwillthereforebemorelikelytoavoid
incurringthiscost.
Amorerecentdevelopmentonthistheorysuggeststhatwhenextrinsic
rewardsareperceivedassupportingratherthancontrolling,theywillcrowd
in,thatisincrease,intrinsicmotivations.Inastudyonthewayfinancial
remunerationaffectsresearchpublicationsinDenmark,Andersenand
Pallesen(2008)findevidenceinsupportofthistheory.Thisresultis
attributedtothebeliefthattheaffectedindividualviewsanadditional
(extrinsic)rewardasrecognitionofherintrinsicvalues.
Conclusion
Thereisconsiderableandgrowinginterestintheconceptofpublicservice
motivation,partlyasareactiontorecentpublicsectorreformsthatare
basedonincreasedmanagerialcontrolandfinancialincentivesandpartly
asmanyseesuchreformscontributingtoadeclinein`thepublic(ethic)
(Marquand,2004).Rebuildingpublicsectormotivationisviewedasaway
toimprovepublicservicequalityandvolumewithoutincurringthe
transaction/monitoringcostsassociatedwithhigherpoweredincentives
suchasperformancerelatedpay.Thisgrowingevidencebasehasbeen
bolsteredbymorethaneightypublicservicemotivationarticlesand
conferencepaperspublishedbetween1995and2007(Perry&Hondeghem
2008).
WhiletheoryandevidencesuggeststhatPSMcanplayakeyrolein
governingbehaviour,policyinitiativesdesignedtoimproveservicequality
andvolumesrelyingonotherformsofincentivesappeartobemore
prevalent.Ifrobustlinksbetweenmeasurablepsychologicaltraitsand
highscoringPSMtypescouldbeidentified,ourunderstandingofhow
extrinsicincentivesrelatetopublicservicemotivationimproved,clear
proxiesforpublicservicemotivationestablished,ormoredirectlinks
betweeninitiativesdesignedtoimprovepublicservicemotivationand
organisationalperformancecouldbedocumented,itmaycreateanew
spaceonpolicyagendasfortheconcept.Basedonthetrajectoryofcurrent
researchintopublicservicemotivation,someoftheseissuesmaybe
resolvedinthenottoodistantfuture.

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