Employee Performance and Compensation in the Public Sector

Posted on February 27, 2017 • Posted in News Articles

Can we effectively link employee performance and pay? The challenges are different in the public sector than they are in for-profit organizations. However, while the road to success is winding and arduous, the potential positive impact on public service seems clear.

The purpose of this article is to define the basic requirements of an effective pay for performance system, identify the particular characteristics of the public sector requiring special attention, and offer suggestions for meeting the challenges effectively.

As a general proposition, I believe there are four fundamental requirements for an effective performance-based pay system:

1. Performance expectations are clearly defined and understood.

2. Performance is measured accurately and communicated effectively by well-intentioned, trained supervisors.

3. The process is managed consistently across the organization.

4. Differences in performance can result in meaningful differences in compensation outcomes.

Performance management takes place in an organizational culture and environment, and the function and purpose of government is different than business. Government’s purpose is to provide critical services requiring collective support through political processes. Effectiveness and cost control are the primary measures of success. In contrast, private sector organizations must create profit to exist, so their standards are different.

To read more, download Charlie Carlson’s article from the 2016 of the Municipality. League of Municipalities – October 2016 Issue