The Pros and Cons of Increasing the Proportion of Performance Pay: An Evidence from South Korean Public Enterprise

Insufficient incentive has been cited as one of the reasons that public sector performance pay policy failed. In the public sector, this can be resolved by increasing the proportion of performance pay without increasing the total budget for compensation. However, this adjustment in pay scale has bot...

Full description

Saved in:
Bibliographic Details
Published inPublic performance & management review Vol. 43; no. 5; pp. 1150 - 1173
Main Author Lee, Hyung-Woo
Format Journal Article
LanguageEnglish
Published Philadelphia Routledge 02.09.2020
Taylor & Francis Ltd
Subjects
burnout
Compensation
Helping behavior
performance pay
Public enterprise
Public sector
work effort
Online AccessGet full text

Cover

More Information
Summary:Insufficient incentive has been cited as one of the reasons that public sector performance pay policy failed. In the public sector, this can be resolved by increasing the proportion of performance pay without increasing the total budget for compensation. However, this adjustment in pay scale has both pros and cons. This study analyzes the data obtained from a South Korean public enterprise in which the proportion of performance pay has substantially increased. The result indicates that the increased proportion of performance pay policy may result in motivational gains: Work efforts are increased when they perceive that the proportion of performance pay is substantial. Although it increased emotional exhaustion, it did not significantly decrease helping behavior. This result implies that performance pay may be an effective resolution if managers are prepared to address some negative side effects.
ISSN:1530-9576
1557-9271
DOI:10.1080/15309576.2020.1739088