Academic journal article Social Behavior and Personality: an international journal

Policy Expectation Moderates the Relationship between Merit Pay Policy Effectiveness and Public Service Motivation

Academic journal article Social Behavior and Personality: an international journal

Policy Expectation Moderates the Relationship between Merit Pay Policy Effectiveness and Public Service Motivation

Article excerpt

In the past three decades, increasing numbers of performance-related pay programs have been implemented as motivational tools in various public sectors throughout countries including the United States, the United Kingdom, and Australia (Kellough & Nigro, 2002). For example, policy makers in the United States have discussed whether merit pay should be offered to public school teachers, as is common practice in the United Kingdom (Woessmann, 2011). In China, as the first step to reforming the wage system in public service institutions, in 2009 a merit pay policy was implemented for teachers working in compulsory schools-that is, public schools offering free education from Grade 1 to Grade 9 (Ministry of Education of the People's Republic of China, 2008). However, as many scholars have expressed doubt regarding the actual benefits of utilizing performance pay programs in public sectors in the West (Ingraham, 1993; Perry, Engbers, & Jun, 2009), the Chinese government and scholars from this country (e.g., Meng & Wu, 2015) have also questioned whether the merit pay policy is a useful incentive for public service employees and whether it can fulfill its original purposes of attracting talented individuals to teaching roles by offering a competitive compensation system and improving student achievement by increasing teacher effectiveness.

Per crowding theory, the use of pay systems may mean that the altruistic intentions of public sector employees are overlooked or even diminished (Moynihan & Pandey, 2008). In contrast, Stazyk (2012) found that performancerelated pay was associated with greater job satisfaction among U.S. local government managers, especially those who possessed strong public service motivation (PSM), which is defined as "an individual's predisposition to respond to motives grounded primarily or uniquely in public institutions and organizations" (Perry & Wise, 1990, p. 368). PSM is an important antecedent of work-related outcomes, such as job performance (Vandenabeele, 2007; Wright & Pandey, 2008), in that employees with high PSM tend to experience high levels of autonomy, task identity, and task significance (Perry & Wise, 1990). Therefore, we examined the relationship between the merit pay policy effect and PSM in a Chinese school teacher context, as well as the conditions that moderate this relationship.

Literature Review and Development of Hypotheses

Perceived Merit Pay Policy Effectiveness and Public Service Motivation

Perceived policy effectiveness refers to the belief of the involved actors that intended goals are being achieved through enacting relevant policies (Lubell, 2003). In this study, we considered the perceived effectiveness of the merit pay policy as reflecting the practical result of this system. The goal of a merit pay policy is to help organizations attract and retain the best and brightest employees, and to improve organizational flexibility and generate better outcomes. In addition to sociodemographic and socioinstitutional factors, such as level of education, family ethnic background, and religion (Perry, 1997), Moynihan and Pandey (2008) also demonstrated that organizations can affect employees' PSM. Previous researchers have shown that a performance pay system may provide the perception of increased self-determination because the employee can optimize the combination of effort and income in accordance with their own preferences (Eisenberger, Rhoades, & Cameron, 1999; Green & Heywood, 2008). Thus, an effective merit pay policy may incentivize public sector employees and foster their PSM.

On the other hand, numerous researchers have argued that implementing merit pay systems in the public sector has adverse effects on employees' perceptions of incentives (Durant, Kramer, Perry, Mesch, & Paarlberg, 2006). Some scholars have also provided indirect evidence based on motivation crowding theory that extrinsic rewards, such as money, decrease employees' intrinsic motivation, especially in the context of public organizations (Georgellis, Iossa, & Tabvuma, 2010). …

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