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Performance-related pay in the public sector: investigation of failure reasons and implications for the brazilian state
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Abstract
The installation of performance-related pay at the Brazilian public administration is growing recently, but the optimism of public managers is not grounded on any theory. The literature shows that performancerelated pay at the public sector abroad have failed or obtained a much limited success. This paper has as its objective to study the experiences in installing incentive systems at governments, to analyze the causes of the failures occurred and to identify practices which will have more chances of conducting a variable payment system to generate good results in Brazil's public service. In order to do so, it was investigated the effectiveness of different models and installation strategies for incentive systems, the relevant aspects of national culture, the arguments based on the agent/principal theory and the interferences of the psychological issue in variable payment. Finally, six practices are presented which may contribute toimprove the results of performance related pay at Brazil's public sector, as follows: the construction of a strategic schedule for all the organization; the establishment of quantitative results, preferentially outputs, as basis for the premium; the scheme's modeling around teams rather than around individuals; the use of an intelligence unit against gaming; the performance of a formal and periodic goal contracting process; and the creation of differentiated incentive systems based on the task type.
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