Research Report on Employee Incentives In Public Sector Agencies

Context of Research (Reason and Background of the study)

In every organisation, employees play a strategic role. They transform inputs into manufacturing outputs. We are accountable. Because they are the key to productive production, their work should be compensated efficiently and adequately. Drucker (1974) believes that the management's task is to make people productive in order to achieve superior achievement and to take a competitive edge through effective compensation packages in the globalized arena. There are several ways of differentiating public sector employment and employee practices from private-sector ones by the nature of the government goals (Dixit, 2002). These characteristics must be taken into account in the design and implementation of effective recruitment policies and motivating public workers. According to Caruth, Middlebrook, and Rachel (1982), increasing productivity in an organisation is the general purpose of incentive plans. In connection with compensation for output, an employer tries to lead employees to work more than they have to do, lowering the costs of manufacturing a single production unit. Employees should make further efforts to raise the amount and/or quality of their output when compensation is linked to performance. In this way, policymakers can use opportunities to provide excellent public services through the encouragement of better performance externally. The introduction of the salary associated with performance can also motivate employees to pursue career opportunities that have previously been of little benefit to the person. Productivity is thus likely to improve both in the short term, because staff work harder, and in the longer term because staff development generates additional productivity gains (Lavy, 2007). 

Monetary rewards can be successful only if better performance appraisal mechanisms help them because these systems are often inadequate for government organisations. The second reason that conditional compensation is not being charged in the public sector is rooted in public-sector systems which are fundamentally considered to hinder the efficacy of monetary incentives (Andersen and Pallesen, 2008; Egger-Peitler, Hammerschmid, and Meyer, 2007; Kessler and Purcell, 1992; Marsden and Richardson, 1994). For instance, private companies, which use monetary incentives most successfully, rely heavily on pay secrecy (Colella et al., 2007), while public organizations have to comply with strict requirements for their pay policy transparency. Moreover, public institutions face budget constraints and the public's expectations of responsible management of resources, which may cause them to offer sufficient bonuses, either legally and politically, (Miller and Whitford, 2007), it is also suggested in the reinforcement theory (Skinner, 1969) expectancy theory (Vroom, 1964;  Gneezy and Rustichini, 2000). The modest quality in pay for public sector performance relative to private sector outcomes was based on the psychological qualities of government workforce in contrast to private sector staff. Studies have examined whether and how foreign rewards undermine motivation for employees, generating an impact that lowers their effort and performance (Georgellis, Iossa, and Tabvuma, 2011; Weibel, Rost, and Osterloh, 2009; Belle and Cantarelli, 2015). Drawing on literature that states that monetary incentives do not contribute to improving public sector work (Ingraham, 1993; Kellough and Lu, 1993; Lah and Perry, 2008; Milkovich and Wigdor, 1991). Rationalistic approaches are based on the use of monetary incentives to improve job performance (Burgess and Ratto, 2003; Fehr and Gachter, 1998; Lehman and Geller, 2004; Luthans and Kreitner, 1985; Durant et al., 2006; Stajkovic and Luthans, 1997). 

While no previous reasons exist for inappropriate monetary incentives to the public sector, there are many people who will object to the use of such incentives in a high philosophical and political sense. A performance results measurable and quantifiable must be based on an incentive program. In the public sector, there is, unfortunately, a lot of confusion about performance evaluation and measurement.

Francois (2000) suggests that intrinsically motivated workers should really work better when small or even absent incentives are available and employers do not commit to diverting surpluses or "profits" from the mission of the organization. Besley and Ghatak (2005) to develop this argument further that the natural sorts of candidates would work as financial incentives if public sector organizations posted missions during recruitment processes. On the other hand, financial incentives can help to focus attention on other strategic goals which could be ignored if employers relied solely on the inspiration for the public service