A formative evaluation of a pay-for-performance system

Abstract

Orientation: Pay-for-performance (PFP) systems emerged during the 1980s as performance improvement tools. However, research findings have shown contradictory evidence as to whether these systems motivate employees to improve their performance.

Research purpose: The main aim of this evaluation was to assess whether a PFP system, which a South African university introduced for administrative employees, improved their performance. A secondary aim was to examine whether the university implemented the system as it intended to.

Motivation for the evaluation: The motivation for this evaluation was to add to the social science literature on the effectiveness of PFP systems. There are many contradictions in the literature and further exploration of whether these systems deliver their intended outcomes seemed overdue.

Research design, approach and method: The evaluators used a descriptive design. They administered a customised questionnaire, to which 391 university staff members responded. Of these, 129 were line managers and 262 were administrative staff.

Main findings: The administrative staff, whose working lives the PFP system affected, thought that it did not improve their performance. Both line managers and administrative staff indicated that the pay aspect of the system did not differentiate between poor and excellent performance.

Practical/managerial implications: The evaluators made practical recommendations for improving the implementation of the system.

Contribution/value-add: This evaluation contributed to the social science literature on the effectiveness of PFP systems by showing that poor implementation rather than poor design often lies at the root of a system that does not deliver its intended outcomes.