Performance-Based Managerial Pay in the Federal Government: Does Agency Matter?

Abstract

Do factors unique to particular agencies affect the design, implementation, and results of performance-based compensation systems? The research presented addresses this question, using the federal Performance Management and Recognition System (PMRS) as the focus of analysis. The findings show that agency does impact the design, implementation, and perceived outcomes of an expectancy-based compensation system. The research suggests that agency-based differences should be explored before implementing a pay-for-performance compensation system. Attention should be given to the adequacy of the organization's rewards for performance, the soundness of its performance appraisal device, the linkage between pay and performance, the geographic proximity or dispersion of employees included in award pools, and the level of trust in the agency. While the preceding listing is not exhaustive, it is a beginning toward determining the types of agencies that may be amenable to performance-based pay. This research takes on particular significance since recent federal legislation requires a feasibility study of extending a PMRS-like pay system to the entire federal workforce.

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