Does Performance-Related-Pay work? Recommendations for practice based on a meta-analysis

Performance-related-pay (PRP) is a controversial topic. Views about its impact are mixed. Through a meta-analysis of studies in public administration, we aim to provide an evidence-based answer to the question: Does PRP work? Our meta-analysis finds a statistically significant, positive but small population effect size between PRP and employee and performance outcomes. Subgroup analyses show that PRPs impact is contingent upon the type of outcome, geographical context, government level, and data source rather than universal in nature. Effect sizes decrease when performance outcomes are measured as opposed to employee outcomes; in USA and European contexts compared to Asian contexts; at the local level compared to the federal level; and when multiple source or experimental data are used compared to single source data. Based on our findings and PRP literature, we construct a flowchart to support practitioners in deciding whether PRP may “work” for them while avoiding its many and typical pitfalls.

© 2023 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group.