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Performance Related Pay in the Public Sector: the Known Unknowns Margaret McEvoy Chief Economist Office of Manpower Economics
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Why the interest in PRP OME supports 7 pay review bodies which make recommendations on pay for 2.5 million workers/ £100bn paybill; Covers health, education, senior public servants (incl judges, health) police, armed forces, prisons Workforce = variety of professions/more educated/ more female/ intrinsic motivation; More recent focus on PRP. Schools now have greater freedoms in setting pay/allowances and linking pay progression to performance.
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Teachers’ pay: recent reforms Changes for classroom teachers from Sept ’13 extension of performance-related pay progression to all; abolition of mandatory pay points within pay ranges; new leading practitioner pay range enabling the very best teachers to stay in classrooms; greater discretion for schools in use of allowances.
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Teachers’ pay: recent reforms Changes to leadership pay from Sept ‘14 new national framework for local decisions taking account of school circs/challenge of role; removal of complex rules on starting pay and differentials within the leadership group; abolition of fixed pay points within pay bands.
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Key questions and evidence What is the evidence on the impact, effectiveness and value for money of PRP in public sector? What are characteristics of a well designed PRP scheme? Literature review of PRP in the public sector: two studies commissioned by OME; Performance related pay in the public sector: a review of the issues and evidence by Burgess, Propper, and Prentice (2007) A review of the evidence on the impact, effectiveness and value for money of PRP by The Work Foundation – (expect to publish Autumn 2014).
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Evidence on PRP Is mixed but suggests; It can increase productivity through Improved motivation; Recruitment of more effective staff; Retention of high achievers/improved performance/shedding of low achievers. Though disadvantages Difficult to implement/multiple principles/misallocation of effort; Intrinsic motivation of workers could be reduced; Risk of gaming/strategic behaviour.
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Drawbacks of research base Paucity of evidence; Studies mainly in health, education and the civil service; Mainly from the US; Few experimental studies; Little evidence on cost effectiveness or vfm.
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Evidence Gaps: research needed on PRP to improve knowledge of what works for UK public sector /professions/groups; measure longterm impacts; establish differential impacts eg on high/low paid, male/female workers, high/low awards; establish the full costs, benefits and vfm.
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