Research questions link between pay and performance

In all the arguments about the feasibility of pay-for-performance management systems, few people ever question the underlying assumption that linking pay to performance will motivate employees.

But the conventional wisdom doesn’t hold up to scrutiny, said Laura Langbein, a professor at American University's Department of Public Administration and Policy.

After crunching data collected by the Merit Systems Protection Board, Langbein reached the opposite conclusion: The closer the link between pay and performance, the lower the level of performance. “It is frequently demotivating,” she said.

It is not that employees do not care about money. Pay must be both fair and satisfactory. But don’t expect a Pavlovian response if you dangle a slightly bigger paycheck in front of them.

“It’s like my dog,” Langbein said. “My dog understands the only reason to sit up is to get a reward. It works well for a dog, but it doesn’t work well for federal employees.”

However, pay-for-performance systems often have one important benefit: They inspire managers to sit down with employees and clarify their goals. “Employees like that,” Langbein said. “They are willing to work, and they want to do a good job.”