Problems with the Implementation of Performance Measurement Systems in the Public Sector Where Performance Is Linked to Pay

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PROBLEMS WITH THE IMPLEMENTATION OF PERFORMANCE MEASUREMENT SYSTEMS IN THE PUBLIC SECTOR WHERE PERFORMANCE IS LINKED TO PAY: A LITERATURE REVIEW DRAWN FROM THE UK

MIRAL METAWIE
PhD student in Industrial Relations KBS Annex University of Kent at Canterbury Tel: [phone] E-mail: [e-mail]

DR. MARK GILMAN
Senior Lecturer in Industrial Relations/HRM KBS University of Kent at Canterbury CT2 7PE Tel: [phone] Fax: [phone] E-mail: [e-mail]

3rd Conference on Performance Measurements and Management Control (Nice September 22-23, 2005)

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Abstract
According to Robert Kaplan and David Norton, (1992; 1996; 2001; 2004), 'the final linkage from high-level strategy to day-to-day actions occurs when companies link individuals ' reward programs to the Balanced Scorecard '. The objectives of this linkage are, first, to focus employees ' attention on strategic priorities, and second, to provide extrinsic motivation by rewarding employees when they and the organisation reach their targets. Performance related pay (PRP) which has been widely introduced especially in the public sector holds out the promise of providing such a link. Yet, in practice performance measurement in the public sector has been a problematic area with PRP. This paper will attempt to address the problems of applying performance measurement systems (PMS) in linkage to pay systems in the public sector through reviewing the literature of the UK. An extensive portion of the literature on PMS has been concerned with the economic benefits of the application of such systems as strategic control systems to increase productivity through monitoring employees’ activities and influencing their behaviours (Kaplan and Norton, 1996b; Neely, 1995). This however, brings attention to two issues that raise doubts in the lucidity of this literature and the validity of using, mainly, economic theories to assess the benefits of PMS. The first is that though one can note that

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