Evaluating performance-related pay for managers in the National Health Service

Abstract

This paper evaluates the scheme of performance-related pay facing NHS managers, using both quantitative and qualitative date from a questionnaire survey. We find that the scheme is modestly successful. On the basis of self-reported data from managers covered by the scheme, there are clear indications that it has raised motivational levels, and induced more effort, albeit for only a minority of the managers. These results stand in some contrast to those from a number of earlier UK studies, and may show what happens in relatively mature PRP systems. In seeking to understand why the scheme was not more successful, we found that motivational and behavioural change was less likely among those who thought that certain aspects of the objective-setting process were done badly, or that assessments were conducted inappropriately, or that the subsequent rewards were unattractive. We finish by drawing out some implications for HR policy.