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False or Fitting Recognition? The Use of High Performance Bonuses in Motivating Organizational Achievements

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  • Carolyn Heinrich

Abstract

This research undertakes a theoretical and empirical examination of high performance bonus systems in government, that is, incentive payments awarded by the federal government to state organizations or statewide programs to motivate and recognize high performance achievements. The paper draws from a multidisciplinary literature on incentives in organizations to first derive implications for the design and implementation of high performance bonus systems. An empirical analysis of the Workforce Investment Act performance bonus system and its effectiveness in recognizing and rewarding performance follows. The results of the theoretical and empirical investigation suggest that high performance bonus systems are more likely to encourage misrepresentation of performance and other strategic behaviors than to recognize and motivate exceptional performance or performance improvements.

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  • Carolyn Heinrich, 2008. "False or Fitting Recognition? The Use of High Performance Bonuses in Motivating Organizational Achievements," Public administration issues, Higher School of Economics, issue 4, pages 72-104.
    • Handle: RePEc:nos:vgmu00:2008:i:4:p:72-104
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    References listed on IDEAS

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    1. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March.
    2. Gerald Marschke & Pascal Courty, 2000. "An Empirical Investigation of Gaming Responses to Performance Incentives," Discussion Papers 00-12, University at Albany, SUNY, Department of Economics.
    3. Robert Gibbons, 1998. "Incentives in Organizations," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 115-132, Fall.
    4. Baker, George P, 1992. "Incentive Contracts and Performance Measurement," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 598-614, June.
    5. James J. Heckman & Carolyn Heinrich & Jeffrey Smith, 2002. "The Performance of Performance Standards," Journal of Human Resources, University of Wisconsin Press, vol. 37(4), pages 778-811.
    6. Avinash Dixit, 2002. "# Incentives and Organizations in the Public Sector: An Interpretative Review," Journal of Human Resources, University of Wisconsin Press, vol. 37(4), pages 696-727.
    7. Kathryn H. Anderson & Richard V. Burkhauser & Jennie E. Raymond, 1993. "The Effect of Creaming on Placement Rates under the Job Training Partnership Act," ILR Review, Cornell University, ILR School, vol. 46(4), pages 613-624, July.
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    Cited by:

    1. Maureen A. Pirog & Anne L. Buffardi & Colleen K. Chrisinger & Pradeep Singh & John Briney, 2009. "Are the alternatives to randomized assignment nearly as good? Statistical corrections to nonrandomized evaluations," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 28(1), pages 169-172.
    2. Carolyn J. Heinrich & Gerald Marschke, 2010. "Incentives and their dynamics in public sector performance management systems," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 29(1), pages 183-208.
    3. Donald Moynihan & Ivor Beazley, 2016. "Toward Next-Generation Performance Budgeting," World Bank Publications - Books, The World Bank Group, number 25297.
    4. Carolyn J. Heinrich, 2008. "Advancing public sector performance analysis," Applied Stochastic Models in Business and Industry, John Wiley & Sons, vol. 24(5), pages 373-389, September.
    5. Homrighausen, Pia, 2014. "Differential pricing and private provider performance," IAB-Discussion Paper 201425, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

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