Remuneration and Motivation

Labour represents the chief resource for many public sector organisations, especially in public services where pay costs typically range from sixty to eighty per cent of total current expenditure. Effective service delivery thus depends crucially upon successful methods of managing, rewarding and motivating human resources. This chapter assesses the implications for public managers of pay reforms pursued during the 1980s, which entailed a sustained challenge to traditional public sector pay principles and associated motivational assumptions. The discussion begins by outlining the pay and motivational features of the ‘old model’ of postwar public sector industrial relations, and the key role of pay comparability in this system. The challenge to the system during the 1980s is then described, and some observations made concerning the durability of the old model. The next section describes the features of a new system that was evolving during the later 1980s, which provides opportunities for restoring public sector pay stability and improving staff morale. Some difficult issues and problems that confront public managers in adjusting to and operating the new system are then discussed.