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Why the interest in PRP

Performance Related Pay in the Public Sector: the Known Unknowns Margaret McEvoy Chief Economist Office of Manpower Economics. Why the interest in PRP. OME supports 7 pay review bodies which make recommendations on pay for 2.5 million workers/ £ 100bn paybill ;

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Why the interest in PRP

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  1. Performance Related Pay in the Public Sector: the Known UnknownsMargaret McEvoyChief EconomistOffice of Manpower Economics

  2. Why the interest in PRP • OME supports 7 pay review bodies which make recommendations on pay for 2.5 million workers/ £100bn paybill; • Covers health, education, senior public servants (incljudges, health) police, armed forces, prisons • Workforce = variety of professions/more educated/ more female/ intrinsic motivation; • More recent focus on PRP. Schools now have greater freedoms in setting pay/allowances and linking pay progression to performance.

  3. Teachers’ pay: recent reforms Changes for classroom teachers from Sept ’13 • extension of performance-related pay progression to all; • abolition of mandatory pay pointswithin pay ranges; • new leading practitioner pay range enabling the very best teachers to stay in classrooms; • greater discretion for schools in use of allowances.

  4. Teachers’ pay: recent reforms Changes to leadership pay from Sept ‘14 • new national framework for local decisions taking account of school circs/challenge of role; • removal of complex rules on starting pay and differentials within the leadership group; • abolition of fixed pay points within pay bands.

  5. Key questions and evidence • What is the evidence on the impact, effectiveness and value for money of PRP in public sector? • What are characteristics of a well designed PRP scheme? Literature review of PRP in the public sector: two studies commissioned by OME; • Performance related pay in the public sector: a review of the issues and evidence by Burgess, Propper, and Prentice (2007) • A review of the evidence on the impact, effectiveness and value for money of PRP by The Work Foundation – (expect to publish Autumn 2014).

  6. Evidence on PRP Is mixed but suggests; It can increase productivity through • Improved motivation; • Recruitment of more effective staff; • Retention of high achievers/improved performance/shedding of low achievers. Though disadvantages • Difficult to implement/multiple principles/misallocation of effort; • Intrinsic motivation of workers could be reduced; • Risk of gaming/strategic behaviour.

  7. Drawbacks of research base • Paucity of evidence; • Studies mainly in health, education and the civil service; • Mainly from the US; • Few experimental studies; • Little evidence on cost effectiveness or vfm.

  8. Evidence Gaps: research needed on PRP to • improve knowledge of what works for UK public sector /professions/groups; • measure longtermimpacts; • establish differential impacts eg on high/low paid, male/female workers, high/low awards; • establish the full costs, benefits and vfm.

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