Thursday, 14 November 2013

Does “pay for performance” work? - Dr Lucia Corno, Lecturer in Economics at Queen Mary University of London

It’s become a stock piece of management consultant’s advice to public authorities: “Design a pay scheme to reward people for performing better and that’s just what they’ll do”. But is that true?

Take the National Health Service in the UK. In April 2004, the NHS introduced a performance related pay (PRP) scheme as part of something called the Quality and Outcome Framework. The idea was to reward doctors, anesthetists and nurses who achieved or exceeded their targets for quality with bonuses worth between a quarter and a third of their salary. There were no fewer than 136 quality indicators. These covered everything from how chronic conditions are managed, through the way that practices are run, all the way to the patients’ experience of care.[i]