one of the most common concerns voiced regard¬ing the performance pay plan is that there is not enough money available to reward all the high performers. The OECD (1993) also notes that achieving the correct intraorganizational fit often involves cycles of experimentation and policy adjustment. Thus, any adoption of a performance pay plan should be considered a work in progress in the short run, if not permanently.
As Ingraham (1993) notes, the diffusion of performance pay schemes has proceeded in many cases without consultation and without a level of empirical support that would indicate the appropriateness of the plan. The seemingly haphazard diffusion has taken place across states within the United States and also cross-nationally. This leads us to concerns about extra-organizational fit. Performance pay plans must fit appropriately not only into the organization's cultural context, but also into the national context in which they are being adopted.
Issues of national fit are often resolved on their own. Morgan (1996) has written about the relationship between the type of state and the possibility of reforming the civil service. Intervening macro-level variables often determine, ex ante, which plans will succeed. For example, a simple lack of funds in developing countries often precludes the adoption of a performance pay system, although perhaps not a merit system based on non-monetary rewards. Furthermore, as several of the contributors to Elliott, Lucifora and Meurs (1999) note, the degree of centraliza¬tion of the pay determination process dictates where decisions regarding merit plans can be made.
Regardless of whether the country is in the OECD or is developing, the first question that should be asked during the performance pay implementation process concerns the nature and needs of the organization. Ingraham has phrased this concern most eloquently in stating: 'Ask what public organizations need, not what private organizations do' (Ingraham, 1993: 354). When managers consider the local circumstances affecting the potential of performance pay plans they are more likely to design one that fits into the given organizational context.
Proposition IV: Measurement problems will continue to be a problem in designing and implementing performance pay plans
One of the most difficult tasks facing managers,
whether in the public or private sectors, is
one of the most common concerns voiced regard¬ing the performance pay plan is that there is not enough money available to reward all the high performers. The OECD (1993) also notes that achieving the correct intraorganizational fit often involves cycles of experimentation and policy adjustment. Thus, any adoption of a performance pay plan should be considered a work in progress in the short run, if not permanently.
As Ingraham (1993) notes, the diffusion of performance pay schemes has proceeded in many cases without consultation and without a level of empirical support that would indicate the appropriateness of the plan. The seemingly haphazard diffusion has taken place across states within the United States and also cross-nationally. This leads us to concerns about extra-organizational fit. Performance pay plans must fit appropriately not only into the organization's cultural context, but also into the national context in which they are being adopted.
Issues of national fit are often resolved on their own. Morgan (1996) has written about the relationship between the type of state and the possibility of reforming the civil service. Intervening macro-level variables often determine, ex ante, which plans will succeed. For example, a simple lack of funds in developing countries often precludes the adoption of a performance pay system, although perhaps not a merit system based on non-monetary rewards. Furthermore, as several of the contributors to Elliott, Lucifora and Meurs (1999) note, the degree of centraliza¬tion of the pay determination process dictates where decisions regarding merit plans can be made.
Regardless of whether the country is in the OECD or is developing, the first question that should be asked during the performance pay implementation process concerns the nature and needs of the organization. Ingraham has phrased this concern most eloquently in stating: 'Ask what public organizations need, not what private organizations do' (Ingraham, 1993: 354). When managers consider the local circumstances affecting the potential of performance pay plans they are more likely to design one that fits into the given organizational context.
Proposition IV: Measurement problems will continue to be a problem in designing and implementing performance pay plans
One of the most difficult tasks facing managers,
whether in the public or private sectors, is
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