performance. In gainsharing plans, baseline measures are established to determine the actual gains in productivity. If an increase is made, the leftover profits are divided between the organization and the employees. A prominent gainsharing plan was implemented at McClelland Air Force Base in California. Employees involved in 'Pacer Share' received gainshares for ten of the twenty-one quarters of the project. The reward level from Pacer Share was $1,924 per employee (http://www.opm.gov/demos/demo¬fact. htm).2
Gainsharing plans have distinct advantages and disadvantages. For example, since there is no guaranteed payout under a gainsharing plan, employees who are looking to minimize uncer¬tainty in their pay are not attracted to gainshar¬ing. On the other hand, if gainsharing plans have been successful in a particular -organization, then employees who are not necessarily risk averse may be drawn to the plan. As one of the leading scholars of pay-for-performance plans notes, gainsharing plans in the private sector have sur¬vived for decades in certain companies, and seem to work best in stable work situations where performance evaluation takes place in small to medium-sized groups (Lawler, 2000).
Cell (d): Small group incentives
While numerous examples of gainsharing or profit sharing plans for small groups of employ¬ees can be found, small group incentive plans that add rewards to an employee's base pay are rare. Organizations that utilize group-based per¬formance evaluation are perhaps more likely to favor compensation that does not become a per-manent part of the employee's pay. This can lead to horizontal pay discrepancies and mistrust between management and employees within the organization.
PROPOSITIONS
Although performance pay plans have been utilized in the public sector for decades, there have been relatively few attempts by scholars to sum up the state of research in this subfield of public management. The rest of this chapter represents an attempt to offer some general and preliminary observations on performance pay plans both in the United States and abroad. We hope that the following propositions will act both as guideposts for further discussions of
performance pay plans in the public sector and as