UC Irvine

Is it particularly difficult to reward employees' performance in public orga­nizations? Here it will forcefully be suggested that this assumption is false, that managers in or out of government have powerful informal rewards at their command. Certainly, there are important differences in the formal per­sonnel and pay policies between government and smaller businesses. Clearly, most employees in businesses are not subject to the variety of goals and con­stituents that often occur in public organizations; yet it will be suggested here that dwelling on the limitations of normal procedures and external links is the leading contributor to the neglect of rewarding good performance in government. In public organizations, the expectation that performance in itself cannot be rewarded leads to few rewards for good performance, a classic self-fulfilling hypothesis. The chapter begins with an analysis of the limitations of formal policies for effectively rewarding performance. This is followed by an argument for the use of informal systems to reward performance, with special attention to the strengths and limitations of this approach. Finally, the chapter concludes with specific steps that individual managers and policymakers alike can take to implement effective informal procedures to reward good performance.