RESPONSIBLE ENTREPRENEURSHIP VISION DEVELOPMENT AND ETHICS

156 RESPONSIBLE ENTREPRENEURSHIP
bination of motivation and ability (Rynes et al., 2005). Based on experience gained by many
companies, pay can be a powerful means of motivation. The choice of a pay system is considered
critical to organizational success, because it may influence employee behaviour and
provide information about the organization values (Brown, 2001). In order to maximize
employee performance and link it to corporate goals more effectively, many organizations
adopt flexible pay systems that relate employee performance with monetary rewards.
Assuming that these systems could also be applied in public administration successfully,
many governments around the world have pushed public organizations to follow the private
sector and initiate performance-related pay (PRP) schemes (Brown, 2001; Weibel et al., 2010,
Harrison et al., 2014). According to OECD studies, approximately two-thirds of OECD countries
have introduced PRP in some form (OECD 2005). The United Kingdom, Switzerland
and the Czech Republic apply PRP more extensively than countries such as New Zealand,
Austria and the Netherlands. In Finland, for example, the proportion of the basic salary that
PRP represents may amount to over 40%. In the US, while PRP is of limited use in the core
public administration, it is at the center of efforts to improve teacher accountability over the
past decade in the context of the No Child Left Behind Act. The literature suggests that there
are similar movements underway in middle income countries and, perhaps more sporadically,
in lower income countries where PRP is more often encountered in the health and education
sectors than in core administration.
These schemes are part of wider efforts for administrative reforms in the public sector
aiming at reducing cost and increasing productivity, service quality and other key organizational
outcomes (Reilly, 2003; Dahlström & Lapuente, 2009). Evidence shows however, that
the effect of PRP on employee motivation and organizational performance is rather doubtful
or even negative (Marsden & Richardson, 1994; Perry et al., 2009; Weibel et al., 2010; Schmidt
et al., 2011). The introduction of a PRP system entails the danger of being seen as an implicit
attempt for wage cuts or a signal of less tolerance towards low productivity (Lazear, 2000,
p. 1355). However, the implementation of a PRP system usually coincides with improvements
in management practices, e.g. clearly defined goals, training and so on. Hence, it is rather
difficult to determine its net contribution to the achievement of organizational outcomes (Glassman,
et al., 2010). This has sparked an extensive debate on whether the public sector could
adopt PRP schemes successfully, under which conditions and which effects they could have
on employee motivation and relations.
While this debate continues, the Greek government plans to reform public administration
and initiate PRP schemes over the next period. The extensive reform of the enlarged and underproductive
Greek public sector is part of the obligations of the memorandum signed between
Greece and the debt granting institutions, the International Monetary Fund, the European Commission
and the European Central Bank (Hope, 2010). At the kernel of the expected reforms
is the core administration that seriously underperforms, intensifying further the country’s economic
and social problems.
This study aims at investigating how public sector employees perceive the forthcoming
introduction of a PPR system. It is the first of its kind in the country, since PRP schemes have
never been used in the Greek public sector before. Although most studies focus on the impact
of PRP on employee motivation and organizational outcomes long after the adoption of PRP,
this study is conducted prior to its introduction. It is a quantitative attempt aimed at exploring
in depth employees’ perceptions on the initiation of PRP schemes in a public organization.
It results may be valuable to academics and practitioners. The study may help scholars