Performance-Related Pay in the Chinese Education Sector: A Balance Between Efficiency and Wellbeing

Abstract

Performance-related pay (PRP) has been a paradox in the public sector. In recent years PRP has witnessed renewed interest although, as a managerial initiative, it is problematic as it does not seem to fit with the nature and intent of public organizations. Moreover, why PRP continues to be pursued in the public sector remains a puzzle given that it has consistently failed to deliver on its promise. This paper explores this paradox and addresses the question of how best can PRP be introduced in public sector organizations. Data for the study was collected from three-rounds of semi-structured interviews with principals in the Chinese education sector over a ten-year period. Based on this data the research found that by adopting a pragmatic integration model based on the economic paradigm and humanistic management theories, the paradox underpinning PRP could be better understood and that PRP could work well in public organizations. The paper contributes to the literature of both the economic paradigm and humanistic management and offers significant practical implications for the adoption of PRP in the public sector.