The Impact of Pay-for-Performance Schemes on the Performance of Australian and Malaysian Government Employees

Abstract

Supported by well-known motivation theories, and the logical notion that people should be rewarded for achievement, pay-for-performance (PFP) schemes are now widely applied across the public service in Asia Pacific as a means to raise employee performance. This comparative survey of over 300 Australian and Malaysian federal government employees examines whether their positive perceptions of PFP schemes have been associated with an improvement in their performance on formal and prescribed organizational activities or in-role behaviour (IRB). The respondents’ favourable perceptions of their agency’s PFP scheme were not found to be accompanied by a significant rise in their IRB levels. In contrast, other factors – psychological empowerment, organizational citizenship behaviour, and culture (high collectivism and low power distance) – positively influenced the respondents’ IRB levels. These factors, however, did not significantly strengthen the PFP–IRB relationship. Country differences in the findings were also noted.