The unintended consequences of a pay-for-performance rule change: U.S. Department of Defense’s National Security Personnel System

PurposeThe purpose of this paper is to estimate the impact of a pay-for-performance (PFP) rule change on US Department of Defense (DoD) employees’ job satisfaction by looking at changes in the DoD’s National Security Personnel System.Design/methodology/approachThe data for the analysis are derived f...

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Bibliographic Details
Published in:The International journal of public sector management 2018-07, Vol.31 (6), p.654-671
Main Author: Hur, Hyunkang
Format: Article
Language:English
Subjects:
Air force
Budgets
Cooperation
Data analysis
Employee attitude
Employee behavior
Employee morale
Employees
Government employees
Human capital
Job performance
Job satisfaction
Monetary incentives
Morale
Motivation
National security
Navy
Pay for performance
Performance management
Performance related pay
Public administration
Quasi-experimental methods
Race
Raises
Security personnel
Self esteem
Studies
Work
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Summary:PurposeThe purpose of this paper is to estimate the impact of a pay-for-performance (PFP) rule change on US Department of Defense (DoD) employees’ job satisfaction by looking at changes in the DoD’s National Security Personnel System.Design/methodology/approachThe data for the analysis are derived from the 2002, 2004, 2006 and 2008 Federal Human Capital Survey. A difference-in-differences (DID) quasi-experimental methodology was used to examine the effect of a PFP rule change on DoD employee job satisfaction. The Department of Air Force and Navy are analyzed as a proxy for the DoD. This study also undertakes a subgroup analysis strategy to understand the effect of PFP systems on specific subgroups (classified by gender, race and supervisory status).FindingsThis study’s results indicate that the overall effect of the introduction of a new PFP rule at DoD is a decrease of approximately 7.9 percentage points in employee job satisfaction, which is a substantial negative effect. In addition, this paper further finds that DoD’s PFP system has widened the gender gap in job satisfaction at DoD.Originality/valueThis study contributes to both the theoretical and the empirical understanding of PFP systems and public employee work morale and attitudes.
ISSN:0951-3558
1758-6666
DOI:10.1108/IJPSM-09-2016-0147