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Implementing Pay-for-Performance with Municipal Employees

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Governmental agencies are often seen as ineffective in managing the human capital within their departments. As budgets become strained and tax revenue declines officials will need to find new ways of motivating and managing employees to do more with less. The development of higher employee engagement and performance often starts with the performance appraisal and the standards set within. The use of pay-for-performance can increase both the skill and standards within such agencies. Human resource functions often set the pay and performance criteria of public service employees. In public agencies the cost of labor can be heavy and accounts for approximately 60% of municipal budgets (Chelladurai, 1999). The effective management of taxpayer dollars often rests on the proper utilization of this resource for greater public service.  To develop stronger uses of human capital there should to be higher levels of alignment between work criteria and organizational objectives.   An