Performance-related pay in health care

Performance-related pay (PRP) has been widely extended within the British public sector in the last 15-20 years, mostly because of pressure from central government. Its penetration in the National Health Service (NHS) has not so far been very deep but it has been sufficient to permit preliminary judgements on its likely impact.

Review of published accounts of the extent of use of PRP in the NHS and its impact, plus two case studies.

There have been few rigorous studies reported. PRP has been introduced for a variety of reasons: an incentive to motivate staff; to enhance staff recruitment and retention; to signal a change in organizational culture; to control staff costs; to reduce the power of trades unions; to reinforce staff development policies. Very few NHS provider organizations have implemented PRP. Despite this, senior managers see real merit in it in improving staff performance and delivering a clear message about the importance of organizational performance. Employees are much more skeptical, seeing PRP as having no effect or being detrimental.

PRP has had, at most, only a very modest beneficial impact in the British NHS. In the absence of better evidence, it would be sensible for government to continue to encourage local initiatives rather than propose a mandatory national scheme. It would also be prudent to subject local schemes to rigorous evaluation.