International Institute
for Educational Planning
Incentive structures as a capacity
development strategy in public
service delivery
Inger Ulleberg
Rethinking capacity development
Incentive structures as a capacity development strategy in public service delivery
Incentive structures as a capacity
development strategy in public
service delivery
A literature review and annotated
bibliography on the role of incentives for
civil servants within capacity development
policies
Inger Ulleberg
International Institute
for Educational Planning
The views and opinions expressed in this book are those of the authors and do not
necessarily represent the views of UNESCO or IIEP. The designations employed
and the presentation of material throughout this review do not imply the expression
of any opinion whatsoever on the part of UNESCO or IIEP concerning the legal
status of any country, territory, city or area or its authorities, or concerning its
frontiers or boundaries.
The publication costs of this study have been covered through a grant-in-aid
offered by UNESCO and by voluntary contributions made by several Member
States of UNESCO, the list of which will be found at the end of the volume.
Published by:
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ISBN: 978-92-803-1344-4
© UNESCO 2009
CONTENTS
List of abbreviations
List of figures
List of boxes
Foreword
Summary
Résumé
Introduction
1. Rationale
Incentives, public performance and capacity development:
a chain of causality
Public capacity erosion and the limited impact of training:
incentives matter
Defining, discerning and operationalizing incentives
2. Frameworks and types of incentives
Financial versus non-financial incentives
A typology of incentives and additional levels of analysis
Frameworks of public performance and capacity
3. Changes and challenges
Dual explanation for the limited impact of incentives
Weaknesses of present incentive systems
The difficulties of reform: obstacles to implementation
4. Reforms and successes
Renewed interest in incentives for civil servants
Pay-based and merit-based reforms
Accountability
5. Policy suggestions
Encourage transparency, merit and professionalism
Foster capacity through HRM
Assess external ‘pull’ and ‘push’ factors for reform
Carefully consider the scope and pace of reform
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Contents
6.
The impact of incentives within the civil service on capacity
development in education
A methodological note
Annotated bibliography
Annex 1
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87
87
95
141
LIST OF ABBREVIATIONS
ATP
BEEPS
BPR
CPIA
CSA
CSR
CSRP
DAC
DFID
ECA
ECDPM
EU
HR
HRM
IEG
IIEP
MDGs
MOE
NGO
NPM
OECD
PIDE
PRP
ROM
SASE
Sida
SPA
Advanced Training Programme (IIEP)
Business Environment and Enterprise Survey
Business Process Reengineering
Country Policy and Institutional Assessment
civil service and administrative reform
civil service reform
Civil Service Reform Program (Ethiopia)
Development Assistance Committee (OECD)
UK Government’s Department for International
Development
Economic Commission for Africa
European Centre for Development Policy Management
European Union
human resources
human resources management
Independent Evaluation Group (World Bank)
International Institute for Educational Planning
Millennium Development Goals
Ministry of Education
non-governmental organization
new public management
Organisation for Economic Co-operation and
Development
Pakistan Institute of Development Economics
performance-related pay
Results Oriented Management
Selected Accelerated Salary Enhancement
Swedish International Development Cooperation Agency
Special Program of Assistance for Africa
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List of abbreviations
STD
UK
UN
UNCDF
UNDESA
UNDP
UNESCO
UNRISD
WB
WBI
WHO
sexually transmitted disease
United Kingdom
United Nations
United Nations Capital Development Fund
UN Department of Economic and Social Affairs
United Nations Development Programme
United Nations Educational, Scientific and Cultural
Organization
United Nations Research Institute for Social
Development
World Bank
World Bank Institute
World Health Organization
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LIST OF FIGURES
Figure 2.1
Figure 2.2
Analytical framework for organizational change
Public sector reform cycle
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LIST OF BOXES
Box 1.
Box 2.
Box 3.
Box 4.
Box 5.
Box 6.
Box 7.
Typology of incentives
Levels of incentives and motivational factors I
Levels of incentives and motivational factors II
Levels of action and intervention strategies
Types of and tools for change management
Reasons for and types of pay reform
Organizational performance: major objectives and
incentives
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FOREWORD
Capacity development is a fundamental part of the mandates of many
international organizations. Much of their work aims to strengthen
national capacities through training, technical advice, exchange of
experiences, research, and policy advice. Yet there is considerable
dissatisfaction within the international community regarding the impact
of many such interventions. The activities have usually strengthened
the skills of individuals, but have not always succeeded in improving
the effectiveness of the ministries and other organizations where those
individuals are working. These shortcomings demand investigation in
order to strengthen capacity development policies and strategies.
In this context, UNESCO received funds from the Norwegian
Ministries of Education and Foreign Affairs to focus on ‘capacity
development for achieving the Education for All goals’. The objective
was to identify appropriate strategies for UNESCO and others.
Within UNESCO, IIEP has coordinated this work. A wide range of
activities was undertaken, including detailed case studies on three
countries (Benin, Ethiopia and Vietnam), a series of thematic studies
and literature reviews, and consultations with experts. The focus has
been on educational planning and management as stronger capacities
in these areas should lead to important improvements in the education
system as a whole.
IIEP’s work has led to the identification of some main principles:
•
•
•
The type of capacity development being considered here only
works in a sustainable manner when there is national leadership
and ownership, and when international efforts match national
priorities and strategies.
Strategies need attention at several levels: the capacities of the
individual, the effectiveness of the organization (for example the
ministry of education), the norms and practices which rule public
management as a whole, and the political, social and economic
contexts.
Any intervention must recognize the intrinsic values of ownership
and participation. When it aims only to identify partners’
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Foreword
weaknesses or to strengthen the positions of those already
powerful, the deepest sense of capacity development is lost.
The series Rethinking capacity development has been prepared
within this framework.
Mark Bray
Director
UNESCO International Institute for Educational Planning (IIEP)
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SUMMARY
Incentive structures play a crucial role when it comes to capacity
development by motivating individuals and targeting organizational
performance. Practitioners and academics have recently given more
and more attention to incentives issues – presented by a number of
authors as the missing link in development. This literature review takes
a closer look at how incentives are linked to motivation, performance
and capacity development. The interplay between incentives and
training is equally addressed. Chapter 2 of the review presents a
typology of incentives, the different levels of analysis, and more
general frameworks linked to capacity development. This publication
emphasizes the distinction between financial and non financial
incentives that target merit and accountability, and the importance of
organizational culture. While recent literature draws the conclusion
that incentives matter, incentive schemes do not always contribute to
improved public performance, and may even represent an obstacle
to capacity development. Chapter 3 attempts to identify the reasons
linked to the failure of incentives in particular, and of public sector
reform in general, including civil service reform. The limited impact
of many incentives schemes is linked to competing disincentives
leading to capacity erosion, such as sustained low wage levels, lack of
transparency in recruitment or promotion based on political affiliation.
The lack of knowledge about efficient use of non-financial incentives
and human resources management tools, and the distorting effects of
donor presence, are additional reasons for failure. When it comes to
public sector reform, political will, existing capacity level, as well as the
scope and sequencing of reform are crucial elements. Chapter 4 presents
several relatively successful approaches to incentives. A number of
these initiatives target not only performance, but accountability, team
spirit or other organizational ‘intangibles’ that may have a positive
impact on performance in the long run. Finally, Chapter 5 presents an
overview of the general recommendations formulated by international
agencies and various authors. An annotated bibliography follows, on
which the literature review is based.
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RÉSUMÉ
Les structures d’incitations jouent un rôle crucial dans le développement
des capacités par le biais de la motivation des individus et de la
performance des organisations. Ces dernières années, les praticiens et
les universitaires consacrent de plus en plus d’attention aux questions
liées aux facteurs incitatifs – présentés par nombre d’auteurs comme
le maillon manquant dans le développement. Cette revue de la
littérature examine de plus près les liens qui existent entre ces facteurs
et la motivation, la performance et le développement des capacités.
L’interaction entre les facteurs incitatifs et la formation est également
évoquée. Le chapitre 2 de la revue présente une typologie de ces
facteurs, les différents niveaux d’analyse et les cadres d’analyse plus
généraux liés au développement des capacités. La distinction entre
incitations financières et non financières, qui ciblent le mérite et la
responsabilisation, et l’importance d’une culture organisationnelle,
sont parmi les aspects mis en exergue. La littérature contemporaine
sur les incitations souligne leur impact potentiel. Cependant, les
structures d’incitations ne contribuent pas toujours à améliorer la
performance publique, et peuvent même constituer un obstacle au
développement durable. Le chapitre 3 tente d’identifier les raisons
liées à l’échec des incitations en particulier, et à l’échec des réformes
du service public. L’impact limité des structures d’incitation est lié
aux incitations négatives qui contribuent à l’érosion des capacités,
comme par exemple un constant niveau de bas salaires, l’absence de
transparence dans le recrutement, et des promotions basées uniquement
sur l’affiliation politique. La non-utilisation des incitations non
financières et des outils de management de ressources humaines, et
parfois les effets pervers de la présence des donateurs sont d’autres
raisons importantes. Quant aux réformes du secteur public, la volonté
politique, le niveau existant de capacités, ainsi que la couverture
et l’ordre des réformes sont des éléments cruciaux. Le chapitre 4
présente ensuite un certain nombre d’initiatives relativement réussies
dans le domaine des incitations. Celles-ci ne ciblent pas seulement la
performance, mais la responsabilisation, l’esprit d’équipe ou d’autres
aspects organisationnels « intangibles » qui peuvent influencer la
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Résumé
performance sur le long terme. En guise de conclusion, le chapitre 5
dresse un panorama des recommandations formulées par des agences
internationales et d’autres auteurs. Le document est suivi d’une
bibliographie annotée sur laquelle est fondée la revue de la littérature.
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INTRODUCTION
This detailed literature review of incentives for civil servants builds upon
an annotated bibliography, in addition to seven interviews conducted
at the IIEP in June 2008. Five of the selected interviewees were public
officials working in the ministry of education (MOE) in their respective
countries of Burkina Faso, Senegal, Tanzania, Cambodia, Madagascar,
and Saint Vincent and the Grenadines. At the time of the interviews,
the interviewees were participating in the IIEP’s Master’s programme
in educational planning and management, the Advanced Training
Programme (ATP). The interviewees will hereafter be referred to as
the ATP participants. For a detailed overview of the questions and areas
of inquiry discussed during the interviews, see Annex 1. The remaining
two interviewees were IIEP professionals with extensive field work
experience and knowledge of a number of issues linked to incentives.
The selection of interview subjects provided a heterogenic yet small
sample. Consequently, the findings cannot be generalized to the wider
universe of MOE civil servants, but may serve as empirical, comparative
examples of the various issues and arguments identified in the literature.
While devoting specific attention to the education sector, the review
also draws examples and inspiration from other sectors and from more
general studies. The interviews proved particularly useful in enriching
the literature review with specific examples from the education sector,
since the literature on incentives is rarely sector-specific. The relatively
general nature and use of incentives allow this type of literature to
provide insights that remain valid for the public administration as a
whole, and across sectors.
The literature review is organized as follows: Chapter 1 presents
the rationale, explaining and justifying the interest in incentives, and
presents the notion of incentives in more detail. The linkages between
incentives, performance and the ultimate goal of capacity development
are identified and make it obvious that incentives matter. Considering
incentives implies expanding the notion of typical capacity development
modalities beyond that of training. The relationship between incentives
and training is therefore explored further. Chapter 2 provides an
overview of the different types of incentives that are mentioned in the
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Introduction
literature, with specific attention to the distinction between financial
and non-financial incentives. A typology of incentives is elaborated
using the different levels of analysis (individual, organizational,
institutional and context-related incentives). The different types of
incentive models and frameworks that link incentives to capacity are
identified and presented. Chapter 3 presents the explanatory factors
linked to the limited impact of past and present incentive schemes.
The section analyses two aspects of the debate. The first aspect deals
with the weaknesses of incentives. In other words, why do they fail to
motivate staff? The importance of incentives has been recognized for a
long time. However, the situation has not changed much and reforms in
the 1980s and 1990s have not led to an improvement. The second aspect
of the debate deals with reform efforts in the area of civil service, and
identifies the main reasons for their failure or counterproductive effects.
Chapter 4 provides an overview of recent reforms, best practices and
innovative approaches. The reasons for their relative success and
further challenges are identified. Finally, Chapter 5 summarizes the
various policy recommendations proposed by international agencies
and individual authors. These recommendations resume the issues
discussed throughout the literature review and provide some concluding
remarks.
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1.
RATIONALE
Incentives, public performance and capacity development: a chain
of causality
The ultimate role of incentives in developing countries is to
promote, via its impact on enhanced public sector performance, the
objective and wider process of capacity development in the public
sector. The correlation between effective public institutions and
capacity development is well known. The importance of incentives is
linked to their impact on the very same chain of causality: incentives
with motivational effects influence public sector performance, which
in turn is decisive for poverty reduction and economic growth (UNDP,
2006a).
The link between incentives and public sector performance
implies a focus on the human dimension of public sector organizations,
namely the civil service. Public sector organizations are made up of
people. Incentives recognize that individual change is a necessary
condition for organizational change. Effective institutions are due to
the effective use of individual skills, which occurs when individuals
align their proper goals with that of the organization they work for.
Incentives thus represent the various ways of aligning individual and
organizational interests. In other words, an incentive is a tool used to
trigger a motivational reaction – that is, a change in human behaviour.
The overall objective of this change is to promote enhanced performance.
Mathauer and Imhoff (2006: 3) define motivation as “the willingness to
exert and maintain an effort towards organizational goals”. Incentives
often include measures that create competition and accountability, such
as merit-based pay and promotion, evaluations and a transparent work
environment. Generally, incentives should correspond to the objective
of fostering a high-performance public service that attracts, retains and
motivates competent staff (World Bank, 2008a: 6).
In the literature on incentives, the 1997 World Development
Report – The State in a Changing World – is often cited as a key
document in the field as it links incentives and the civil service to the
wider objective of development: The report places the state at the centre
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Incentive structures as a capacity development strategy in public service delivery
of development, identifies the civil service as the main instrument for
the state, and recognizes the connection between the major incentive of
merit appointments and bureaucratic capability (1997: 79-99; Olowu,
1999: 1). The World Public Sector Report 2005, published by the UN
Department of Economic and Social Affairs, also underscores the link
between a merit-based bureaucracy and economic growth and poverty
reduction. The Development Assistance Committee (DAC) (2006) has
listed the establishment of positive incentives as a default principle for
capacity development. In this respect, the third book in the UNDP series
on capacity development, Ownership, leadership and transformation:
can we do better for capacity development?, makes a pertinent point:
“Perhaps the most critical form of support for capacity development is
an efficient, transparent and accountable public administration, partly
because a significant portion of all development work takes place in
this system” (Lopes and Theisohn, 2004: 97). Interpreted as a default
principle for capacity development, incentives contribute to the creation
of an efficient, transparent and accountable public service, and thus, to
the wider process of development.
Incentives are evoked not only as an important tool in order to
build and sustain capacities, but also as a central part of the ongoing
and much-needed civil service reform efforts that take place in many
developing countries (Morgan and Baser, 2007). Ul Haque (2006) from
the Pakistan Institute of Development Economics recalls the evolution
of the development discourse in order to situate the issue of civil service
reform (CSR) within the present paradigm: the structural adjustment
programmes of the 1980s focused principally on macro-economic
stability and downsizing. The more recent approaches to civil service
reform, however, recognize the importance of the quality of public
institutions for development, as reflected in most of today’s public
reform programmes.
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The focus on public sector organizations is nothing new within the
capacity development perspective. Over the past few years, however,
both governments and donors are increasingly paying attention to the
linkages between incentives, civil service reform and development. The
World Bank is no exception. It argues that the objective of fostering
a high-performance public service is a central part of civil service
and administrative reform and thus of public sector reform, along
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Rationale
with issues related to public expenditure and financial management,
tax administration and anti-corruption. Taken together, their ultimate
desired impact is economic growth, reduced poverty, security of life
and property, participation and empowerment of people, and improved
quality of and access to public services (World Bank, 2008a: 6). In
this respect, it is interesting to note that some authors do not consider
civil service reform as an integral part of public sector reform. They
conceive of civil service reform rather as an instrument preceding
public sector reform, since no reform can be implemented without the
efficient management of human resources already in place and able to
accommodate such reform (Mengistu and Vogel, 2006). If this is not the
case, the civil service becomes an obstacle to capacity development.
Public capacity erosion and the limited impact of training:
incentives matter
The erosion of developing countries’ public sector capacity, despite
donors’ technical assistance programmes, is often referred to as the main
explanation for the relatively recent interest in the role of incentives
for enhanced public performance. Government ineffectiveness and
‘brain drain’ are identified as the consequences of poor public service
conditions and they contribute to the sustaining of a vicious cycle of
capacity erosion (OECD/DAC, 2006: 17). On the individual level,
negative or perverse incentives within the public sector, such as poor
salaries and unjust criteria for recruitment and promotion, have led
to capacity erosion. Donor involvement, especially through technical
assistance, has focused extensively on the training of civil servants as
a major strategy for capacity development. The UNDP, for example,
considers motivation an essential aspect of capacity development,
but acknowledges that it is often downplayed in comparison with
the emphasis put on acquiring new knowledge and capacities at the
individual level.
However, the limited impact of ‘typical’ capacity development
modalities such as training has made it necessary for practitioners
and scholars in both government and donor circles to look above and
beyond training. Even when individuals have acquired new skills and
knowledge, this does not always translate into enhanced performance
in the workplace. As one author puts it, “the problem lies not in the lack
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Incentive structures as a capacity development strategy in public service delivery
of skills, but the lack of strong incentives to use these skills optimally”
(Kamoche, 1997: 4). Using the example of Indonesia, another author
also warns against looking at training as the whole answer, since “the
fundamental problem in Indonesia’s bureaucracy is, for the most part,
not a lack of skills but simply the lack of incentives to use them”
(McLeod, 2005: 5). A number of authors confirm that there is great
doubt as to whether training actually leads to improved individual
and organizational performance, and criticize what Kamoche (1997)
refers to as ‘trainingism’ – that is,“a pervasive ideological support for
training”.
Nevertheless, the development community, whether it be
practitioners or scholars, underscores the importance as well as the
complexity of acquiring and applying new knowledge for capacity
development. The Economic Commission for Africa (2003) identifies
training as one element of a broader public sector reform strategy that
also includes performance contracting, public reporting and citizens’
charters, alongside organizational capacity development efforts,
performance management and pay reform. Verheijen (2000) identifies
training as an important contributor to change in the civil service, in
addition to legislation (civil service laws may establish transparent
systems of employment) and structure. Training is considered an
efficient reform tool as it creates a more coherent civil service, changes
mentalities and may create a sense of community among civil servants.
However, the transferral of new skills and knowledge is a necessary,
but not a sufficient condition for successful capacity development. Berg
(1993) makes the pertinent observation that incentives are conceived
of not only as necessary for the application of skills and knowledge
in a given situation, but are crucial in motivating civil service
employees to participate in training programmes, acquire new skills
and actually learn from technical cooperation projects. As emphasized
by the World Bank, “capacity development occurs once participants
transfer what they have learned to their everyday jobs, and improve
their performance” (World Bank, 2008b: 66). For this to happen, one
must take into account the additional variables that intervene prior to
the actual learning process – that is, the establishment of support for
training, and after training, the application of the acquired skills and
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Rationale
knowledge in the workplace. These intervening variables are incentives
that encourage the implementation of individual learning.
Often, learning does not become implemented because of obstacles
related to power structures within an organization, entrenched attitudes
or a lack of resources (World Bank, 2008b). These obstacles constitute
examples of perverse incentives. On the other hand, positive incentive
systems may help change and evolve such practices. Well designed
incentives encourage individuals to seek out training, motivate them
to apply their skills and enhance their performance in the workplace.
Incentives may or may not be conducive to capacity development, and
the causal relationship between incentives and improved performance
is therefore relevant for capacity development. Incentives have been
identified as ‘the missing link’ (Ul Haque, 2006) or as ‘the missing
sector in sectoral studies’ (McLeod, 2005). The role and functioning of
these motivational factors are therefore receiving increasing attention,
especially within public sector organizations. In fact, making “incentives
and motivation converge in order to create capacity development” is
one of the UNDP’s fundamental principles in this respect (Lopes and
Theisohn, 2004).
Defining, discerning and operationalizing incentives
Theoretically, incentives are situated at the nexus of development
theory and human resources management theory. The notion of
incentives is multi-disciplinary and draws on additional academic
disciplines such as sociology and economics. The various definitions
of incentives tend to emphasize different yet complementary aspects
of the concept depending on the theoretical approach taken and its
empirical implications. As mentioned, the overall, cross-disciplinary
objective of incentives is identified generally as producing a change
in behaviour by introducing a motivating factor for this change. The
notion of incentives is often used interchangeably with the notion
of motivation, although the former is the cause and the latter the
effect. The UNDP makes the distinction clearly when referring to
incentives with “motivational effects” (2006a: 6). Motivation is linked
conceptually to capacity, which in turn is defined by the UNDP as “the
ability of people, institutions and societies to perform functions, solve
problems and set and achieve objectives” (2006: 5). The World Health
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Incentive structures as a capacity development strategy in public service delivery
Report 2000 defines incentives in the health sector in a more detailed
manner, as “all the rewards and punishments that providers face as a
consequence of the organizations in which they work, the institutions
under which they operate and the specific interventions they provide”
(Adams and Hicks, 2000). This definition places the individual, in
this case a service provider, within a specific public organization and
acknowledges the importance of the wider institutional context as well
as the specific tasks undertaken by the individual. Incentives, in the
form of rewards or punishment, may originate from all of these levels
and the individual adapts their behaviour according to the nature of
these incentives.
As mentioned, incentives generally correspond to the objective of
improved performance. However, an increasing number of incentives
respond to another objective, namely accountability. Accountability
and enhanced performance are interlinked and in practice often overlap,
since accountability itself may contribute to enhanced performance.
Improving public access to information or establishing transparent
rules for human resources management are typical measures aimed at
improving accountability, which in turn may motivate civil servants
to work more efficiently (Caiden and Sundaram, 2004: 379). Yet
accountability is conceptually distinct because it underscores a
normative dimension of capacity development, linked to ‘good
governance’ considerations and the values of transparency, equity and
encouraging people to become aware of and claim their rights. The
World Bank argues that incentives can improve both internal and external
accountability, and consequently, contribute to good governance (World
Bank Institute, 2007). However, research conducted by the UNRISD
(Therkildsen, 2001) implies that policymakers generally put less of an
emphasis on incentives aimed at accountability than on those aimed at
efficiency. Nevertheless, the more recent literature reflects the fact that
increased attention is being devoted to accountability issues. Successful
initiatives in this area will be discussed and analysed in further detail
in Chapter 4 of this review. Internal and external accountability and
performance may be interpreted as two sides of the same issue; they
constitute the intended effects of incentives. Externally, the public
service has to be able to compete with the private sector for skilled
human resources, and should be accountable to the public. Internally,
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Rationale
civil servants should participate in fair competition for rewards and
promotion, and be accountable to its hierarchy. This distinction finds
support in the literature: Caiden and Sundaram (2004: 383) refers to
the double objective of a responsive and accountable administration to
improve the performance and integrity of the civil service. Adams and
Hicks (2000) makes a similar distinction between competition with the
aim of efficiency and accountability for transparency.
The rather theoretical discussion on incentives, public
performance and capacity development is complemented by empirical
studies that look into specific incentives, which will be presented in
the next part of this literature analysis. A third strand of the literature
on incentives takes an intermediate approach to the subject matter by
exploring the different public sector areas and capacity issues that
incentives are linked to. The background literature prepared for the
African Governance Forum organized by the UNDP (Saasa, 2007)
is a case in point. It relates incentives to the various capacity issues
of organizational effectiveness, governance, management capacity,
human resources, financial resources and service delivery. Within
human resources, incentives may be used to retain and attract talent
on the global labour market and to encourage local service delivery
in remote areas (UNDP, 2006a). Changing incentive systems may
thus be part of various reforms within a specific public organization,
such as specific compensation reforms, changes in human resources
management (HRM), organizational reforms or demand-side reforms,
in addition to the wider civil service and public sector reforms (World
Bank, 2008a: 52). Whereas compensation reforms generally deal with
pay structures and pensions, HRM deals with merit-based recruitment,
promotion and discipline, performance management, and appraisal
systems.
Much of the research on civil service incentives in developing
countries has been conducted in the form of case studies. This has
made it difficult to explore systematically the link between incentives
and performance, or the types of incentives that are conducive to
bureaucratic performance in particular. The study conducted in 1998 by
Court, Kristen and Weder (Bureaucratic structure and performance:
first Africa survey results) is one of the few quantitative studies that has
been undertaken on the subject. Its cross-country findings correspond
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Incentive structures as a capacity development strategy in public service delivery
to those presented in various case studies and confirm that incentive
structures are not bound geographically. In African countries and
elsewhere, enhanced performance is linked primarily to organizational
autonomy, good career opportunities and good salaries. Key issues
included in the survey and in the resulting regression analysis are
appointment and advancement based on meritocracy, salary scales
equivalent to responsibility, adequate wages, career structure,
transparency and accountability. Research on civil service incentives
in developing countries confirms empirically the assumption made by
policymakers and human resources managers in developing countries
– that incentives matter.
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2.
FRAMEWORKS AND TYPES OF INCENTIVES
Financial versus non-financial incentives
The complexity of incentives is linked to their role in predicting
and influencing human behaviour, since “what encourages people to
change is often a very complex and abstract mixture of objectives and
expectations, with some elements of concern for society at large, but
with a heavy emphasis on individual rewards” (Lopes and Theisohn,
2004: 92). Individual rewards, or benefits, are identified by most authors
as the main incentive for behavioural change. Financial incentives
represent the principal type of incentives used in the public service to
reward civil servants, mainly through salaries and monetary allowances.
However, in most developing countries, salaries represent a major
capacity challenge in that they are too low to attract, motivate and retain
civil servants. In some countries, such as Madagascar, ‘everybody’ has
two or three jobs in order to make ends meet (ATP participant). The
theme of low salaries has been recurrent in the literature, as is the focus
on and use of financial incentives. However, most authors agree that the
value of non-financial incentives generally has been underestimated,
and much of the recent literature devotes considerable attention to this
area. Such non-financial incentives are “incentives that involve no direct
transfers of monetary values or equivalents” (Mathauer and Imhoff,
2006: 4). The literature emphasizes two main groups of non-financial
incentives: (1) merit-based non-financial incentives and (2) incentives
that are linked to accountability issues. These correspond largely to the
distinction made between performance and accountability as sources
for capacity development.
Merit = rewarding performance
For incentives to be motivational, they have to be closely linked
to notions of what is equitable, just and fair. Fairness in the working
place is linked intrinsically to merit – that is, recognizing, awarding and
appraising performance. Merit has generally been interpreted and applied
as a financial incentive, matching salaries to individual performance,
for example by introducing performance-related pay (PRP). The logic
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Incentive structures as a capacity development strategy in public service delivery
behind PRP is that merit will lead to competition, which will lead to
enhanced performance (OECD Observer, 2005). The limited impact
of such measures (which will be discussed in Chapter 3), as well as
the limited availability of financial resources in many developing
countries, has turned the attention of policymakers to non-financial,
merit-based incentives. In the absence of basic, reasonable salaries,
other factors may assume greater importance. The UNDP maintains
that “it is arguable that, at least up to a certain point, low salaries are
more likely to be accepted in a system that is commonly regarded as
equitable” (Lopes and Theisohn, 2004: 100). Incentives are therefore
designed by appealing to a perception of what can be considered just,
such as the introduction of transparent, performance-based criteria for
recruitment and promotion (Adams and Hicks, 2000). Consequently,
in recruitment processes, merit may be translated as “open, ongoing,
fair and vigorous competition for all positions, supported by a clear
set of rules and provisions for enforcement of those rules” (McLeod,
2005: 9).
McCourt (2001) explores the notion of merit in more detail.
He links merit directly to wider organizational goals such as
bureaucratic capacity, anti-corruption efforts, individual performance
and accountability. Another merit-based, non-financial incentive is
the previously discussed use of training. Kamoche (1997) is one of
the authors who raises doubt about the use of training as a means to
improve individual performance, but recognizes that it is often used
as an incentive within the public sector for attracting and retaining
staff. In this sense, training is perceived as a merit-based reward for
good performance, rather than as a way of promoting and enhancing
future performance. Even though enhanced performance may result
from the training, it is not always perceived by the participants as the
main objective. This is an interesting perspective because it shows how
a ‘typical’ capacity development effort may be used as an incentive
which is not necessarily conducive to capacity development. The ATP
participants emphasized the value of training for promotion. Lopes and
Theisohn (2004: 100) confirm that training programmes may rather
be linked to certain ‘perks’ associated with it, such as travelling with
expenses covered, than the actual objective of learning. “These practices
[...] divert the interest of the remaining staff from their main duties
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to the possibilities of having access to aid-funded perks”. This was
confirmed by the interviewees. Participating in training, conferences or
meetings that involve travel is, in many cases, used as a reward for good
performance. This is linked to the generous travel allowances that are
often subsidized by donor agencies. In extreme cases, the daily travel
allowance may exceed monthly salaries. As a result, “everybody tries to
save for their families” when they go travelling (ATP participant). One
ATP participant explained that an individual may sometimes be allowed
to participate in an English-speaking conference, even though he or she
doesn’t speak English. Another interviewee observed that the use of
training or travelling as a perk can lead to management problems when
it comes to the selection of candidates. In his unit, travelling is used as
a perk, which the employees try to share among themselves. Since all
training provides a form of perk, it is important to exercise ‘scrupulous
transparency’ when selecting participants (UNDP, n.d.: 8).
Accountability = demanding performance
Whereas merit-based incentives are relatively easy to
conceptualize, the second type of non-financial incentives relates to
the less tangible notion of accountability. The distinction between
internal and external accountability is useful in this context. Internal
accountability is exercised through control and evaluation, and is
primarily a tool for assessing performance, thus it is partly linked
to merit. Performance management is one example of such HRM
tools. External accountability is about holding public organizations
responsible and accountable to the public. Empowering citizens by
giving them increased access to information (transparency) and the
power to discuss, criticize and influence public action is normally
encouraged in a rights-based approach to development. However, it
may also improve performance by putting pressure on civil servants to
do their job efficiently and according to rules and regulations. In this
sense, external accountability works as a civil service incentive, albeit in
an indirect manner. Citizens’ charters, public complaints arrangements,
service delivery surveys and user charges are examples of initiatives
that specifically widen and strengthen the public’s opportunities for
‘voice’, multiplying the accountability points of a public organization
(Therkildsen, 2001: 41).
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The right mix of incentives
Much of the literature seems to draw the same conclusion, that
salaries and similar financial incentives constitute a necessary, but
not sufficient, condition in order to create motivation for enhanced
performance. More money does not automatically lead to better
performance. Several studies have illustrated the limited impact of
financial incentives, especially in the health sector, where conscience,
vocation and professional ethos are important motivational factors
(Mathauer and Imhoff 2006). Grindle and Hilderbrand’s study on the
performance of public organizations finds that “while higher salaries
may have contributed to better performance in some cases, this factor
did not strongly differentiate between the categories of performance”
(1997: 484). Whereas non-financial incentives are attributed an
important role in the public sector in general, values such as vocation
and ethos may be particularly important for service providers such as the
health or education sector. However, the limited research on incentives
in the education sector makes it difficult to find empirical support for
this hypothesis. Most of the ATP participants that were interviewed did
tend to agree with the view that non-financial incentives matter beyond
a certain minimum salary level. Several of them made reference to
Maslow’s hierarchy of needs in order to illustrate the importance of
financial incentives to meet the basic needs. Once these are met, other
factors such as esteem needs and self-actualization become important.
One IIEP professional made reference to the situation of teachers in
Senegal, who are relatively well paid and still have two or three jobs
on the side. This goes to show that adequate financial incentives do not
necessarily translate into enhanced motivation. The interviewee listed
work environment, general living conditions and career prospects
(based on performance, not seniority) as crucial motivational factors.
In general, participants coming from the poorest countries emphasized
more strongly than the other participants the need for decent salaries.
Only one of the ATP participants mentioned professional vocation as
a motivational factor for joining the Ministry of Education (MOE).
Among the ATP participants, the reasons for joining the MOE were
various. Many of them were originally teachers and career prospects
are naturally oriented towards the MOE. Others had passed the public
selection competition for becoming a public servant and were placed in
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or transferred to the MOE. Professional conscience, however, did seem
to score highly among the interviewees. As one participant said, she
could probably get a better paid job working for a donor agency upon
completion of the IIEP training programme, but chooses to go back to
the ministry. In general, the job security and pensions provided by the
public sector are greatly appreciated by civil servants. One participant
did mention the possibility of leaving the public sector, because of
limited career prospects within the MOE.
The distinction between financial and non-financial incentives
is important theoretically, but in practice, most public organizations
include a range of both kinds of incentives. Non-financial incentives
include various measures such as technical upgrading, career
development, unpaid holidays, equal opportunities for training and
active staff participation in decision-making. Incentives may also be
less tangible, such as team building, morale boosting, prestige, work
environment, changes in management structure, good leadership and a
sense of meaning (Adams and Hicks, 2000). The work environment was
perceived as an important motivational factor for the ATP participants.
Being able to work with important people at a high level within the
MOE – “working close to the bosses”, as one participant put it – was
emphasized by three interviewees. Recognition, constructive feedback
from superiors and training opportunities were also perceived as
motivating. Grindle and Hilderbrand (1995: 444) argue that training
focused on skills and technology may be less motivating than actually
being able to use the skills in a meaningful way and so being able
to contribute to the organization’s work. The European Centre for
Development Policy Management’s case study of capacity issues in
Tanzania’s public sector (Morgan and Baser, 2007) finds that the public
sector reform process actually gave staff a sense of meaning, which
proved to be more important in fostering motivation and responsibility
than financial incentives. This is interesting because it provides an
empirical example that goes against the conventional wisdom of
financial incentives as key to increased capacity and performance.
According to Adams and Hicks (2000: 4), self-actualization, a sense
of achievement, recognition, responsibility and the quality of personal
relationships in the workplace are important sources of motivation.
Consequently, “there is a special need for research into incentives
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that seek to affect personal motivation rather than simply elicit an
economic response” (2000: 5). In general, the challenge for public
organizations is to “establish an optimal mix of financial and nonfinancial incentives that generate the desired behaviour” (Hongoro
and Normand, 2006: 1313). Van Lerberghe, Conceição, Van Damme
and Ferrinho (2002) suggest that such a ‘mix’ consists of introducing
incentives that are coherent with the organization’s goals and provide
public servants with financial compensation, a clear sense of purpose
and recognition.
A typology of incentives and additional levels of analysis
Many of the incentives mentioned so far have been referred
to as intangible or indirect, and often non-financial, such as career
concerns, performance measurement and evaluation. Incentives
also include many common HRM tools that may affect motivation,
but in a more indirect manner as they do not target the individual
directly but the organization as a whole. They may aim for individual
motivational effects, but through changes in the organization or the
wider institutional framework in which the individual is situated. The
distinction between what most authors refer to as individual incentives
on one hand, and organizational incentives on the other, is therefore
central. Much of the recent literature on human resources management
focuses on organizational incentives, as they are relatively novel in
their use and may prove to have a greater impact than traditional
individual incentives.
Organizational incentives are defined by the UNDP as “the
reason for staff to join an organization, and the way an organization
rewards and punishes its staff” (UNDP, 2006a: 8). It is a relatively
straightforward definition which Grindle and Hilderbrand (1997)
take one step further by identifying and presenting the concept of
organizational culture. The authors refer to organizational culture as
the ‘missing ingredient’ in the literature on organizational performance,
and argue that it may explain why some organizations perform better
than others. Organizational culture is defined as “a shared set of norms
and behavioural expectations characterizing a corporate identity”
(1997: 491). As mentioned, individual incentives temporarily align
an employee’s interest with that of the organization. This alignment
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may be conceptualized as a psychological contract of sorts between the
individual and the organization (Adams and Hicks, 2000: 4). According
to Grindle and Hilderbrand, certain organizational incentives go
beyond the alignment phase and strive to make individuals internalize
the organization’s goals. Consequently, these incentives are much more
‘powerful’ because individuals may adopt the organization’s goals,
consider them their own, and enhance their performance in order to
reach these goals.
In their study, Grindle and Hilderbrand find that the “characteristics
associated with positive organizational cultures, such as mission,
performance-oriented managerial style, and autonomy in personnel
matters differentiated those [the public organizations] that performed
well from those that did not” (1997: 482). The organizational mission
may assume the role of incentives by helping employees internalize the
organization’s goals. A shared mission is linked to a “mystique about
the organization and the importance of the task it was performing”,
making employees consider themselves vital contributors to the
accomplishment of this task (1997: 486). Clear and applied performance
standards, linked to rewards and recognition, also contribute to
organizational performance. In addition, autonomy is a facilitating
factor, leaving room for an organization to develop its proper culture,
both in terms of its mission and its performance standards: “When
successful organizations had the capacity to manage incentives for
good performance, they promoted and recognized the achievements of
their employees” (1997: 490). Bana and McCourt (2006: 406) confirm
that the civil service seems to be more efficient when it is somewhat
autonomous, allowing public organizations to foster capacity and
confidence. According to Grindle and Hilderbrand (1997), promoting
these organizational characteristics is vital when aiming for improved
organizational performance through civil service reform. On the other
hand, the organization’s tasks, salary level and client demand and
oversight find little or no support for organizational performance in
Grindle and Hilderbrand’s study (1997). Other authors, such as Ul
Haque, give additional examples of organizational incentives such as
teamwork and dialogue. In Singapore, so-called Work Improvement
Teams allowed groups of staff to discuss openly the obstacles to quality
and solutions for service improvement (Ul Haque, 2006: 26). One ATP
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Incentive structures as a capacity development strategy in public service delivery
participant proudly explained how she and a colleague had actively
contributed to changing the work culture in their unit by emphasizing
the values of teamwork and team spirit.
Nevertheless, what Ul Haque (1999: 472) refers to as formal
incentives on the individual level remain important tools for motivating
self-interested agents. The two types of incentives, individual and
organizational, are therefore kept separated in most typologies. In order
to provide a complete list of the incentives identified in the literature, it
is useful to present a typology based on the ones elaborated by authors
such as Ul Haque (1999), Hongoro and Normand (2006), Adams and
Hicks (2000), Mukherjee and Manning (2000), and Mathauer and Imhoff
(2006). These authors make the distinction between individual and
organizational incentives on one hand and financial and non-financial
incentives on the other. When it comes to organizational incentives, a
further distinction is made between internal and external incentives,
the former referring to the internal functioning of an organization, and
the latter relating the organization to its external environment.
Box 1.
Typology of incentives
Individual incentives
Financial incentives
Pay
Other direct
financial benefits
Indirect financial
benefits
Base wage/salary
Bonuses
Stock options
Insurance
Pension
Allowances (transportation, housing, telephone, meals, travel)
Material (computer, Internet, equipment, air conditioning)
Subsidies
Child care
Training
Non-financial incentives
Job security
Social privileges
Reputation
Re-employment after retirement
Holidays
Flexible working hours
Sabbatical
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Frameworks and types of incentives
Study leave
Planned career breaks
Counselling
Recreational facilities
Internal
External
Internal
External
Organizational incentives
Financial incentives
Group-based performance awards and pay
Benchmarking and competition among organizations (e.g.
health facilities)
Non-financial incentives
Autonomy
Supervision schemes
Recognition schemes
Training and professional development
Leadership
Team-building
Transparent and reliable promotion schemes
Supportive supervision and feedback
Performance management tools
Staff participation in decision-making processes
Horizontal and vertical communication among staff
Quality improvement teams and building a quality culture
Participatory problem assessments and problem-solving
processes
Accountability schemes: citizens’ charters, service
delivery surveys and so on
Market exposure
Financial responsibility
Governance: transparency, preventive anti-corruption
measures, responsibility for decisions
Regulatory mechanisms
Source: Adams and Hicks (2000: 5) and Hongoro and Normand (2006: 1311).
Situating the various incentives within the different categories
is not always an easy task, as authors tend to place certain incentives
in different categories. One such example is training, which can be
conceived of as both an individual and an organizational incentive, and
as a non-financial incentive and an indirect financial benefit. Incentives
target different and sometimes overlapping levels, depending on the
departure point of the analysis: the individual participates in training,
but the training programme may be organized by and targeted towards
the organization as a whole. The financial aspect lies in the cost of
training and the value of the skills acquired by the individual. Many
authors do not clarify how they relate incentives to these different
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levels, whether incentives originate from or target the levels in
question. Implicitly, the typologies match the different incentives to
concrete motivational factors at different levels. On the individual
level, incentives are linked to individual self-efficacy, goals, values
and motives, while organizational determinants may be the work
environment and organizational culture.
Some authors take the analysis one step further and identify at
least one, and often two, additional levels – an institutional level and
the context level. These levels may indirectly create incentives for
performance for individuals and organizations, such as institutional
and cultural norms and values (Hongoro, 2006: 1311). They may
also interact with motivational factors on other levels. It is therefore
important to consider the wider context in which public organizations
are situated and in which incentives are implemented. McCourt
(2006a) emphasizes in this respect the need for ‘thick’ descriptions
of political, economic, social and historical variables. The example of
staff management is a case in point: talking about this issue exclusively
in management terms is not sufficient, since there is no such thing
as politics-free public management. And vice versa – politics alone
cannot successfully implement reforms. A comprehensive approach
to incentives reform must take into account the interaction between
the micro level (HRM), meso levels (policy and strategy), macro level
(institutions), and meta level (politics). According to McCourt, the
meta level of politics is paramount:
Talking about staff management in purely management terms is
inadequate. Whether the problem was the general preference for
reacting rather than initiating, as in Morocco, or an absence of
political will deriving from the ‘dual’ system of government, as in
Swaziland, or the existence of a patronage system which politicians
and officials feel obliged to stoke, as in Sri Lanka, all three cases
had one thing in common: the failure of management reform had
its roots in the political system (McCourt, 2006a: 25).
Frameworks of public performance and capacity
Several models and frameworks are presented in the literature
in order to illustrate how public performance and capacity may be
analysed. These frameworks generally include the presented levels of
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Frameworks and types of incentives
analysis, their interaction, how various factors at different levels of
analysis influence incentives, and how these in turn influence human
behaviour. Three types of frameworks may be identified. They all focus
on public performance, but differ in their approach to incentives:
1)
2)
3)
The first group is represented by level-type frameworks that
aim specifically for a better understanding of incentives and the
motivational factors they rely on. They build upon the different
levels already presented.
The second type refers to models that attempt to illustrate how
various variables and levels interact and influence each other,
and how they contribute to the overall objective of capacity
development. These variables may have an impact on individual
and organizational performance, functioning as indirect
incentives.
The third type illustrates the all-encompassing process of capacity
development in which incentives play an important role. The
process is traced over time and is representative of many public
sector reform processes.
In order to illustrate the three types of frameworks, a few examples
by some key authors have been chosen.
Type 1
Adams and Hicks (2000: 5), and Hongoro and Normand
(2006: 1311) present two overlapping models that are useful in order to
conceptualize the different levels of motivational factors. They are both
elaborated in relation to health sector reform, but may prove useful in
other sectors as well. The health sector is an area in which the work on
incentives is relatively recent, yet vast. Despite a few sector-specific
issues, many of the challenges related to incentives are the same as
in the education sector, such as providing efficient service delivery in
rural areas.
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Incentive structures as a capacity development strategy in public service delivery
Box 2.
Levels of incentives and motivational factors I
Individual-level determinants
Organizational context
Salary
Benefits
Clear and efficient HRM systems
Feedback about performance
Availability of materials and facilities
Organizational norms and practices (culture,
management and leadership)
Social and cultural context
Community expectations and feedback
Socio-economic context
Technology
(Health) sector reform
Policy context
Level of bureaucracy and decentralization
Communication and leadership
Congruence with personal values of workers
Funding and regulatory arrangement
Political commitment
Source: Adams and Hicks (2000: 5) and Hongoro and Normand (2006: 1311).
Mathauer (2004: 3-4) makes a similar distinction between different
levels of motivational determinants and processes that influence the
motivational consequences of job performance and work satisfaction:
Box 3.
Levels of incentives and motivational factors II
Cultural determinants
Organizational determinants
Cultural norms and values
Work environment, organizational culture, HRM
tools
Individual determinants
Goals, values and motives, personality, self-efficacy
Motivation (job performance ‘Will do’
Congruence between personal
and work satisfaction)
and organizational goals,
vocation and professional
conscience
‘Can do’
Motivational effectiveness, selfefficacy, the extent of individual
resources that are mobilized to
accomplish adopted goals
Source: Mathauer (2004: 3-4).
Motivation is divided here into two internal dimensions – ‘can
do’ and ‘will do’. The ‘can-do’ dimension responds to the question
“how likely am I to achieve the desired level of job performance?” The
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‘will do’ dimension relates to the question “what is the personal value
of devoting more of my resources to the job or achieving higher job
performance?” The study finds that the ‘will do’ dimension is stronger
in explaining health workers’ motivation and that it affects the ‘can do’
dimension (self-efficacy). The two-dimensional concept of motivation
implies that “HRM tools have the dual task to promote health workers’
professional ethos and commitment, and to strengthen their perception
of self-efficacy” (Mathauer and Imhoff, 2006: 14).
Type 2
Grindle and Hilderbrand (1995) have elaborated a broader
framework aimed at identifying capacity gaps and designing intervention
strategies for building sustainable capacity in the public sector. The
framework assists the identification of factors that constrain or facilitate
the ability of public organizations to perform their development tasks
effectively, efficiently and in a sustainable manner. The measured
outputs are therefore effectiveness, efficiency and sustainability. The
analytical framework has five levels, starting with the overarching
action environment, followed by the institutional context of the public
sector, the task network, the organization and its human resources.
Constraining or facilitating factors are identified on each level:
Box 4.
Levels of action and intervention strategies
Human resources
Organization
Training, recruitment, utilization, retention
Goals, structure of work, incentive system,
management/leadership, physical resources,
formal and informal communications,
behavioural norms, technical assistance
Task network
Communication and interaction among
organizations
Public sector/institutional sector Concurrent policies, public service rules and
regulations, budgetary support, role of the state,
management practices, formal and informal
power relationships
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Incentive structures as a capacity development strategy in public service delivery
Action environment
Economic factors Growth, labour market,
international economic
relationships and conditions,
private sector, development
assistance
Political factors Leadership support,
mobilization of civic
society, stability, legitimacy,
political institutions
Overall human resources
Social factors
development, social conflict,
class structures, organization
of civic society
Source: Grindle and Hilderbrand (1995).
By assessing capacity gaps empirically at these given levels in
a number of public organizations, the authors demonstrate that the
traditional focal points for public performance need to be called into
question. For example, in many organizations, the political, economic
and social context will continue to hinder organizational effectiveness
despite attempts at organizational strengthening. Factors in the action
environment, such as a low level of human resources development
and social conflict, may constitute critical dimensions for capacity
development. Consequently, Grindle and Hildebrand (1995: 461)
argue that interventions aimed at enhancing the performance of public
organizations, such as incentive systems, “need to be strategic; they
need to vary and be sensitive to the inter-relationships among the
different dimensions of capacity sketched out in the framework”.
The European Centre for Development Policy Management
(Morgan and Baser, 2007) has elaborated a similar analytic framework,
which serves as the point of departure for the project Capacity, Change
and Performance, commissioned by the Network on Governance
and Capacity Development of the OECD. The framework’s focus
is on the organizations that undergo change – that is, reform – with
the goal of building capacity and improving performance. It consists
of three overlapping core components: performance, capabilities,
and endogenous change and adaptation. These core variables are
influenced and shaped by four additional components: the external
context, external intervention, stakeholders, and internal features and
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Frameworks and types of incentives
resources. Incentives generally target the core variable of performance,
but may also have an impact on an organization’s endogenous change
and adaptation – that is, the effectiveness of the capacity development
process. Like most other frameworks found in the literature on incentives
and capacity development in general, the framework takes into account
external factors such as context, actors and interventions. These factors
influence and are influenced by internal features and resources, such as
structures, resources, culture, strategies, values and formal and informal
roles. Most individual and organizational incentives may be placed
within this category. They influence the core components and are in
turn influenced by the other components: the external context, external
interventions and involved stakeholders are part of the institutional and
systemic levels and may shape and create incentives, for example by
imposing demands of accountability or better performance.
Figure 2.1 Analytical framework for organizational change
External
context
Stakeholders
Capabilities
Endogenous
change and
adaptation
Performance
External
intervention
Internal
features and
resources
Source: The European Centre for Development Policy Management (Morgan and Baser, 2007: preface).
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Incentive structures as a capacity development strategy in public service delivery
Type 3
Finally, in the brief entitled Public sector governance reform
cycle, the World Bank Institute (2007) introduces a framework for
assessing the capacity gaps in the public sector, and for designing the
tools and incentives necessary in order to fill the gaps and strengthen
public sector capacity and accountability. The cycle consists of
five consecutive phases and is particularly useful for analysing and
introducing reform processes. It is more process-oriented than the
previously presented frameworks. For each cycle, examples are given
of relevant tools that are in use or under development. It can thus help
users identify the different tools that have been elaborated by the World
Bank, understand governance problems and develop proper strategies
to address them. All of the steps imply taking into account the relevant
variables at different levels and relative to issues of governance, politics
and stakeholders. In this sense they correspond to the multiple-level
analyses emphasized by the other frameworks. The cycle may be
applied to a variety of tools and contexts, such as incentive systems in
the context of civil service reform (2007: 7).
The last phase, which may result in an adjustment of the reform
process, is followed by going back to step one. In practice, this implies
constant evaluation and analysis of the reform process.
The UNDP (2006b) presents a typology of change interventions
that illustrates the different types of reform generally used, such as
top down, transformational and strategic. The challenge is to manage
these types, successfully applying them to a concrete context.
However, within the development context, there is little knowledge
of change management and the related issues of constraints embedded
in bureaucratic systems. Such change processes therefore need to be
mapped out step by step and be consulted on in order to reach consensus
around a given reform. The authors look at different tools for managing
change in two decisive phases:
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Frameworks and types of incentives
Box 5.
Types of and tools for change management
Change management phases
Implications/tools
1) Managing the environment of change Creating a momentum for change and
assessing the change context
2) Executing the change process:
Advocacy activities, visioning,
facilitating change and
empowerment and voice, stakeholder
communicating about change
analysis, consultations, leadership,
brainstorming, and measuring and
celebrating progress
Source: UNDP (2006b: 9).
Figure 2.2 Public sector reform cycle
Identifying relative strengths and weaknesses in public sector management
and institutions at the country level and create awareness (e.g. weakness
of incentive systems)
1
5
Assessing the scope for political change and reform (commitment,
constraints and risks) – that is, considering how various factors at different
levels sustain or menace the present incentive systems
2
Problem specification and the design of reform: identifying underlying
problems and the unique conditions of the country; design feasible reform
options for specific local settings
3
Managing the politics of reform and ensuring sustainable implementation:
since the winners and losers in reform may influence reform outcomes,
stakeholder preferences and behaviour should be assessed. Reform should
be implemented in a participatory manner: civil service reform needs to
be supported by civil servants
4
Monitoring and evaluating the results and adjusting the reform process
(scorecards, surveys)
Source: World Bank Institute (2007: 2).
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Embedding change messages in social and organizational culture
is one of the UNDP’s guiding principles, since organizational culture
(in which employees often lack the incentives of innovating) often is a
decisive determinant of the direction and pace of change.
As many authors argue, such schemes are rarely followed
step-by-step in actual reform processes. However, this does not make
them useless. In fact, they provide useful tools for analysing the changes
and challenges linked to incentives for civil servants in the public
sector of developing countries over the past few years in that incentive
schemes may be identified and analysed according to the level of
motivational factors and determinants they correspond to (type 1), the
constraining or facilitating factors on each level (type 2), and according
to their evolution and management as part of broader reform processes
(type 3). The challenges related to improving performance through the
use of incentives may be analysed usefully by comparing them with
and referring to these frameworks.
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3.
CHANGES AND CHALLENGES
Dual explanation for the limited impact of incentives
The civil service’s performance depends on the performance of
the individuals it employs. Their performance depends, in turn, “on the
incentives they face and on the capabilities relative to the jobs they are
required to do” (McLeod, 2005: 9). The importance of incentives for
public sector performance and ultimately, for capacity development, is
well established. However, the situation in many developing countries
is characterized by capacity erosion, poor public sector performance
and weak incentives for civil servants. Real-life incentive schemes
often deviate more or less radically from the ideal types identified in the
theoretical strand of the literature, as outlined in the first two parts of
this analysis. In fact, the UNDP argues that “the incentives structures of
public administration in most developing countries are known for their
counterproductive effects on staff morale and efficiency” (Lopes and
Theisohn, 2004: 99). Many of the public sector reforms implemented
throughout the 1980s and 1990s have not led to any improvement. In
fact, many incentive schemes have contributed actively to the capacity
erosion that has taken place in the public sector despite frequent reform
initiatives over the past few decades.
The limited impact of incentive schemes and the failure of reform
processes have received much attention in the literature on incentives.
Whereas many authors focus exclusively on the issue of incentives,
others choose to describe and analyse, most often through case studies,
wider public sector reform issues. In this context, incentives are
considered an element of civil service reform. The many explanations
identified in the debate about why incentives fail illustrate the
complexity of the issue at hand. These explanations generally relate
to two complementary aspects of the use of incentives in developing
countries:
1)
The first aspect relates to the content side of incentives – that
is, how incentives function and how they are designed to link
motivation to performance. The key question is the following:
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Incentive structures as a capacity development strategy in public service delivery
2)
What are the weaknesses of present incentive systems and why do
they fail to ‘motivate’ staff?
The second aspect deals with the actual implementation of
incentives – that is, the chosen strategy of and approach to reform.
The key question is: Why have reform efforts in this area failed or
been counterproductive?
Authors tend to emphasize one of these two issues. A few,
however, recognize that they are complementary. The World Bank
(2008a: xvi) is a case in point. It recognizes that “the frequent failures
of civil service and administrative reform (CSA), despite continued
acknowledgment of its importance, seem to reflect the lack of a coherent
strategy and of clear diagnostic tools to address CSA issues”. Olowu
(1999: 8) supports this argument by claiming that “their [civil service
reforms] diagnosis and prognosis are both faulty, but so also have been
their strategies of reform implementation”. This section on changes
and challenges reflects the dual explanation for the limited impact of
incentives by elaborating separately the main elements associated with
each of them.
Weaknesses of present incentive systems
Scholars and practitioners generally include several variables
in their analysis of the limited impact of past and present incentive
systems. The various explanations may be categorized according
to the main emphasis of their argument. The first category includes
explanations that consider incentive systems too weak and the
disincentives too important to contribute to capacity development.
The second emphasizes the lack of knowledge about how incentives
really work, while the third underscores the importance of matching
incentives to the specific context in which they are being implemented.
In short, incentives are generally perceived as being too weak, poorly
understood or poorly adapted to the situation in a given country.
Disincentives and capacity erosion
Descriptive case studies of the civil services, public sector
employment and pay reform constitute an important strand of the
literature. The focus is primarily on inadequate financial incentives
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Changes and challenges
on the individual level (mostly in terms of salary), both as a cause
and a consequence of public sector capacity erosion. Most authors
trace the process of capacity erosion back to the 1970s, when public
sector employment was actively used as a tool to counter high rates
of unemployment and was privileged over income growth of public
employees (Lopes and Theisohn, 2004: 99). Overstaffing made it
impossible to sustain salary levels and led to a dramatic fall in wages,
followed by attempts at staff reduction and at decompression of
differentiated salary levels in many countries. Increasing civil service
salaries remained a marginalized or failed objective throughout the
1970s and 1980s. Ul Haque makes the observation that salary decline
has been the most severe in the poorest countries (2006: 8). Berg
(1993: 204) argues that the wages of skilled professionals fell more
than those of unskilled workers. This, in turn, symbolized the growing
“divorce between effort or responsibility and reward: the amount
of salary received by employees is less and less determined by the
importance of their contribution to the functioning of the public sector”
(1993: 207). Although several countries planned to increase salaries
once the necessary staff reductions were made, this has rarely been the
case. According to one author, where retrenchment was realized, it should
not have been general, since the African civil service was overstaffed
at lower levels but understaffed at higher levels (Olowu, 1999: 10).
Many civil services, however, remain overstaffed. Retrenchment has
been difficult politically and not always successful, becoming a major
challenge for public performance. As one ATP participant put it, “too
many cooks spoil the broth”.
For all of these reasons, a breakdown of capacity has taken place.
Mamman and Rees (2007) link this breakdown to the attention devoted
to the institutional level at the expense of human and organizational
capacities. Many authors today criticize the excessive focus on
macroeconomic stability that was in tune with the structural adjustment
programmes in the 1980s. Grindle and Hilderbrand claim that
“experience with these macro-institutional initiatives has not ‘solved’
the problem of poor performance” (1997: 481). Therkildsen argues in
a similar vein that “a variety of objectives – depending on the country
concerned – have been pursued in the pay reforms, but concern about
fiscal stability has always been at the forefront” (2001: 26). Olowu
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Incentive structures as a capacity development strategy in public service delivery
(1999: 2) also claims that the failed strategies on the African continent
have been too focused on technical issues of reducing the size and
cost of the civil service, with less attention being given to developing
capacity. Consequently, “the inability to attract and retain high quality
professionals has been, and still is, the major problem in African civil
services”.
Many governments have now set the objective of increasing the
pay of their public servants (McCourt 2006b: 175). The success of
doing so, however, has been uneven. The lack of financial resources
keeps financial incentives, in terms of salaries, from ‘motivating’
staff. When salaries are too low to make ends meet, people take on
second or third jobs and divide their time between them. Consequently,
from a practical point of view, performance is low. The report Tactics,
sequencing and politics of public service pay reform in developing and
middle income countries: lessons from sub-Saharan Africa realized by
PriceWaterhouseCoopers and the University of Dar es Salaam (Kiragu
and Mukandala, 2003) shows that adequate levels of pay are crucial to
sustaining the motivation, performance and integrity of public servants.
However, the overall funding may simply be too low to pay civil
servants more (Hongoro and Normand, 2006: 1318). In some countries,
salaries have increased indirectly with the introduction of allowances to
compensate for low wages. Such allowances are often discretionary and
complex, making the salary system opaque and unclear. According to
the World Bank (Mukherjee and Manning, 2000), allowances represent
up to 70 per cent or more of the basic salary in Jordan, up to 92 per cent
of pay in Indonesia, and even more so in Moldova. The lack of financial
and human resources remains a core obstacle for capacity development
and for the successful use of incentives. The capacity erosion caused
by a public sector’s low salaries and few skilled professionals has
been aggravated further by excessive centralisation, patronage and
even corruption (Saasa, 2007). In addition, public organizations are
characterized by a rigid organizational culture, with no competition
from the outside and seniority requirements for promotion. In other
words, “the rules of the game are weak and the playing field is far from
level” (McLeod, 2005: 9). This is confirmed by the ATP participants;
promotion is often based on a mixture of skills, performance, education,
personal relations and political affiliation. The turnover in the MOEs is
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Changes and challenges
high. In some countries, however, the turnover is also linked to changes
in political leadership and the political affiliation of key civil servants.
The correlation between the level of wages in the public sector and
corruption is considered a well-established one (McCourt, 2006b: 162).
The UNDP report Ownership, leadership and transformation: can we
do better for capacity development? (Lopes and Theisohn, 2004: 115)
devotes much attention to the disincentive of petty corruption, which
is “found where public servants who may be grossly underpaid
depend on small kickbacks from the public to feed their families”. The
interviewees agree that squandering government money is an important
problem and that attitudes need to change, but that petty corruption
is often a simple survival strategy. Often-evoked factors encouraging
corruption are linked to salary level, the poor matching of skills to
the tasks to be carried out, as well as poor matching of performance
and compensation levels (McLeod, 2005: 8). In turn, what Lopes and
Theisohn (2004: 116) refer to as “the lack of integrity in emerging
political and administrative systems” becomes an additional obstacle
for foreign and domestic investment. In the health sector the research
on so-called ‘coping strategies’ gives useful insight into staff behaviour
when health workers are severely underpaid. Van Lerberghe et al.
(2002) illustrate how these coping strategies may have predatory effects
and undermine the performance of the health sector. The widespread
use of under-the-counter fees is a case in point. Van Lerberghe et al’s
argument is that health professionals’ way of dealing with unsatisfactory
living and working conditions contributes actively to capacity erosion.
More specifically, coping strategies create competition for time since
many health workers share their time between the public and private
sector, which may result in a conflict of interest. Coping strategies also
contribute to both inter-country and urban migration – that is, a brain
drain.
In light of the variety and complexity of the obstacles to capacity
development, the difficulty of matching these to concrete incentives
is evident. The process of capacity erosion described above is linked
clearly to the lack of sufficient incentives, especially in comparison
to the disincentives for enhanced performance. Due to the sustained
lack of financial resources, the consequences of pay problems listed
by McCourt (2006b: 175) remain characteristic for the situation in the
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Incentive structures as a capacity development strategy in public service delivery
public sectors of many developing and even emerging countries. These
include inadequate pay on all levels, opaque remuneration systems,
unclear links between pay and responsibilities, unclear links between
pay and performance, and insufficient pay to retain employees with
scarce skills. In other words, the incentives necessary in order to create
a professional, neutral and effective civil service have not been in
place or have been too weak to be able to break the cycle of capacity
erosion.
Lack of knowledge leads to perverse incentives
Poor knowledge about how incentives actually work in practice
has also contributed to weaknesses in the design of incentive systems.
Whereas the situation described above is linked to the absence of
incentives or the presence of disincentives, a number of authors also
emphasize the existence of perverse incentives for civil servants. In
this context, perverse incentives refer to implemented incentives,
the consequences of which deviate or are even opposite from their
objective – that is, they contribute to capacity erosion rather than
capacity development. Incentives may, for example, be individually
positive but fail to offer a coherent and mutually reinforcing incentive
scheme when combined. In other words, the mix of incentives may have
unintended effects, making them an obstacle to capacity development.
According to the UNDP, perverse incentives “block sustainability,
promote the use of external resources rather than more cost-effective
domestic ones, discourage local initiatives and, at least indirectly,
stimulate brain drain” (Lopes and Theisohn, 2004: 91). The literature
emphasizes (a) the lack of knowledge about non-financial incentives,
(b) counterproductive HRM tools and (c) the distortive effects of donor
presence.
(a) Non-financial incentives
Authors such as Ul Haque (2006: 3) link the existence of perverse
incentives to the fact that incentives in general constitute an underresearched area. He suggests that by drawing on organization and
management theory, it may be possible to shed some light on the
linkages and interplay of different kinds of incentives at different
levels of analysis in order to design incentive schemes that work
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Changes and challenges
effectively to motivate staff and improve performance. Some of these
linkages have been presented in the first two parts of this literature
review but more knowledge is needed, especially when it comes to
non-financial incentives. Even though they are used widely in most
countries, their impact is rarely monitored and evaluated. Mathauer and
Imhoff argue that this is due to the lack of systematic implementation
of non-financial incentives; they are often not applied “specifically
in relation to motivation and performance increases” (2006: 15).
Hongoro and Normand argue in a similar manner that little is known
about the functioning of non-financial incentives because they do not
conform to economic logic (2006: 1315). Adams and Hicks (2000: 3),
for example, use economic theories that demonstrate how key payment
mechanisms in the health sector provide different incentives for health
care providers: whereas salaries provide an incentive to reduce the
number of patients and number of services provided, fee-for-service
mechanisms will likely increase the number of cases seen as well as
the service intensity. As opposed to financial incentives, the short-term
consequences and long-term impact of non-financial incentives are
difficult to measure.
When it comes to non-financial incentives, it is often the complex
reality on the ground that transforms a positive incentive into a
negative one. Autonomy, for example, may constitute an incentive.
Autonomy in itself may be motivating for civil servants and may also
allow for an organizational identity to emerge and for new incentives
to be introduced. In addition, where organizational autonomy is a
consequence of decentralization, it generally responds to external
accountability demands linked to the distribution of political power and
the proximity to citizens. In their study on the performance of public
organizations, Grindle and Hilderbrand found that autonomy “appeared
to provide a medium in which mission identities could be established,
managerial styles developed to support organizational goals, and
performance incentives applied” (1997: 491). However, unless the
proper capacities and management skills are present, autonomy may
endanger motivational factors such as career structure, job security
and transparent management (Hongoro and Normand, 2006: 1314).
Attracting skilled professionals to rural areas is a challenge that is linked
specifically to decentralization processes. Wescott argues that career
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Incentive structures as a capacity development strategy in public service delivery
prospects in rural areas are less attractive than in central ministries and
that incentives need to compensate for this (1999: 7).
Incentives aimed at strengthening external accountability
– that is, accountability to citizens – are often used in parallel to
internal accountability mechanisms such as evaluation, controls and
regulation. User evaluations, service delivery surveys and citizens’
charters constitute tools for strengthening ‘voice’ and correspond to
a responsive governance approach, according to which citizens are
considered empowered participants in public activities. Such ‘voice’
mechanisms may enhance public performance by providing incentives
for civil servants to respect the rules and strive for efficient service
delivery. In most cases, however, such mechanisms have not proved
to be particularly useful for enhancing accountability. Such incentives
may be efficient individually, but putting too many demands on internal
and external accountability may create the constraint of multiple
accountability (Economic Commission for Africa, 2003). In general,
internal accountability is privileged. This was reflected in the interview
sessions; none of the ATP participants identified recognition by the
public or by citizens as a motivational factor, whereas recognition by
superiors was considered an important factor. In addition, Therkildsen
underscores the uncertainty surrounding the actual impact of tools
such as user surveys as it is highly uncertain whether the information
obtained through such surveys is actually used and whether they
“provide incentives for change and increased efficiency” (2001: 32).
The risk of such surveys is that they create pressure without any kind
of professionalization in exchange.
(b) HRM tools
Likewise, HRM tools may backfire and may become
counterproductive when they come in conflict with other motivational
factors or are applied inappropriately. Mathauer and Imhoff (2006), for
example, found in their study on health worker motivation in Africa
that many employees tended to perceive supervision as an exercise of
control rather than as a tool for support and recognition. Recognition
and appreciation by superiors were often absent in supervision schemes
and feedback rarely focused on individual performance. Supervision,
normally conceived of as an instrument “to correct shortcomings and
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Changes and challenges
support good practice” (2006: 9) became a disincentive for employees.
This partially reflects the findings of the interviews conducted with the
participants in the IIEP’s Advanced Training Programme. Most of the
interviewees did not engage in regular meetings with their superiors in
order to evaluate their performance. Feedback was reported to be mainly
informal and not used systematically as an HRM tool. Another HRM
tool that may backfire is the emphasis on individual performance when
it conflicts with the value of team cooperation. Authors like Hongoro
and Normand (2006: 1318) and Mathauer and Imhoff (2006: 13)
underscore the potential for tension between individual incentives and
success, and teamwork. If the balance between individual incentives
and team-based performance is ignored, it may provide a disincentive
for individual performance. One of the ATP participants confirmed that
envy among colleagues was a common problem and that supervisors’
lack of support and negative feedback often led to a blame game rather
than constructive teamwork within the unit.
Performance-related pay (PRP) is another tool used to stimulate
competition and performance. The idea behind it is that PRP will have
a motivating effect on individuals, allow the public sector to compete
with the private sector for human resources and contain salary costs
by reducing the automatic progression of pay levels. PRP can be given
as a merit increment or bonus; performance systems may also be used
in promotion processes through the use of performance assessments.
Common for these systems is that they link individual performance
to organizational goals through the measurement of competences and
performance. It has been of limited use in developing countries, where
salary levels are differentiated but stable and promotion often linked
to seniority requirements. Tanzania is one example of a country that
has begun to experiment with competence-based promotion. When it
is applied properly in the right managerial context, it can indeed be
a useful tool for motivating staff. However, the OECD emphasizes
the importance of having transparency, trust and clear promotion
mechanisms already in place before such systems are introduced (OECD
Observer, 2005). If not, difficulties linked to measuring and assessing
performance may undermine their utility and make promotion and
salary subject to biased assessments. If PRP is perceived by employees
as being biased and not based on ‘just’ criteria linked to performance
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Incentive structures as a capacity development strategy in public service delivery
and merit, they may become a disincentive. As already mentioned,
other incentives such as job content and career development remain
more important incentives for most public employees. According to the
UNDP, “the benefits of performance pay remain to be demonstrated,
and management requirements and costs of installing such systems can
be considerable” (UNDP, n.d.: 12).
Performance assessments were considered difficult to use,
according to several of the ATP participants, since performance
cannot easily be measured, especially in the education sector. Finding
measurable and fair criteria for promotion or salary raises is a difficult
task, not only for developing countries. McCourt pertinently observes
that “it is notoriously difficult to quantify the performance of public
servants in the way that such a system requires; even the World Bank as
an employer seems to find it hard” (McCourt, 2006b: 176). Therkildsen
similarly argues that “there is no commonly accepted framework for
establishing what ‘good’ performance means” (2001: 41). In practice,
PRP has been less efficient than expected. However, the OECD Observer
argues that the introduction of PRP may have derived effects leading
to organizational and managerial change. By emphasizing notions of
performance and efficiency, PRP may function more efficiently as an
organizational incentive than as an individual incentive, introducing
a goal-setting approach that might enhance the efficiency of the
organization as a whole.
(c) Donor presence
Public sector organizations in developing countries are not the
only employers in need of skilled professionals. A number of bilateral
and multilateral donor agencies and NGOs are generally present
in these countries and they compete alongside the public sector for
human resources. The lack of sufficient incentives for civil servants is,
as we have seen, a major obstacle for capacity development. Moreover,
incentives are weakened when compared to those offered by NGOs
and donor agencies (Lopes and Theisohn, 2004: 100). Incentives in
the form of ‘top-ups’ or direct donor recruitment of skilled staff in
the partner countries are a widespread phenomenon. Donor-funded
allowances are usually referred to as ‘top-ups’ and are used widely
in developing countries. They are “official cash payments or in-kind
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Changes and challenges
benefits that a civil servant receives over and above what colleagues
in the same grade and pay scale receive. Often, the original purpose of
salary top-ups is to persuade some civil servants to move to positions
that (s)he would normally not want to accept” (Mukherjee and Manning,
2002). Even when donors are reticent about handing out top-ups, they
may find themselves obliged to do so. Top-ups are often subject to
political pressures, making it difficult for donors to refuse if they want
to cooperate with the government. Also, a common perception is that
‘everybody’ else does it. As a result, top-ups are considered crucial tools
in implementing projects with the active support of key civil servants.
UN agencies such as the UNDP have given the issue of donor top-ups
considerable attention, as this is recognized for being a “widespread
phenomenon with distortionary effects” (UNDP, n.d.). Top-ups “draw
scarce knowledge and skills away from where they are needed most”
in the public sector (Mukherjee and Manning, 2002). The selected civil
servants are chosen in a process that is neither transparent nor based on
merit and top-ups are subject to a wide variety of donor practices.
In the short run, these incentive schemes may be useful because
they help donors implement their capacity development projects. One of
the IIEP professionals therefore supports a pragmatic view on top-ups,
especially considering that ‘everybody does it’, even if it is frowned
upon officially. The challenge is to ensure that top-ups contribute to the
sustainability of projects after donors exit and in this way, contribute to
capacity development in the country as a whole. The risk is that when
donor funding decreases and top-ups are phased out, civil servants will
seek employment elsewhere. The ad hoc nature of top-ups may thus
lead to a public sector brain drain and a distortion of the local labour
market. These issues constitute an important challenge to the public
sector and to sustainable capacity development in the long run (Lopes
and Theisohn, 2004: 8).
Some civil servants are hired directly by donor agencies offering
salaries that are much more attractive than public sector pay. The
resulting inter-agency competition for skilled staff may have a
distortionary effect linked to the paradoxical behaviour of these actors.
Therkildsen describes the situation as follows: “Donors may actively
seek to influence government pay policy. At the same time they distort
it by seeking to attract skilled recipient staff to key positions in the
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Incentive structures as a capacity development strategy in public service delivery
programmes and projects that they fund” (2001: 26). The DAC (OECD/
DAC, 2006) confirms that “by recruiting local personnel (and offering
higher salaries), donors and NGOs often contribute to the skilled
professional deficit in the public sector”. Consequently, these incentives
become perverse in the sense that they contribute to a domestic brain
drain from the actor responsible for the country’s development – that
is, the public sector – to the assisting bilateral and multilateral actors in
the development enterprise. One ATP participant agreed that this was
a serious problem, but more in terms of quality than quantity as the
available positions in donor-funded programmes are rare and far apart,
but they attract the best staff. In Afghanistan, job openings are spotted
quickly by civil servants and are considered very attractive, primarily
in terms of salaries. In Cambodia, an informal agreement between
the government and donor agencies keeps the latter from hiring civil
servants (ATP participant).
A few authors emphasize another issue linked to the presence
of donors, namely the use of foreign consultants. The need to retain
domestic human capital is essential and, as Lopes and Theisohn argue,
“... existing national capacity can only be retained if the principles
that create incentives for expatriates are considered for the nationals”
(2004: 106). An alternative solution to using foreign experts could be to
use national experts that have left the country, as part of a repatriation
strategy. This is the case in Afghanistan, where the government and
donor agencies have appealed to the Afghan diasporas for help (IIEP
professional). These consultants normally receive important top-ups.
Highly experienced consultants cannot be expected to accept the low
domestic salaries that probably contributed to them leaving in the first
place (Berg, 1993). According to Ul Haque, more research should
therefore be done on the costs and benefits of the alternative channels
of brain drain repatriation and technical assistance for development
(Ul Haque, 1999: 475).
From theory to practice: the importance of context
The frameworks that were presented and outlined in the second
part of this review emphasized the importance of taking into account
the wider context when diagnosing capacity gaps, identifying indirect
incentives or disincentives and designing incentives as part of a capacity
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development strategy. In practice, however, this kind of adaptation
has rarely been the case. Wescott (1999) argues that the ideal-type
Weberian bureaucratic model based on the logic of downsizing has
had perverse effects on incentives in Africa, leading to rent-seeking
and other unintended outcomes, such as ghost workers: “Reforms such
as downsizing and rightsizing not only threaten the careers of civil
servants [...] but threaten the well-being of the network of kin, etc.
supported by the job holder. This is important in Africa because of the
absence of social security safety nets provided by the state” (1999: 20).
A number of authors have criticized the way the more recent New Public
Management (NPM) tools were introduced in the 1980s and 1990s. They
warn against the blind application of models elaborated in developed
countries. NPM blueprints do not take into consideration the historical,
cultural, economic and political specificities of the country in question.
McCourt (2006c) describes how countries like Mauritius, Malaysia and
Namibia have introduced performance-related pay schemes and have
ended up duplicating many of the errors made by the countries serving
as their models (in particular, the UK and New Zealand). Bana and
McCourt (2006) are among the authors who underscore the importance
of analysing an institutional framework within its politico-historical
context, including informal power configurations, which may prove
difficult to change, despite political commitment to reform. It is only
through adapting incentive systems that an independent bureaucracy
capable of fostering civil service capacity and confidence can emerge.
What contextual aspects should be taken into account ultimately
depends on the specific country in question.
When it comes to undertaking an analytical diagnosis, DAC
describes the increasing use by donor agencies of ‘power analysis’
or ‘institutional analysis’ in order to be able to foster an enabling
environment for capacity development (OECD/DAC, 2006: 21). Such
diagnostic tools may be useful in understanding the incentive structures
that exist in and regulate a given sector, especially if these are of an
informal nature. The DAC argues that it is only by fully understanding
the functioning of such structures that institutional and organizational
change can take place. Sida (2006) describes how power analysis can
stimulate thinking about what can be done in order to reach policy
goals in terms of formal and informal power relations, structures and
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Incentive structures as a capacity development strategy in public service delivery
the actors or incentives involved. Key issues deal with articulation and
voice – that is, the capacity of civil society to impose demands upon
the state – and responsiveness – that is, public mechanisms capable of
acting upon these demands. This involves an analysis of the institutions
and structures that shape capacity and incentives for actors within
the public sector. The following examples taken from the literature
emphasize three different contextual aspects (history, social and ethnic
issues, and political instrumentalization) which may be relevant when
designing incentives.
The decompression of salary levels followed by the introduction
of performance-related pay, for example, have proved particularly
difficult to implement in countries where previous communist regimes
have fostered strong egalitarian norms and mentalities (Verheijen,
2000). This is true for many African and Eastern European countries.
The wider institutional framework in these countries remains
affected by a legacy of bureaucratic politicization and egalitarianism.
Incentives aimed at accountability, such as ombudsman institutions
and citizens’ charters, have proved equally difficult to introduce in
many central and Eastern European countries because of the legalistic
culture. The value of legislation has generally been overestimated,
while changing administrative culture has been underestimated, since
“laws do not change mentalities” (Verheijen, 2000: 42). Mengistu
and Vogel (2006: 214) offer another perspective on the importance of
context by discussing the value of bureaucratic neutrality, ethnicity
and civil service reform in Ethiopia. The key question is whether
civil servants should be selected on the basis of competence or
ethnic representation. Diversity may function as an incentive in the
sense that equal opportunities for employment may transform the
public sector into a more attractive employer (Van Lerberghe et al.,
2002). Wescott also touches upon this question when discussing the
issue of gender balance in the civil service (1999: 5). The UNCDF
(2005) illustrates how incentives have been applied to achieve gender
mainstreaming at the local level in Uganda. McCourt gives a similar
example from South Africa and links the issue explicitly to efficiency:
South Africa has made it a priority to transform apartheid bureaucracy
through affirmative action, “into a public workforce which represents
the ethnic and gender composition of the country’s population”
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(McCourt, 2006b: 162). However, McCourt argues that this objective
has overshadowed conventional efficiency objectives (2006b: 163).
According to the UNCDF, there is, as yet, “insufficient evidence to fully
demonstrate the effectiveness of these kinds of incentives” (2006: 78).
Grindle and Hilderbrand (2006: 61) emphasize the importance of
the political context for successful capacity development. Capacity
development activities regularly become instruments of the political
leaders in order to gain votes and popularity. Grindle and Hilderbrand
illustrate this process at the decentralized level by looking at the
conditions under which newly elected administrations in a number
of Mexican municipalities initiated capacity-building programmes.
According to Grindle and Hilderbrand, “the study of the performance
of municipalities adjusting to new responsibilities provides insight
into the political dynamics of public sector capacity building efforts”
(2006: 57). Elected for three years and not allowed to be re-elected, local
governments generally emphasized policies linked to modernization
and change at the beginning of each elected term. Reorganization took
place; the profiles of public appointments were changed; and training,
technical up-grading and performance standards were introduced.
The incumbent local government deployed such strategies early on in
order to differentiate itself from the previous one: “Almost all capacity
building initiatives were introduced within the first months of taking
office, suggesting the importance of electoral calendars to the activities
of municipal officials” (2006: 67). This example corresponds to the
observation made by one of the interviewees, an IIEP professional,
that incentives are distributed not only as a motivational strategy but
as a way to strengthen and solidify an individual’s proper position in a
given organization or institution. Capacity development initiatives are
thus facilitated by the incumbent administration in the short run, but
changes in political leadership may endanger their institutionalization
in the long run. Consequently, sustainability becomes a problem, since
“the very flexibility that allowed for significant change [...] raised
barriers to its institutionalization over time” (2006: 67).
The difficulties of reform: obstacles to implementation
The issues related to the content side of incentives provide some
insight into how incentives function and why they often fail to do so.
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However, it is not the full story. The limited impact of incentives for
civil servants is also linked to the issue of reform. Incentives generally
play a central role in three major types of reform (Caiden and Sundaram,
2004):
1)
2)
3)
civil service reform: the management of human resources;
accountability reform: enhance transparency, oversight and
control;
managerial reform: contracting out, decentralization and
results-based management.
According to the World Bank (2008a: 54), the tools and
instruments for comparative civil service analyses are underdeveloped,
because there is no consensus within the development community on
the ‘right’ reform model for developing countries. The competing
objectives of affordability, performance and accountability – and the
sequencing and fit with political realities – are common issues that are
encountered by most countries undertaking reform. Accountability and
managerial reform have received much attention recently and will be
considered in more detail in the next part of this literature analysis.
Civil service reform, often introduced as part of wider public sector
reform, remains the basic type of reform used in order to enhance the
performance of the public service. A number of authors link the failure
of this type of reform to the approach taken and to the various obstacles
in the implementation process. Again, the importance of context is
evident; it is only by looking at the wider context that one can identify
constraining factors to reform. According to McCourt (2006b: 164),
“political, economic and social factors have influenced the conduct and
outcomes of reform”.
The challenges of initiating reform are often similar. Caiden and
Sundaram (2004) emphasize the erosion of public capacity, widespread
corruption and the need to attract and retain talent. These are but a few
of the issues that need to be addressed. Like the challenges of initiating
reform, the obstacles encountered during the implementation process
are often similar, making reform risky and rarely successful. According
to the World Bank, civil service reform supported by the Bank has been
largely unsuccessful because of major political difficulties encountered
underway, a technocratic approach to reform, and limited ownership and
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relevance of reform (World Bank, 2008a). Polidano (2001: 1) similarly
emphasizes three main tactical elements: the scope of reform, the role
of aid donors and the leadership of reform. These aspects relate to
reform efforts in general, whether they are civil service reform or wider
public sector reform. They go beyond the specific issue of incentives,
but are worth mentioning because reforms related to incentives are
rarely addressed separately. The limited impact of reforms is analysed
by most authors in terms of (1) the need for commitment and support,
and (2) the existing capacity and its impact on the scope and sequencing
of reform.
Commitment and support
Civil service reform has generally been considered more difficult to
implement and institutionalize than other types of public sector reform.
As described, the lack of financial resources has made it difficult to
establish adequate financial incentives (Rugumyamheto, 2004: 439).
The World Bank also emphasizes the lack of political commitment to
reform as a major obstacle to creating an efficient civil service. The
ATP participants widely agreed with this view. ‘Rightsizing’ the public
sector through the reduction of the size of the civil service has proved
politically to be very difficult to achieve (World Bank, 2008a: xi). The
lack of proper implementation therefore characterizes a number of
reform efforts. Reform strategies need consistent support from all actors
involved and a systematic plan of action in order to be implemented
successfully in a sustainable manner. A number of analyses imply that
successful reform depends, to a large extent, on politicians’ incentives
to create a momentum for reform and maintain this momentum
throughout the reform process. The momentum for reform may slow
down after a while due to competing policy objectives, such as reducing
public expenditure, or other kinds of institutional pressures. Projects
may end up stalling altogether, or “put into effect only in a tokenistic,
half-hearted fashion” (Polidano, 2001: 2). This has been the case in
Ghana, Argentina and the Republic of Yemen (World Bank, 2008a).
The World Bank (2008a: 52) has classified a number of civil service
reform components in terms of political risk, financial implications
and demands on capacity. Incentives linked to compensation and
HRM reform are considered politically risky compared to traditional
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Incentive structures as a capacity development strategy in public service delivery
measures to contain and reduce the number of staff. The political risk
is especially pronounced in egalitarian cultures and patronage-based
systems. Compensation and HRM reform also contain financial costs
and are perceived of as capacity-demanding, thus reducing their chance
of being implemented successfully.
A number of authors criticize this view. They concede that the
limited impact of reform is linked partially to insufficient domestic
political commitment but it is not the whole story. The presence and
active involvement of donor agencies in these countries are equally
responsible. Polidano (2001: 4) identifies excessive donor influence and
lack of leadership as obstacles for ownership, which in turn becomes
an obstacle for reform. According to Olowu (1999: 16), the question
of ownership is indeed crucial in this context, in view of the fact that
most civil service reform has been introduced without consulting key
stakeholders. Ul Haque similarly argues that “there is limited domestic
ownership of a product whose origins lie overseas” (1999: 484). The
previously mentioned survey on bureaucratic structure and performance
in Africa (Court, Kristen and Weder, 1999: 7-8) found that “bureaucrats
across the continent felt that economic policy is formulated outside the
country, particularly by the Bretton Woods Institutions”. These reforms
have also been characterized by their extensive focus on short-term
processes because of donor demands for quick results. As a result,
long-term processes, such as changes in organizational behaviour, have
not been privileged. Olowu confirms that “the reality of most reform
initiatives is the dominance of external timetables and immediate
results” (1999: 16). ‘Disbursement pressures’, tied aid and fragmented
development efforts are other obstacles linked to donor involvement
(Lopes and Theisohn, 2004: 93). Wescott (1999: 3) suggests that the
role of donors should be limited to one of facilitation and consultation.
The general involvement of donors and the vested interests of actors
involved in development cooperation may lead to perverse incentives:
the UNDP has demonstrated how politics often gets in the way of
pursuing development objectives. As a result, aid funds are often
given to countries with mixed development results and not to countries
with a successful growth and equity record. This is referred to by
market analysts as ‘moral hazard’ and may be a negative incentive
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Changes and challenges
for developing countries pursuing reform if good development is not
rewarded (Lopes and Theisohn, 2004: 93).
In addition to political commitment and donor involvement, the
support of civil servants for reform is equally crucial. An effective civil
service is a necessary condition for an effective state and economic
growth. Olowu (1999: 8) pertinently illustrates the important and
multiple roles the civil service plays in society and the economy, not
only as an instrument for policy-making, but also as an institution of
employment and governance. This should be taken into consideration
when introducing reforms that depend upon the efficiency and support of
the civil service. Schneider and Heredia (2003) qualify the commitment
of the bureaucracy as a deciding factor for reform, which often proves
difficult to foster. The World Bank (2008a) also observes that support
from central parts of the civil service, such as senior officers, is crucial
in this respect. The distinction between public sector reform that
addresses the issue of incentives for civil servants and that which does
not is therefore important. When incentives do not accompany wider
reforms, willingness to implement them efficiently is often absent.
This is especially true when measures related to retrenchment are not
accompanied by salary augmentation for the remaining employees. An
ATP participant confirmed that the civil service was often reticent about
reform, with the exception of reform being perceived as benefitting
them. In general, reform simply means more work and demands a
greater effort on behalf of the civil servants. If this greater effort is not
compensated by incentives, reform processes may easily stall. The fit
between incentive-specific reform and the overall public reform process
is therefore an additional challenge that needs to be addressed.
The reticence towards reform may also be linked to existing
practices of patronage – that is, moneyless corruption and bureaucratic
politicization. Huber and McCarty (2004) elaborate a model according
to which low bureaucratic capacity provides few incentives for civil
servants to do their work efficiently and few incentives for politicians to
undertake reform. The model illustrates that there are strong incentives
for politicians to politicize the bureaucracy when bureaucratic capacity
is low and that when bureaucrats become politicized, the incentive to
reform bureaucracy is low. Schneider and Heredia (2003) support this
argumentation. They claim that when the relationship between political
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reformers and civil servants is too close, the incentive for reform will
generally be low. This has been the case in Mexico and Thailand.
According to Caiden and Sundaram (2004), attention therefore needs
to be devoted to designing direct incentives aimed at changing civil
service attitudes towards reform and replacing patronage with merit.
If not, the lack of capacity may create a vicious circle leading to
patronage and bureaucratic politicization, which in turn impede reform
and capacity development. This implies that a minimum level of
capacity facilitates reform. In other words, capacity is itself a condition
for capacity development.
Existing capacity and its impact on the scope and sequencing
of reform
The importance of a minimum level of capacity for successful
reform is also emphasized when it comes to issues related to the scope
of reform. Berg (1993) compares public reform efforts to technical
cooperation projects: whereas they both aim to improve organizational
capacity, their success depends to a large extent on the existence of
a certain level of organizational cohesion and stability. This explains
why public sector reform succeeds where it is least needed, such as
in middle-income countries. In low-income countries, where reform
is urgent, there have been fewer improvements. Tajikistan is a case in
point. The country’s wage system is opaque, highly compressed and
with extremely low wage levels. Various allowances and supplements
add to the complexity. While the World Bank normally would
recommend a comprehensive reform to deal with this complexity, it
recognizes that the country’s low capacity makes it necessary to take a
step-by-step approach to reform. In other cases, the lack of capacity has
been translated by a superficial reform process, not leading to any indepth change. McCourt (2006c) presents findings from seven African
countries where this has been the case: strategic HRM in the form of
mission statements were introduced, for example, but did not at all
change the day-to-day management. Verheijen (2000) also observes
that in Eastern and central European countries, the gap between official
statements for reform and actual progress has been considerable.
Polidano argues that in some cases, “incentives and performance
measures are so complex that it may be more advisable to introduce
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Changes and challenges
changes as small-scale experiments” (2001: 1). On the other hand,
comprehensive reform may be needed, since low administrative
capacity is not only linked to structure, but to rooted social norms
and institutionalized behavioural patterns. Simply changing incentive
schemes will not deal with such institutionalized behaviour. An ATP
participant similarly argued that simply enhancing financial incentives
would not automatically reduce the incidence of corruption. More indepth measures were deemed necessary, such as changing the attitudes
of civil servants. Comprehensive institutional reform may therefore
be necessary in countries with a high degree of patrimonialism
and corruption. This paradox illustrates the complexity of the issue
at hand. A low level of capacity may easily become an obstacle
when considering the complexity of incentives and the need for
comprehensive reform. As one of the IIEP interviewees observed,
“once the system is down, it’s difficult”. The interviewee further
warned against simply increasing salaries, arguing that something
must be given in exchange for enhancing the financial incentives. This
‘something’ should be linked to the changing of attitudes. The level of
capacity, understood as structurally, socially and institutionally linked,
should therefore be considered when deciding on the scope of reform
in order to avoid unrealistic expectations, unpredictable government
commitment and reform that fails to take care of the basics first (World
Bank, 2008a: 40).
Taking care of the basics is linked to the sequencing of reform.
Agencies tend to make a difference between first and second generation
reforms. First generation reform is aimed at decreasing the size of
the public sector and increasing the salaries of the remaining civil
servants. This is referred to in the literature as ‘rightsizing’ the civil
service. Whereas reducing the size of the public sector was achieved
partially through the removal of ghost workers, increasing salaries has
been financially impossible for many countries. Uganda is a case in
point. The country presented a comprehensive strategic framework
for reform, which impressed the donor community. In reality, most
of the money was used for paying retrenchment benefits (Polidano,
2001: 3). Olowu confirms that first generation reform has proved to
be costly and counterproductive (1999: 8). Second generation reform
is inspired by the New Public Management ideology and toolbox.
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Often-used tools include the reorientation of the state administration
towards more competition, a reduction in administrative fragmentation
and the rationalization of manpower (Caiden and Sundaram, 2004).
Complementary tools are linked to the introduction of management and
accountability systems and improving the conditions of employment
(Grindle and Hilderbrand, 1997: 481). Kayizzi-Mugerwa (2003) argues
that second generation reform has been difficult to implement due to
the limited success of first generation reform. Kiragu and Mukandala
(2003) argue that in many cases, contradictory approaches to pay
reform are applied, making the task all the more difficult. Consequently,
neither pay and employment reform nor general administrative reform
have resolved the challenges of capacity development. In many cases,
reform has “by and large been limited to job reduction – improving
the quality of administration remains to be addressed” (McCourt,
2006b: 168).
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4.
REFORMS AND SUCCESSES
Renewed interest in incentives for civil servants
Despite these obstacles and the limited motivation of civil servants
to be part of a reform process, a few relatively successful reforms and
innovative approaches to the issue of incentives may be identified.
They constitute a limited number of best practices and are often made
reference to in the recent literature. These best practices are relatively
rare. Nevertheless, they have contributed to the renewed interest in
incentives for civil servants within the development community.
Authors such as Ul Haque (2006) link this renewed attention to
the ‘good governance’ perspective and the increasing emphasis by
international agencies on the functioning of public institutions. The
new development discourse, exemplified by the focus on capacity
development, has seemingly placed the question of incentives and
civil service reform at the forefront of the development agenda. This
approach recognizes that reform must be people centred if it is to
succeed and that incentives are efficient tools for linking people and
change. Consequently, the place of civil service reform is changing,
from being a non-issue to a simple budgetary concern, to becoming a
key issue in public sector reform (Ul Haque, 2006). More than half of
the World Bank’s projects on public sector reform (lending projects
with public sector reform components) from 1990 to 2006 (261 out of
467, to be precise) include a civil service and administrative reform
theme (World Bank, 2008a: 21, 29). According to the World Bank, the
factors for successful donor-supported reform include general analytical
diagnosis and advice, pragmatic opportunism in selecting reforms
to support, realistic external expectations, appropriate packages of
lending instruments, tangible indicators of success and effective donor
coordination (World Bank, 2008a: 54). In short, and as mentioned,
both content and strategy matter. However, donors cannot manage
a reform process without the necessary support from stakeholders.
Kayizzi-Mugerwa (2003) recognizes that African bureaucracies are
simultaneously part of the problem and of the solution. In a similar
vein, Caiden and Sundaram (2004: 383) place incentives for the
civil service at the centre of public service reform. This trend is also
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Incentive structures as a capacity development strategy in public service delivery
reflected on the ground. The ATP participants confirmed that the issue
of civil service reform is discussed widely in the countries concerned,
but that it needs to be debated more seriously beyond its continuous
use in political rhetoric – the demand for this type of reform is often
instrumentalized by the political opposition, without a real reform
proposal being presented.
Capacity development through the training of human resources
is but one of the many recent reform elements that puts the issue of
incentives at the centre of civil service reform. Other elements include
the restoration of meritocracy (focusing on the highly-skilled levels),
improving accountability and competitiveness, and the mobilization of
additional resources (Olowu, 1999). The principal issues emphasized
by most authors, however, are linked to pay reform, merit-based
recruitment and promotion, and increased accountability. In practice,
reforms have evolved progressively by emphasizing these issues in the
order listed. The World Bank confirms that since 2000, “merit-based
reforms are becoming more important than down-sizing and pay
reforms” (2008a: 29). This reflects the already mentioned renewed
focus on incentives in general. Whereas these issues are subject to state
action – that is, reforms introduced by the government – accountability,
another non-financial external incentive, may also be imposed from
the outside. UN Department of Economic and Social Affairs (DESA)
(2005) links accountability to a specific model of governance, namely
responsive governance. This model values accountability to citizens
and stakeholders, empowerment, transparency and participation.
It represents an alternative to the preceding models of public sector
reform, namely traditional public administration and New Public
Management. From an emphasis on pay reform to merit-based reform,
current reforms emphasize the accountability dimension of public
sector organizations.
Analyses of these best practices include the reasons for their
relative success as well as the challenges encountered. The following
sections take these issues into account and give additional empirical
insight into the obstacles that were presented above in a more theoretical
and general manner.
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Reforms and successes
Pay-based and merit-based reforms
When it comes to pay-based reform, a useful point of departure
is the proposed solutions to the various pay problems encountered by
many countries and outlined by McCourt (2006b: 175). The problems
and their proposed solutions are as follows:
Box 6.
Reasons for and types of pay reform
Pay reform
Pay problems
Inadequate pay on all levels
Opaque remuneration systems
Unclear links between pay and
responsibilities
Unclear links between pay and
performance
Insufficient pay to retain employees with
scarce skills
Proposed solutions
Across-the-board pay rises
Consolidation of remuneration
Job evaluation: gives a more
justifiable basis for pay differentials
Performance-related pay
Pay decompression and pay differentials
Source: McCourt (2006b: 175).
As mentioned, across-the-board pay rises have been relatively
modest, if not non-existent. Several of the ATP participants explained
that salaries do increase on a yearly basis, but that this increase is
very small and makes no difference, especially when compared to the
inflation increases these countries experience. According to the ATP
participants from the poorest countries, salary levels remain highly
compressed. As a result, salary increases through promotion do not
constitute a motivational factor. Promotion was perceived by the
ATP participants as dependent upon a mixture of skills, performance,
seniority, personal relations and political affiliation. Progress is
slow, but real. In Senegal and Cambodia, detailed job descriptions
and evaluations are increasingly being used and provide incentives
for performance (ATP participants). In Albania, the development of
measurable indicators of results has allowed for government tracking
of the percentage of recruitment done by merit. Such tracking provides
a “transparent method of demonstrating progress in implementation”
(World Bank, 2008a: 56). In many countries, however, the link
between pay and performance is non-existent. Salary levels depend on
the diplomas acquired and on seniority. Remuneration systems remain
opaque, with a mix of financial and non-financial incentives. Various
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allowances are used in order to compensate for low salaries. In several
countries, pay reforms have attempted to monetize allowances and
benefits such as housing and transport, allowing salary differentials to
increase. The objective of such a pay policy is to be able to pay civil
servants a living wage. Uganda is a case in point. McCourt observes
that “the pay compression ratio between the highest and the lowestpaid staff of 1:6.8 in Uganda changed to 1:100 after non-monetary
allowances and benefits were included” (2006b: 175). Nominal pay
increased about 50 per cent from 1990 to 1994, although from very
low levels, as a result of reducing the number of public employees
(Wescott, 1999: 9, Therkildsen, 2001). In addition, performance and
results-oriented processes have been introduced (Rahman, 2001).
The World Bank (2005), in the report Tajikistan – civil and public
sector service wage note, presents a similar overview of the issues
linked to pay reform in this country, which are also valid for many
other countries. The World Bank puts forward a number of steps that
should be taken in order to improve the situation. Like in Uganda, an
important step is the integration of bonuses and allowances into a new
base pay ration. Other measures include changing the calculation of the
qualification rank payment, introducing a decompression policy and
establishing an incentives fund that may be used to pay supplements to
staff in positions that are in high demand. Some of these measures have
already been introduced through pilot projects.
In Cambodia, a pilot project named the New Deal Experiment
provides an example from the health sector (Hongoro and Normand,
2006: 1319). The concerted initiative was launched in 2000 by the
Ministry of Health, Médecins Sans Frontières and the UN Children’s
Fund in response to the high levels of absenteeism, low levels of
working hours and low quality of public health service in the Sotnikum
district. Salaries were increased in order to make health workers
respect job descriptions and working hours, and avoid unethical
behaviour, such as the payment of informal fees. Bonuses were
distributed when these internal regulations were fully respected. By
“tackling the problem of low official income”, the quality of service
provision improved considerably and family expenditures on health
fell considerably (Hongoro and Normand, 2006: 1319). At the same
time, however, extensive use of bonuses created a serious hospital
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debt crisis. Hongoro and Normand (2006: 1313-1314) gives another
example of incentive packages within the health sector – the so-called
vertical programmes for priority areas (such as malaria, family planning
and STDs). Incentive schemes incorporated into these programmes
have proved particularly successful. Goals were specified, understood
and shared by staff, and linked directly to incentives. In addition,
incentives included better salaries, field and transportation allowances,
streamlined management, better facilities and material resources,
results-oriented management and specialized training. The reasons for
success are linked to the combination of financial and non-financial
incentives, and the additional material and financial resources received
from donors. In addition, their autonomy makes it easier to avoid the
time-consuming bureaucracy, underfunding and lack of capacity in
the public health system. According to the World Bank, pilot projects
constitute effective instruments for reform, especially in countries
where comprehensive reform would most likely fail (2008a: 55).
Mengesha and Common (2007) have assessed the impact of one such
pilot project in Ethiopia, where the public sector has gone through a
number of reforms. General human resources management became a
key area for reform in 1996. The most recent reform phase began in
2001 with the Public Sector Capacity Building Support Program, which
focused on the improvement of service delivery, citizen empowerment
and the promotion of good governance and accountability. One of the
policy’s main objectives is to build a civil service that is ethically sound
and free of corruption, nepotism and favouritism. In order to achieve
this goal, it has been recognized that a change in bureaucratic values
is needed. The authors evaluate the introduction of Business Process
Reengineering (BPR) in two ministries – the Ministry of Education
and the Ministry of Trade and Industry. BPR is a management
approach designed to improve individual performance and targets the
efficiency of various processes within an organization. The initiative
is part of the ‘Performance and Service Delivery Improvement Policy’
implemented in selected ministries. To date, the reform has been fairly
successful and has resulted in substantially improved service delivery,
“in addition to streamlining processes, eliminating duplication of work
and enhancing user satisfaction” (2007: 371). The implementation of
incentive schemes and monitoring systems is not considered part of the
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Incentive structures as a capacity development strategy in public service delivery
reform, but rather conceived of as an auxiliary to the reform process.
Incentives are conceived of as a ‘partnering’ factor that should be
introduced in order to protect the wider reform from backsliding and in
order to maintain the momentum for reform and ‘cascade’ elements of
it to other ministries (2007: 367).
The successful elements of the initiatives presented above
correspond to the findings presented in the theoretical part of this paper.
That is, financial incentives, such as salaries, are important and need to
be dealt with. In addition, non-financial incentives need to accompany
the financial ones and a deeper change in values and attitudes is
needed. For this to occur, reforms and incentives have to target issues
of performance and accountability at the individual, organizational and
institutional levels. The political and socio-economic context must be
taken into account, such as the desire for change, and the groundwork
for reform should be well prepared. In addition, progress needs to be
monitored and its benefits evaluated continually: “Unlike tax reform,
where leaders see obvious benefits, the political leadership cannot easily
identify tangible benefits of CSA (civil service and administrative)
reform” (World Bank, 2008a: 56). Appropriate monitoring systems
therefore need to be established. Ultimately, pilot institutions and
parallel initiatives such as the targeted interventions set up to tackle
particular diseases need to be mainstreamed or reintegrated into the
public sector in order to be recognized as national successes.
Facilitating general reform through incentives
Tanzania is another country in which civil service reform
accompanies wider public sector reform and as such, uses pay reform as
an incentive for accelerating the wider reform process. The Tanzanian
Selected Accelerated Salary Enhancement (SASE) scheme is identified
by a number of authors as the prime example of a relatively successful
pay reform initiative. The SASE scheme attempts to make salaries a
sustainable incentive for public officials in the context of wider public
sector reform (Lopes and Theisohn, 2004: 292). The objective is to
target the public servants closest to and most decisive for the reform
process. Key staff whose contributions have been critical to improved
performance have been severely underpaid in the past, making reform
difficult to implement efficiently (Morgan and Baser, 2007). Reformers
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made the assumption that by enhancing the salaries of key public
servants, the reform process would regain momentum. In addition
to facilitating reform, the financial incentive scheme is a strategy for
phasing out top-ups by gradually improving pay – it is a response to
the pronounced will to avoid the distortionary effects of donor top-ups.
By agreeing to contribute financially to the SASE scheme, donors have
contributed to harmonizing salary levels under the leadership of the
Tanzanian Government (Lopes and Theisohn, 2004: 101). The SASE
scheme is, in other words, a top-up given by the government, with the
aid of donors, to civil servants in charge of reform implementation. Job
descriptions and a performance appraisal system have been introduced
in order to evaluate the recipients of these top-ups and the overall
scheme is evaluated annually. The selection of recipients is transparent
and targets the personnel with the greatest impact on service delivery.
The additional sum they receive corresponds to the difference between
the current pay and the medium-term policy targets, set in 1999, which
aim to gradually increase competitive pay levels. As these pay levels
increase progressively, the SASE top-up will decrease proportionally. In
other countries, agreements are also increasingly being made between
donors and recipient governments regarding top-ups, for example
by putting a ceiling on salaries and the travel or meeting allowances
offered by donors.
The DAC (OECD/DAC, 2006: 27) situates this innovative reform
between the “divisive and uncoordinated” top-up schemes of the past
and the fully-fledged public service pay reform. In other words, it is a
gradual approach to pay reform, which takes into account the practice
of top-ups. Rugumyamheto (2004) characterizes the reform strategy as
particularly promising because it contains various innovations designed
to fit the specific national context. Morgan and Baser (2007) links the
initial success of this reform to the nature of the Tanzanian governance
structure, which appears to rely less on personalization and informal
structures compared to other African countries. Consequently, the
incentive to rely on performance is greater. In addition, the country’s
public organizations clearly make the distinction between its political
and bureaucratic spheres. Appointments to public organizations are
increasingly being made through public notices and competitive
selection. The SASE scheme is thus perceived by many authors as a
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balanced, progressive reform which is well adapted to the Tanzanian
context and reinforced by embedded bureaucratic values, such as
transparency and performance.
74
However, as with most innovations, it has not been a problem-free
process. Despite the initial success of the initiative, problems have
surfaced with regard to civil servants, political opposition and external
donors. The problems are linked generally to the pace of implementation
and the lack of financial resources. Matching incentives to different
categories of staff and avoiding conflict between these categories is a
major challenge, which the SASE scheme has not been able to avoid
(Adams and Hicks, 2000). The legacy of egalitarianism has contributed
to the discontent of non-SASE officers because they perceive the
incentive scheme as unfair. As the ATP participant from Tanzania
explained, the gradual increase in salaries for non-SASE staff, as set in
the medium-term policy targets, is not respected. Salaries do increase,
but only marginally. The country cannot afford to pay living wages to
all civil servants (Morgan and Baser, 2007). At the end of the day, the
ATP participant said, the non-SASE civil servants have the same needs
as those who receive the SASE top-up, but are far from getting the
same resources: “We go to the same market – the differences should be
smaller”. The political opposition has criticized the reform in order to
mark its opposition to the incumbent government, even though some
of the members of the opposition also benefit from the scheme. Donors
are becoming increasingly reluctant to fund the scheme as the money
is not being used as planned (OECD/DAC, 2006: 27). In addition,
performance assessments of civil servants benefitting from the scheme
have proved difficult to realize in practice and the interpretation of
selection criteria varies across ministries. Consequently, “issues of the
capacity to manage the system arise” (Lopes and Theisohn, 2004: 291).
Rugumyamheto argued in 2004 that these obstacles risked making the
SASE nothing more than a short-lived pilot project. Four years later,
however, the SASE scheme is still in place. According to the Tanzanian
President’s Office for public service management (see www.utumishi.
go.tz), progress in the implementation of this strategy took place much
slower than planned: “In July 2006, at the turn of the 2006/07 financial
year, significant increases in pay were realised and pay targets were
almost met. Work on the consolidation of non-incidental allowances into
salaries, which started in the mid-1990s to achieve a more transparent
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Reforms and successes
pay structure, was completed.” Despite this progress, “Tanzania’s
public service pay remains uncompetitive and compressed thereby
hindering the recruitment and retention of qualified and experienced
technical and managerial professionals in the public service” (see
www.utumishi.go.tz).
The last example of pay- and merit-based reform is given by the
UNCDF (2005: 69), which has devoted much attention to the issue of
performance-based funding to local governments. This is considered
a promising innovation that links financial incentives to merit on
the organizational level. In other words, it is an organizational,
merit-based financial incentive. Fiscal transfers are used as financial
incentives in order to improve performance on the local level. Uganda
is again a case in point, although Bangladesh and Mali have introduced
similar schemes. The UNCDF has worked closely with the Ministry
of Local Government in Uganda in order to design grant modalities
with inbuilt performance incentives. In addition, the public is informed
of the conditions to be fulfilled by local governments, the results of
the performance assessments and the grants awarded by the ministry.
The UNDCF observed that “as a result, the public became much more
concerned about local government performance, as it now had a visible
and direct link to service provision (the amount of development funds
the council was allocated)” (2005: 69). This is an innovative example
of how funding schemes may be linked to merit and in turn, become a
useful tool for ensuring the internal and external accountability of public
organizations in a decentralized context. Rugumyamheto confirms that
better supply and stronger demands go hand in hand: “As incentives for
civil servants create a momentum for increased performance, the public’s
expectations are raised, and the external demands for accountability
and efficiency are strengthened” (2004: 444). Consequently, pay- and
merit-based reform may go beyond structural changes and lead to a
re-orientation of attitudes for public servants and the general public in
order to improve performance and service delivery.
Accountability
Accountability-linked incentives are non-financial and in
general target organizations and not individuals. In this sense, they
are distinct from the basic financial, individual incentives. Whereas
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Incentive structures as a capacity development strategy in public service delivery
internal accountability is linked to management issues and constitutes
a top-down approach, external accountability is closely linked to
issues of citizen empowerment and constitutes a bottom-up approach
to capacity development. It has been introduced in some form or
another in several countries, such as India and Bangladesh, or through
citizens’ charters in South Africa and Zimbabwe. In Uganda, local
governments recently signed the Ugandan Charter of Accountability
and Ethical Code of Conduct. This is seen as a mechanism for ensuring
accountability and improved performance, but also for preventing
recentralization. Public complaints mechanisms and user charges are
also much-used tools. In Malawi, an ombudsman has recently been
created. The actual accountability outcomes, however, are uncertain
and under-researched. In developed countries, such as the UK, there
has been limited public awareness of citizens’ charters (Therkildsen,
2001). Therkildsen (2001) does give an example of an interesting
exception, namely the case of Ugandan primary education, “a sector
to which that country’s president pays direct attention”. A few authors
remain sceptical towards this kind of reform, however. Polidano
(2001: 10) argues that internal accountability should be privileged
in view of the fact that many service delivery surveys have had little
impact. Kayizzi-Mugerwa (2003) suggests that such reforms may have
to be internalized to some degree by civil servants themselves in order
to lead to improved performance.
However, external accountability may be both a demand- and
supply-driven process. The public may impose demands of enhanced
performance through the introduction of various accountability
measures. If successful, these small, innovative initiatives then become
streamlined and ‘recognized’ by the state as an incentive for enhanced
performance. As mentioned elsewhere in this literature review,
however, successful capacity development through the strengthening
of ‘voice’ demands a pre-existing minimum level of capacity. In this
context, capacity refers to the organization of civil society, its tools
for mobilization and the necessary resources in order to impose
accountability demands upon public sector organizations through
advocacy or watchdog activities. External accountability measures will
be futile if civil society is not influential enough to push for reform or
hold the civil service accountable. On the other hand, such demands
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also depend on the public sector’s capacity to accommodate them.
The UNDP (Lopes and Theisohn, 2004) presents two examples of
demand-driven processes of external accountability, both initiated by
Indian civil society. Whereas the first takes a more traditional approach
through the use of evaluations and the grading of public services, the
second example involves, in a creative manner, citizens in the oversight
of public expenditure.
The UNDP (n.d) cites public expenditure tracking systems as a
useful tool for strengthening external accountability and the UNCDF
(2005) emphasizes the importance of establishing incentives for
making information available to the public. The example of public
hearings in India, the jan sunwais, answers to both of these elements. It
was started by a small NGO in Rajasthan, whose goal was to improve
citizens’ oversight of public allocations and expenditure on the
local level, for example when it comes to development expenditure.
Through a participative process, where citizens, government and
anyone concerned with the issue in question are invited to participate,
expenditure records are read out, discussed and verified by the public.
Discrepancies are compiled and commented on, and the inhabitants
of the village in question decide what further action should be taken.
In addition to transparency, objectives include the accountability of
officials, the redress of grievances and the legitimization of the process
of public audits (Lopes and Theisohn, 2004: 118). The hearings have
become widespread and have had a real impact: public apologies have
been made and missing funds have been returned. According to the
UNDP, “the findings that have been gathered bolster the belief that
corruption alone drains away a large portion of public expenditure”
(Lopes and Theisohn, 2004: 235). The obstacles encountered are
linked to difficulties in obtaining information and the capacities
needed for research. The release of public documentation has proved
to be difficult and civil servants have been sceptical towards showing
up at the hearings. Nevertheless, what started in a remote village
as an initiative “to challenge local government functionaries on
disbursements of drought relief funds [...] ended up carrying out one
of the most energetic civil society campaigns in recent Indian history”
(Lopes and Theisohn, 2004: 234). The campaign concerned the right to
information, the slogan being ‘the right to know; the right to live’.
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Incentive structures as a capacity development strategy in public service delivery
The second example, also from India, is the use of citizen report
cards in order to improve service delivery and performance (Lopes
and Theisohn, 2004: 233). In Bangalore, government agencies are
graded by lower income groups through user surveys that assess the
performance of public services such as electricity and water supply.
The results are shared with the public organization in question and then
published in the media. The report cards have proved to be efficient
tools of pressure for change, leading to improved performance in the
worst-rated services. A refined methodology based on both quantitative
and qualitative analysis makes the grading credible and reliable.
The initiative is now used widely in Bangalore and the report card
methodology has been adapted for use by major donor agencies and
other developing countries. The process illustrates, once again, the
importance of the wider context and the existing levels of capacity, as
it requires “adequate financing, time and interest on the part of the local
residents, in addition to a conducive socio-political climate” (Lopes and
Theisohn, 2004: 233). In Bangalore, the conditions were favourable,
allowing the initiative to trigger a wider process of civil engagement
and empowerment in the region. The example illustrates the powerful
linkages between accountability, communication and information.
These links are increasingly becoming recognized elsewhere. In
both Nepal and Tanzania, the quality of communication activities
constitutes a criteria used for assessing performance (UNCDF 2005).
The examples also illustrate the need to recognize, value and reinforce
non-financial incentives, such as the incentive to respond to client
needs. For instance, the report cards went from being an instrument of
pressure to becoming an incentive for improved performance, as they
“prompted the agencies themselves to respond positively to calls for
improvement” (Lopes and Theisohn, 2004: 232). The UNDP (2006) is
but one of the many contributors that argues that their impact might be
stronger than financial incentives in some cases and that they constitute
alternative strategies in countries where it is financially difficult to raise
salary levels.
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5.
POLICY SUGGESTIONS
The reasons for the success of the listed examples reflect much of
the policy advice and recommendations proposed by international
agencies and individual authors to both governments and donors. They
provide a pertinent résumé of the main issues related to incentives
and policy advice, elements that have been touched upon, more or
less explicitly, throughout this paper. These policy recommendations
reflect the extensive empirical research on incentives over the last two
decades, initially through cases studies. These have in turn contributed
to more systematic and quantitative research with the aim of drawing
some general lessons and producing a number of theoretical insights.
Within the development community, The World Bank pays particular
attention to the issue and has provided much useful policy advice to
countries involved in civil service reform. UN agencies, such as the
World Health Organization (WHO) and the UNDP, also devote much
attention to the issue (McCourt, 2006b: 163).
Encourage transparency, merit and professionalism
“Establish positive incentives. Motives and incentives need to
be aligned with the objective of capacity development, including
through governance systems that respect fundamental rights.
Public sector employment is one particular area where distortions
throw up major obstacles.” UNDP default principle for capacity
development number 6 (Lopes and Theisohn, 2004: 13).
The key to capacity development in public organizations is
to design incentives in order to attract and retain staff and enhance
their performance. Most authors emphasize the importance of
applying a variety of incentives that aim to create open employment
frameworks, institutionalize the principles of merit and impartiality and
professionalize civil servants. Some of the major incentives, policies
or issues associated with these specific objectives are listed here in a
brief summary:
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Incentive structures as a capacity development strategy in public service delivery
Box 7.
Organizational performance: major objectives and incentives
Transparency and open employment frameworks
Detailed job descriptions matching tasks and skills
Clear organizational mission and vision
Autonomy
Paying attention to equity issues
Opening up positions for competition
Transparent remuneration systems
‘Rightsizing’ the civil service
Focus on measurable targets and objectives in order to monitor progress
Principles of merit and impartiality
Fair competition
Merit-based appointments
Auditing appointment practices
Performance management
Performance-based remuneration
Eliminating perks
Restore salary differentials
Monetising benefits
Professionalism
Improving pay
Moving towards a minimum living wage and competitive remuneration
Professionalizing HRM
Quality leadership
Career development opportunities
Training and skills improvement
Anti-patronage rules and depoliticization of the civil service
Client focus
Capacity for human resources management should be fostered
within all government agencies and units in order to develop an enabling
environment and incentives capable of retaining high quality staff.
The provision of career development opportunities constitutes a key
incentive in this context. Good leadership is crucial for the successful
implementation of reform. Human capacity development should not
only focus on developing knowledge and skills, but also on developing
the values and attitudes of civil servants (Global Forum on Re-inventing
Government, 2005). In addition to encouraging transparency, merit
and professionalism, three general issues have recently been devoted
specific attention by various agencies and authors:
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Policy suggestions
Foster capacity through HRM
“Reform must [...] be based on a recognition that people are at
the heart of public service. As a result, managing human resources
must be at the centre of any CSR [civil service reform] effort – not
technology or market forces” Ul Haque, 2006: 29.
The need to develop capacity for and professionalize human
resources management is emphasized by most authors. According to
Saasa, “the administrative culture needs to be changed into a purpose-led
managerial culture where the achievement of results becomes the
dominant ethic” (2007: 20). UNDESA (2005) recommends that issues
related to HRM be privileged by establishing performance management
to accompany merit-based reform and foster quality leadership.
The rationale for institutionalizing HRM is linked to the need for
profound change on the organizational level, if individual attitudes
and organizational culture are to change and become conducive for
performance. HRM can be conceived as a concrete tool for managing
incentives and policies that contribute to improved individual and
organizational performance, and as an instrument for establishing
a favourable organizational culture and changing the attitudes and
values of civil servants. This corresponds to one of the UNDP’s (2006)
guiding principles, namely embedding change messages in social
and organizational culture, which is often a decisive determinant of
the direction and pace of change. Hongoro and Normand argue in a
similar vein that “incentive or payment packages should attempt to link
payment with individual or group performance and should be assisted
by supportive organizational and system changes if the desired provider
behaviour is to be achieved” (2006: 1320).
Change needs to be managed. The question of leadership is
therefore important, in terms of leadership within a public organization
and political commitment to public sector reform processes. In other
words, good leadership is crucial for the successful implementation
of reform and for its sustainability. One of the ATP participants listed
human resources, political commitment, institutional capacity and
financial resources as the key factors for creating an efficient civil
service. Capacity for human resources management may be fostered
within public organizations and help develop a supportive environment
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Incentive structures as a capacity development strategy in public service delivery
for incentives. HR functions capable of privileging the question of
incentives need to be fostered and encouraged. McCourt argues in a
similar vein that
... there are arguments for a more strategic approach, in which
pay and employment reform form part of a package of HRM
reforms – which would include such elements as more professional
recruitment and the introduction of performance management – all
in the context of the strategic management of the public service
(2006b: 186).
The author suggests a two-step normative approach to introducing
HRM, with the first stage focusing on integrity and a method of
bureaucratic rule-following and the second focusing on performance
through strategic human resources management. In other words,
integrity should be addressed before performance. This corresponds to
UNDP’s observation that “performance pay is likely to be resisted and
should be a low priority to start off with” (n.d: 12). Therefore, a culture
of rule-following has to be established before addressing the quality of
staff management.
Assess external ‘pull’ and ‘push’ factors for reform
“Integrate external inputs into national priorities, processes and
systems: External inputs need to correspond to real demand and be
flexible enough to respond to national needs and agendas.”
UNDP default principle for capacity development number 7
(Lopes and Theisohn, 2004: 13)
Reforming the civil service and introducing strategic management
of the public service implies assessing and adapting to external ‘pull’
and ‘push’ factors. These factors may be assessed by using frameworks
similar to the ones presented in Chapter 2. According to Grindle and
Hilderbrand (1995), capacity development efforts should be designed
on the basis of a comprehensive assessment of ‘pull’ factors and of
the variables contributing to sustaining them on the individual,
organizational, institutional and systemic level.
One important ‘push’ factor is linked to the challenge of retaining
domestic human capital in general, and civil servants in particular.
Reforming civil services is therefore an imperative and reform efforts
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Policy suggestions
need to be intensified (Berg, 1993). Incentives should be compared to
and inspired by financial and non-financial incentives on the global
labour market. Ul Haque argues that “pay-scales must be attractive
enough to compete for quality” (1999: 481). McLeod advises
governments to rethink what constitutes ‘fairness’ in salary setting,
implying that fairness is linked to salaries matching the wider labour
market (2005: 10). Globalization and migration have made it necessary
to take this factor into account (Lopes and Theisohn, 2004: 92). Also,
incentives that reverse the brain drain effect may be designed. When it
comes to non-financial incentives, the UNDP recommends upgrading
the quality and status of public services to counter any brain drain,
arguing that “when higher professional standards are attained, qualified
staff will be prepared to work for the public services even though salary
levels are lower than in industrialized countries” (Lopes and Theisohn,
2004: 124). This was supported by two of the ATP participants, who
considered the upgrading of the status of working in the public sector
as key to enhancing performance. This may be done by “giving them
something to lose” – that is, enhancing the worth of being a civil
servant. A third ATP participant, from Cambodia, explained that this is
the case in his country. Working for the state is considered prestigious
despite the poor salary levels. People are proud to be civil servants,
“even if their pockets are empty”.
An important ‘pull’ factor for successful civil service reform is
commitment and support, not only from leaders but also key public
officials, the civil service as a whole, the wider public and other
stakeholders. To maintain the momentum for reform, producing ‘good
results’ is necessary in order to provide incentive for continued support
(UNDP, n.d: 23). This depends on sustained leadership and ownership
and the coordinated support of donor agencies in order to avoid
fragmented development efforts, aid dependency and distortionary
top-ups. The UNDP advises governments to
remember that donor support, (including UNDP’s), despite its good
intentions, can have a perverse effect on the political economy
by generating greater resistance to change in all areas of public
management. Donor pressure to reform can free governments from
the need to consult with and obtain policy support from their own
citizens. In addition, donors tend to favour comprehensive reform
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Incentive structures as a capacity development strategy in public service delivery
programmes even where more limited, incremental approaches are
advisable (UNDP, n.d: 23).
The UNDP (2006) proposes that distortionary incentives should
be eliminated by aligning aid around national pay reform. Berg (1993)
suggested that these issues need to be discussed in more detail among
donors in order to create awareness and devise solutions. Fifteen years
later, this issue remains an important one.
Carefully consider the scope and pace of reform
“Don’t rush. Capacity development is a long-term process. It
eludes delivery pressures, quick fixes and the search for short-term
results.” UNDP default principle for capacity development
number 1 (Lopes and Theisohn, 2004: 13).
The process of change should be realistic and set according to
well-defined targets that are easy to manage (UNDP, n.d: 23). The
World Bank (2008a: 75) argues that a better framework for civil
service reform needs to be elaborated, including a set of indicators
that can measure progress. Models should be adapted to the particular
socio-economic context. When it comes to the African continent, many
countries share similar experiences, challenges and objectives, such as
institutional reform, economic growth and poverty reduction. These
similarities underscore the importance of region-specific research and
policy-making. Hongoro and Normand argue that “governments should
adapt and not imitate compensation and incentive structures, given the
evidence that effective incentive structures depend on local conditions
and traditions as well as on universal principles” (2006: 1320). Most
authors recommend a comprehensive approach to reform, “in which
several parallel initiatives are undertaken at different points in the
state system” (Saasa, 2007: 6). Huber and McCarty (2004) argue that
successful bureaucratic reform depends on successful reform in other
areas. However, according to McCourt, there is a trade-off to be made
between a “comprehensive, but complex, approach to reform on one
hand and a crude, but practicable approach on the other” (2006b: 187).
When it comes to involving stakeholders, Schneider and Heredia
(2003) suggest in a similar vein that reformers must find the balance
between a top-down and a bottom-up reform process, which allows for
some consultation. Wescott (1999: 2), on the other hand, argues that
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Policy suggestions
some reform components, such as the setting of global targets, need
to be introduced in an authoritative manner, while other components
could be designed and introduced through consultation. Saasa clearly
disagrees with this view, emphasizing that “lasting changes in
administrative reform can only be achieved through a participative
approach that harnesses the knowledge and commitment of a wide
variety of interested parties through a dialectical process” (2007: 20).
Incentives for civil servants are an important instrument for
capacity development. By linking incentives and personal motivation
to specific organizational objectives, public organizations can move
from a vicious circle of capacity erosion to a virtuous cycle of
economic growth and bureaucratic efficiency. However, it is only by
paying attention to all of the issues listed above and moving from the
micro to the macro level, that such a change can take place. Incentives
must aim to encourage transparency, merit and professionalism. These
may be introduced though a strategic HRM approach that also aspires
to create a supportive organizational environment that reinforces the
applied incentives. Incentives and civil service reform can be made
more effective by paying attention to the influence of various ‘push’ and
‘pull’ factors, and the scope and pace of reform. Finally, and perhaps
most importantly, the civil service and the administrative dimensions
of public sector reform need to be devoted more attention. One of the
main findings of the World Bank’s Independent Evaluation Group on
public sector reform (2008a) shows that performance usually improves
for public financial management, tax administration and transparency,
but not for the civil service. Making the civil service an instrument for
and not an obstacle to capacity development is therefore imperative.
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6.
THE IMPACT OF INCENTIVES WITHIN THE
CIVIL SERVICE ON CAPACITY DEVELOPMENT
IN EDUCATION
A methodological note
As indicated by the title, the bibliography focuses exclusively
on public administration or the civil service, excluding the school
level. Ideally, the unit of analysis would be the ministry of education.
However, literature on incentives within specific ministries has
proved difficult to find. Other sectors have therefore been included
in order to enrich the bibliography. The relatively general nature and
use of incentives allow this type of literature to provide insights that
remain valid for public administration as a whole and across sectors.
The bibliography contains, for example, several references related
specifically to the health sector. This is an area in which the work on
incentives is relatively recent, yet vast. Despite a few sector-specific
issues, many of the challenges related to incentives are the same as
in the education sector, such as providing efficient service delivery in
rural areas and issues related to HIV and AIDS.
All of the contributions or references have been read with a
clear focus on incentives in mind, which is reflected in the annotated
bibliography. In the more general literature on the public sector, the
annotations highlight the issues related explicitly to incentives and civil
service reform, without ignoring the important links between these and
the wider process of public sector reform.
Key issues identified in the literature
The literature devoted to incentives within the public service, and
especially within developing countries’ civil services, tend to focus
on similar issues. However, the level and scope of analysis applied
are often diverse and are not always made explicit. Descriptive case
studies of the process and evolution of civil service reform, pay reform
and incentive structures constitute an important strand of the literature.
These have in turn contributed to more systematic and quantitative
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Incentive structures as a capacity development strategy in public service delivery
research with the aim of drawing some general lessons and producing a
number of theoretical insights. This literature emerged in the aftermath
of the widespread introduction of new public management (NPM)
tools in the 1980s and 1990s, a trend often associated with structural
adjustment programmes. This theoretical body of knowledge focuses to
a large extent on general public sector reform in developing countries,
in which civil service reform and incentives play an important role.
The more recent literature related to incentives is found within the
discipline of human resources management (HRM) and, much like
NPM, encourages the public sector to apply and adapt to private sector
management models. The literature gives much attention to these
issues and how they may be handled on the African continent. This
attention is mainly due to the urgent need for institutional reform,
economic growth and poverty reduction in this region, and the fact that
many African countries share similar experiences and face the same
challenges concerning civil service reform.
As mentioned, much of the literature is relatively homogenous
and some key issues can be identified. These correspond more or
less to the various levels and scope of analysis used throughout the
literature, making the various approaches to the issue of incentives
more explicit. These issues overlap to some extent, but they are distinct
in the sense that they approach incentives in different ways. The first
issue approaches the notion of incentives as a given unit of analysis
(“what are incentives?”) and situates incentives within the context of
public sector reform and the ultimate goal of capacity development.
The second focuses on the past failure of incentives and tries to give
a diagnosis (“when and why do incentives not give the intended
results?”). The third issue attempts to identify some commonly-used
tools and good practices (“when and why do incentives work?”),
going beyond individual and financial incentives in order to include
previously underestimated, indirect and non-financial incentives, such
as external accountability (strengthening ‘voice’) and organizational
culture and learning (internalization of the organization’s goals).
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The impact of incentives within the civil service on capacity development in education
The notion of incentives
–
Conceptualizing the role and place of incentives in developing
countries, and in the context of public sector reform and capacity
development
In most of the literature, the ultimate objective of incentives in
developing countries is linked, more or less explicitly, to capacity
development. The importance of incentives is explained by its place in
a commonly used argument about how development can be promoted
and sustained. This argument underscores the correlation between
effective public institutions, poverty reduction and economic growth.
Effective institutions are due to the effective use of individual skills,
which occurs when individuals align their proper goals with that
of the organization. Using incentives that create competition and
accountability (such as merit-based pay and advancement, evaluations
and a transparent work environment) is a way of aligning individual
and organizational interests. In other words, incentives are a tool used
to trigger a motivational reaction – that is, a change in human behaviour.
There is thus a causal relationship between incentives and improved
performance. In relation to capacity development, one can conceive
of incentives as an intervening variable between acquired skills and
knowledge and actual performance (that is, the application of acquired
skills and knowledge).
The World Health Report 2000 defined incentives as “all the
rewards and punishments that providers face as a consequence of the
organizations in which they work, the institutions under which they
operate and the specific interventions they provide” (Adams and
Hicks, 2000). Another definition identifies an incentive as “a particular
form of payment intended to produce a change in behaviour”. The
notion of incentives is often used interchangeably with the notion of
motivation, although the former is the cause and the latter the effect.
Motivation is linked conceptually to capacity and is commonly
defined as “the ability of people, institutions and societies to perform
functions, solve problems and set and achieve objectives” (UNDP,
2006: 5). Theoretically, incentives are often situated at the nexus of
development theory and human resources management theory. The
notion of incentives is multi-disciplinary and draws on additional
academic disciplines such as sociology and economics.
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Diagnosis: the causes and effects of negative incentives and failed
civil service reform
–
The general failure of past civil service reforms linked to policy
strategy (implementation) and content (lack of understanding
about how incentives work)
In the context of public sector reform, incentives play a central role
in the three major types of reform: civil service reform (the management
of human resources), accountability reform (enhance transparency,
oversight and control) and managerial reform (contracting-out,
decentralization and results-based management). Accountability and
managerial reforms have become widespread, although it is uncertain
to what extent incentives such as citizens’ charters or increased
autonomy as a result of decentralization actually contribute to improved
performance.
Civil service reform has generally been considered the most difficult
to implement and institutionalize, because of the limited financial
resources available and the lack of political commitment. ‘Rightsizing’
the public sector through the reduction of the size of the civil service
has proved to be politically difficult to achieve. The lack of political
commitment refers to a different type of incentive: politicians’ lack of
incentive to introduce incentives for the civil service. The reticence
towards reform may also be linked to existing practices of patronage
and bureaucratic politicization. Huber and McCarty (2004) illustrate
that there is strong incentive for politicians to politicize the bureaucracy
when bureaucratic capacity is low and that when bureaucrats become
politicized, the incentive to reform bureaucracy is low.
As a result, public servants’ salaries have remained low, the
criteria for recruiting or promotion unjust and the compression of wage
levels has remained unchanged. In short, the incentive necessary in
order to create a professional, neutral and effective civil service has not
been in place. Problems of patronage and corruption are widespread
in many countries and represent important obstacles for public reform
in general. In this respect, it is interesting to note that some authors do
not consider civil service reform as an integral part of public sector
reform. They conceive of civil service reform rather as an instrument
preceding public sector reform, since no reform can be implemented
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The impact of incentives within the civil service on capacity development in education
without the efficient management of human resources already in place.
Most authors do not make this distinction, although the question of the
sequencing of reform is discussed widely and they tend to prioritize
civil service reform.
The majority of authors underscore the importance of context
and capacity assessment when designing and implementing incentive
packages and civil service reform. They warn against the blind
application of models without taking into account the political context
and history of a particular country and its public administration. The
decompression of salary levels and performance-related pay, for
example, has proved particularly difficult to implement in countries
where previous communist regimes have fostered strong egalitarian
norms. This is true for many African countries and Eastern Europe. The
importance of ownership of the reform process is also emphasized.
Ul Haque is one of the authors who goes beyond the strategy
and looks at the very content of civil service reform and the theory on
incentives. According to these authors, there is a lack of knowledge
about the theory on incentives in organizations (Ul Haque, 2006: 3).
In other words, incentives constitute an under-researched area. By
drawing on organization and management theory, it may be possible
to shed some light on what Ul Haque refers to as ‘the missing link’ and
McLeod as ‘the missing sector in sectoral studies’.
Human resources management: incentive schemes as tools for
capacity development
–
Linking incentives to performance and introducing non-financial
incentives, such as strengthening ‘voice’ and demand, and
promoting organizational culture, decentralization and training
The main types of incentives are linked to merit – that is,
recognizing, rewarding and appraising performance. In the civil
service, the introduction of merit-based incentives is often an important
part of broader reform efforts. Within the public sector, incentives
are therefore closely linked to the pursuit of merit and the desire for
reform. Traditionally, this has been reflected in the focus on individual
and financial incentives to face the challenge of low salaries. However,
incentives are also linked to measures aimed at creating competition
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Incentive structures as a capacity development strategy in public service delivery
and accountability, both internally and externally, in order to enhance
efficiency and transparency. Externally, the public service has to be
able to compete with the private sector for skilled human resources and
should be accountable to the public. Internally, civil servants should
participate in fair competition for merit-based pay and be accountable
to its hierarchy.
The SASE scheme in Tanzania (OECD/DAC, 2006: 27) is a good
example of a recent civil service reform. It is often referred to in the
literature for two reasons. Firstly, it is an innovative reform, situated
between the ‘divisive and uncoordinated’ top-up schemes of the past
and fully-fledged public service pay reform. Secondly, as with most
innovations, it has not been a problem-free process. It is therefore
interesting to assess its advantages and disadvantages. The objective
of the SASE scheme was to target the public servants closest to and
most influential in the reform process. The assumption was that by
enhancing the salaries of key public servants, the reform process would
regain momentum. According to the SASE, general pay reform would
be introduced progressively. Some of the problems encountered were
linked to the discontent of non-SASE officers, as well as political
opposition both internally and from external donors.
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Tools such as performance-related pay, non-monetary benefits
and top-ups are also discussed widely in much of the literature. PRP is
a useful tool but transparency, trust and clear promotion mechanisms
should already be in place prior to its introduction. If not, PRP can have
an effect contrary to its intentions. Top-ups are used widely by donor
agencies in order to attract skilled staff to their projects. However,
they often contribute to public sector capacity erosion and brain
drain. The sequencing, content and techniques of the implementation
of performance management systems, pay reform and efficiency
as the basis for promotion are other issues that are addressed and
analysed. Incentives aimed at strengthening external accountability
– that is, accountability to citizens – are often used in parallel to
internal accountability mechanisms such as evaluation, control and
regulation. User evaluations, citizens’ charters and ombudsmen are
efficient tools for strengthening ‘voice’ and correspond to the NPM
approach in which citizens are regarded as customers, as well as to
the responsive governance approach, according to which citizens
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The impact of incentives within the civil service on capacity development in education
should be empowered participants in public activities. Such ‘voice’
mechanisms may translate into a societal motivation for enhanced
public performance by providing incentives to respect the rules and
strive for efficient service delivery.
The literature also evokes organizational incentives, defined by
the UNDP as “the reason for staff to join an organization, and the
way an organization rewards and punishes its staff” (UNDP, 2006: 8).
Grindle and Hilderbrand (1997) link these incentives to organizational
culture. As mentioned, individual incentives temporarily align an
employee’s interest with that of the organization. Incentives constitute
a psychological contract between the individual and the organization.
According to Grindle and Hilderbrand (1997), organizational
incentives inherent in some organizational cultures (such as Grindle and
Hilderbrand’s emphasis on mission/mystique) go beyond alignment and
strive to make individuals internalize the organization’s goals. Better
teamwork and dialogue constitute examples of organizational incentives.
In Singapore, Work Improvement Teams allowed groups of staff to
openly discuss obstacles to quality and to devise practical solutions for
service improvement (Ul Haque, 2006: 26). The organization’s clarity
of mission and objectives may enhance its performance, as may greater
autonomy. In this respect, decentralization is interpreted as necessary
not only for the sake of distributing political power and increasing local
accountability, but also to provide appropriate incentives for economic
efficiency. In addition, training and skills enhancement can provide
important incentives for attracting and retaining skilled professionals
and make the public sector competitive with the private sector.
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ANNOTATED BIBLIOGRAPHY
References are listed in alphabetical order.
Adams, O.; Hicks, V. 2000. Pay and non-pay incentives, performance
and motivation. Prepared for WHO’s Global Health Workforce
Strategy Group, December 2000. Retrieved 16 July 2009 from:
www.who.int/hrh/en/HRDJ_4_3_02.pdf
Although this 25-page article focuses on the health sector, it
addresses important issues related to incentives that can also be of use
in other public sector areas. It outlines a round table discussion prepared
for WHO’s December 2000 Global Health Workforce Strategy Group. It
provides various definitions of the concept of incentives, and a typology
of financial and other types of incentives. The paper also provides a
typology of key payment mechanisms and their expected results. By
linking incentives and personal motivation to specific organizational
objectives, the authors review ways in which incentives can lead to
changes in behaviour (improved performance) and how incentives can
be made more effective. Although the paper recognizes the importance
of organizational and institutional incentives, it remains focused on
the individual level. However, the authors do make the distinction
between internal and external incentives at the organizational level:
while the former refers to autonomy and staff management, the latter
refers to regulation and accountability. Non-financial incentives for
motivation are discussed widely, such as prestige, work environment,
changes in management structure and decentralization. Based on a
comprehensive literature review, some key issues are identified and
discussed. These include matching incentives to different categories
of staff, avoiding conflict between these categories, and matching
incentives to organizations’ strategies and objectives. The authors give
relevant examples of incentive packages for human resources issues
from country case studies. The discussion remains rather theoretical,
but makes reference to relevant examples that are also useful beyond
the health sector.
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Annotated bibliography
Bana, B.; McCourt, W. 2006. “Institutions and governance: public
staff management in Tanzania”. In: Public Administration and
Development, 26, 395-407.
The paper attempts to illustrate how Tanzania’s administrative
institutional framework has affected the way the country’s civil service
is managed. The authors offer a relatively detailed description of postindependence public sector reform efforts, and the remaining legacy of
bureaucratic politicization and egalitarianism. Civil service legislation
and the agencies responsible for hiring public servants are assessed.
They both reflect the single-party era: the President of Tanzania
has considerable direct powers when it comes to appointments and
dismissals, and most civil servants do not consider the appointment
procedures independent. Influencing factors in appointments include
‘who knows who’, social connections, bribery, patronage and tribal
affiliation. The authors encourage the establishment of an independent
bureaucracy capable of fostering civil service capacity and confidence,
and in turn, serving development objectives. The paper does not deal
with incentives per se, but illustrates how to analyse an institutional
framework within its politico-historical context. Despite political
commitment to reform, the formal and informal power configurations
are difficult to change. An autonomous bureaucracy can provide an
incentive for working more efficiently towards development goals.
Berg, E.J. 1993. “Getting the work environment right”. In: Rethinking
technical cooperation – reforms for capacity building in Africa
(pp. 195-242). New York: Regional Bureau for Africa, UNDP and
Development Alternatives.
This chapter considers the issue of incentives that are crucial for
efficient capacity development via technical cooperation. Incentives
are conceived of not only as necessary for the application of skills
and knowledge in a given position, but are equally important for
civil service employees to acquire new skills and actually learn from
technical cooperation projects, such as training. Low salaries and high
turnover in the public sector have proved futile for such projects. The
public sector on the African continent is far from efficient, notably
because of two factors: the deterioration of basic management systems
and inadequacies in salary and structure. As for the latter, the failure of
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donors’ efforts is linked to the following paradox: technical cooperation
aims to improve organizational capacity, but its success depends to
a large extent on the existence of a certain level of organizational
cohesion and stability. The inadequate salary incentives are linked to
governments privileging employment growth over income growth for
public employees, the result being a fall in wages (the fall was in fact
more dramatic for skilled workers than for unskilled ones) and the
growing gap between effort or responsibility and reward.
The author also describes three alternative strategies used by
donors to confront these challenges – that of donor payment of local
salaries, pay and employment reform and general administrative
reform. However, none of these strategies has proved to be particularly
successful. The paper proposes three complementary strategies that
aim to improve the work environment and thus, capacity development:
confront the salary supplements issue by hiring only nationals for
project-related jobs and discuss the issue in more detail among donors,
intensify efforts to reform civil services and downsize the public sector
by accelerating the processes of deregulation and privatization.
Caiden, G.E.; Sundaram, P. 2004. “The specificity of public sector
reform”. In: Public Administration and Development, 24,
373-383.
The article uses the example of recent public sector reform efforts
in India in order to illustrate the complexity of such reform and the
need to redesign, alter and adjust reform models to the local context.
Whereas varying local conditions need a tailored approach, the
challenges in initiating reform are often similar: the erosion of public
capacity, widespread corruption, as well as the need to attract and retain
talent are but a few issues that need to be addressed. Unfortunately,
public sector reform is risky and rarely succeeds. It constitutes a major
investment that takes time, is dependent upon political and public
support and needs periodical monitoring to ensure progress. Most of
today’s reform elements are inspired by the new public management
ideology and toolbox. Tools often used include the reorientation
of state administration towards more competition, a reduction in
administrative fragmentation and the rationalization of manpower.
Performance may be enhanced by improving external accountability
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through improved public access to information, decentralization,
transparent rules for human resources management, and independence
from political interference. Citizens’ charters and surveys of service
delivery are useful strategies for strengthening the responsiveness and
integrity of the civil service. The protection of whistleblowers is a
useful and effective anti-corruption measure. Parallel attention needs to
be devoted to direct incentives aimed at changing civil service attitudes
towards reform. Diversity is another key issue; equal opportunities for
public sector employment may transform the public sector into a more
attractive employer.
Court, J.; Kristen, P.; Weder, B. 1999. Bureaucratic structure and
performance: first Africa survey results. Tokyo: United Nations
University.
The paper presents the results of a survey conducted in 1998 on
incentives and bureaucratic structures in Africa (the African Bureaucratic
Structure Survey). One of the aims of the survey was to renew the
available quantitative data on the subject. Most research in this area has
previously been conducted in the form of case studies, which makes
it difficult to explore systematically the link between bureaucratic
performance and economic growth, and the institutional characteristics
that are conducive to improved bureaucratic performance. Key
issues included in the survey (and the resulting regression analysis)
were appointment and advancement based on meritocracy, salary
scales equivalent to responsibility, adequate wages, career structure,
transparency and accountability. Large differences in structure and
performance were found across the African continent when it came to
bureaucratic corruption, efficiency of service provision and diversity
in the civil service. The African countries were then compared to
other developing countries. The results imply that incentive structures
play similar roles in African countries and elsewhere in that enhanced
performance is linked to organizational autonomy, good career
opportunities and good salaries. The paper confirms empirically
some of the assumptions made by policymakers and human resources
managers in developing countries – that incentives matter.
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OECD/DAC. 2006. The challenge of capacity development: working
toward good practice. Paris: OECD. Available at:
www.oecd.org/dataoecd/4/36/36326495.pdf
This publication details the existing knowledge and previous
lessons drawn about capacity development, and offers valuable
advice for developing countries. The paper is quite general, but does
offer some fitting illustrations that help conceptualize the process of
capacity development. The focus is on capacity development of the
public sector as a whole, though some attention is given to the question
of incentives: poor public service conditions are evoked as a major
reason for government ineffectiveness and the flight of qualified staff
to other countries (p. 17). The paper describes the increasing use by
donor agencies of ‘power analysis’ or ‘institutional analysis’ in order
to be able to foster an enabling environment for capacity development
(p. 21). Such tools can be useful in understanding the incentive
structures (often informal ones) that exist in and regulate a given sector.
It is only by fully understanding the functioning of such structures that
institutional and organizational change can take place. On the individual
level, negative or perverse incentives within the public sector have led
to capacity erosion. Yet these negative incentives are also created from
the outside – by recruiting local personnel (and offering higher salaries),
donors and NGOs often contribute to the skilled professional deficit in
the public sector. One solution is to harmonize salary levels under the
leadership of the government. Tanzania and its Selected Accelerated
Salary Enhancement scheme (SASE) is a case in point (p. 27). The
document evokes the idea behind it, its progressive implementation and
the problems encountered, in terms of employees, political opposition
and external donors. Finally, establishing positive incentives is listed
as a default principle for capacity development.
Economic Commission for Africa (ECA). 2003. Public sector
management reforms in Africa: lessons learned. Addis Ababa,
Ethiopia: ECA Development Policy Management Division.
The paper explores the specificity of the African political
and economic context in relation to public sector reform. It traces
the evolution of public sector reform frameworks, from structural
adjustment programmes to good governance and institutions, as key to
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development. The concepts and ideas related to new public management
(NPM) are described and a set of NPM tools is considered in detail with
relevant examples from African countries. Administrative reform, civil
service reform and organizational incentive structures are considered
part of the NPM strand that emphasizes managerial empowerment
and organizational restructuring. The objectives of such reforms are
increased efficiency, performance and accountability. The paper
considers NPM strategies such as performance contracting, public
reporting and citizens’ charters in order to strengthen the demand for
an accountable and effective public administration. Organizational
mechanisms aimed at strengthening the incentives for public service
delivery (and not via empowering the service users – that is, ‘voice’ or
‘choice’) are also considered. Initiatives such as training (to improve
skills and change attitudes), performance management and pay reform
are promising organizational capacity development efforts. Such
efforts might counter challenges such as the constraints of multiple
accountability and declining public service ethics. Finally, the paper
offers concrete recommendations concerning how NPM tools and
themes can be useful and applied successfully in the African context.
Enhancing ethics and accountability, and measuring and monitoring
public service efficiency, are among the emphasized themes.
Global Forum on Re-inventing Government (GFRG). 2005. Capacity
development workshop: building the human capital in the public
sector. Paper presented at a GFRG workshop on building human
capital in the public sector, in Mexico, 5-6 November 2003.
100
The paper outlines the findings of the workshop on building human
capital in the public sector. The workshop looked at global trends in the
strategic management of human capital, leadership development and
capacity building of staff. The same factors leading to a brain drain are
used to explain the lowering of prestige and employment in the public
sector. The objectives of civil service reform are linked to considerations
of efficiency, responsiveness and accountability. Employment
frameworks need to become more open, ensuring impartiality, merit
principles and professionalism. However, developing countries need to
be cautious when adopting civil service reform models from countries
that are more advanced economically. Instead, they should adapt such
models to the particular socio-economic context. Capacity for human
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resources management should be fostered within all government
agencies and units in order to develop an enabling environment and
incentives capable of retaining high quality staff. The provision of
career development opportunities constitutes a key incentive in this
context. Good leadership is crucial for the successful implementation
of reform. Human capacity development should focus not only on
developing knowledge and skills, but also on developing the values
and attitudes of civil servants.
Grindle, M.S.; Hilderbrand, M.E. 1995. “Building sustainable capacity
in the public sector: what can be done?” In: Public Administration
and Development, 15, 441-463.
The article builds on a study conducted in six developing
countries in order to assess a framework elaborated for identifying
capacity gaps and designing fitting interventions to fill these gaps. The
focus of the study is on public sector organizations. The framework
attempts to identify factors that constrain or facilitate the ability of
these organizations to perform their development tasks effectively,
efficiently and in a sustainable manner. The study goes beyond the
traditional focus on the organizational level – assessing training
activities, and institutional rules and structures. In fact, the analytical
framework has five levels: the action environment, the institutional
context of the public sector, the task network, organizations and
human resources. Constraining or facilitating factors are identified
on each level in relation to a number of organizations. By assessing
capacity gaps at multiple, interacting levels, the authors demonstrate
that the traditional focal points need to be called into question. In
many organizations, the political, economic and social context will
continue to hinder organizational effectiveness despite attempts at
organizational strengthening. The action environment (such as a low
level of human resources development and social conflict) is a critical
dimension for capacity development. Organizational culture (see the
following article) seems to matter more for enhanced performance than
administrative structure, financial incentives and control mechanisms:
standards of good performance, leadership, recognition and a sense of
mission can explain commitment to organizational goals independent
of salary levels. Open recruitment procedures are clearly correlated to
employee performance. Training focused on skills and technology is
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at times less motivating than being able to use skills in a meaningful
manner and a feeling of being able to contribute to the organization.
These findings indicate than capacity development efforts should be
designed on the basis of a comprehensive assessment of capacity gaps,
and of factors contributing to sustaining them.
Grindle, M.S.; Hilderbrand, M.E. 1997. “Divergent cultures? When
public organizations perform well in developing countries”. In:
World Development, 25(4), 481-495.
The study looks at the factors contributing to organizational
performance in developing countries. Previous research and reforms
aimed at enhancing public sector performance have tended to focus on
macro-institutional initiatives such as improving civil service salaries
and reducing the size of the public sector. In response to the general
failure of these initiatives, the authors suggest that organizational
culture may constitute the ‘missing ingredient’ in explaining why some
organizations perform better than others, despite the similar political,
economic and social context of developing countries. Organizational
culture is defined as “a shared set of norms and behavioural expectations
characterizing a corporate identity”. The concept has been applied
widely to the private sector in developed countries, but not in the
analysis of public organizations in developing countries, the autonomy
of which is limited and the context less than favourable. Based on a
wider study on public sector capacity, the authors identify a number of
‘good’ and ‘poor’ performers and assess varying explanatory variables.
Whereas the types of tasks, salary levels and client demands find little or
no support for organizational performance, key variables are a sense of
organizational mission, management style, performance expectations
and autonomy. The organizational mission helps employees internalize
the organization’s goals. Performance expectations are linked to the
capacity to manage incentives for good performance. Autonomy is
a facilitating factor in the development of an organizational culture.
These variables, taken together, form an implicit contract between
leaders and employees that works to stimulate a positive output. The
variables are interdependent and, taken together, are interpreted as
representative of the wider concept of organizational culture.
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Grindle, M.S.; Hilderbrand, M.E. 2006. “Modernising town hall:
capacity building with a political twist”. In: Public Administration
and Development, 26, 55-69.
The paper assesses the importance of politics for successful capacity
building in a decentralized context. Based on a study of municipal
governments in Mexico, the authors argue that contrary to expectations
and assumptions about the political neutrality of capacity-building
efforts, political circumstances – that is, politicians’ incentives – are
decisive for the successful implementation of capacity-building
initiatives. The first part of the paper takes a closer look at the general
content of such initiatives, such as reorganizing town hall, altering
the profile of those appointed to public office, providing training and
technical upgrading, and introducing performance standards. The
training was typically oriented towards effective service delivery,
team building and morale boosting. New systems for measuring
performance were also introduced. In the second part of the paper, the
author explores the political motivations for initiating, implementing
or withdrawing such capacity-building reform. Democratization gave
more opportunities for the alternation of political elites and for politicians
with ‘good governance’ concerns to enter the local arena. When in
office, reforms were introduced rapidly in consideration of the relevant
electoral calendars. Finally, reforms were facilitated or constrained by
the political rules of the game and the available room for manoeuvre.
Reform such as civil service incentives thus ultimately depends upon
politicians’ incentives to commit to them. Capacity-building activities
become instruments of the leadership, which may facilitate their
immediate implementation, but their institutionalization over the long
term is endangered by changes in the political leadership.
Hongoro, C.; Normand, C. 2006. “Health workers: building and
motivating the workforce”. In D.T. Jamison, J.G. Breman, et al.,
Disease control priorities in developing countries. Washington,
DC: The World Bank Group and New York: Oxford University
Press. Retrieved 16 July 2009 from:
www.ncbi.nlm.nih.gov/books/bv.fcgi?rid=dcp2.chapter.10283
The chapter emphasizes the importance of sound human resources
policy in order to achieve wider policy goals. Brain drain, the lack of
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human resources in rural areas and competition from the private sector
are core challenges within the health sector in developing countries.
The lack of technical skills, low motivation and poor support networks
are additional problems. The authors focus on how the health sector
can build and improve human resources capacity, and draw on relevant
examples from various African countries. They link explicitly the use of
incentives to motivation in order for health workers to accept and stay
in posts, and to choose to train and increase their skills. Health workers
value financial and non-financial incentives. The paper illustrates the
complexity of health HR problems at different levels and the difficulty
of matching these various issues to concrete incentives. While most HR
approaches tend to focus on the individual level, individual performance
is linked closely to the wider context, at the organizational and systemic
levels. The availability of resources, organizational autonomy, level
of bureaucracy and policy context are relevant examples. Using these
three levels of analysis, the paper considers the importance of policies,
management and incentives. It illustrates how incentive packages,
using a combination of different types of incentives, have been used
successfully in so-called ‘vertical programmes’ for priority diseases.
It provides a useful typology of incentives at the different levels and
illustrates the importance of understanding the socio-economic context,
culture, history and norms when designing incentives. Decentralization,
for example, may constitute an incentive by creating more autonomy.
However, unless the proper investment in new management skills
and capacities is made, career structure, job security and transparent
management may be endangered. The authors also present a summary
of the structure, objectives and results of incentive packages used
in selected countries. Empirical evidence of payment methods and
group incentives are presented, as well as the influence of system
capacities and sustainability issues (such as inadequate funding, lack
of technology, political commitment and thriving private sectors) on
incentives. Cambodia’s New Deal Experiment launched in 2000 is
presented in detail. Finally, the authors provide some general advice
for governments and propose possible research areas.
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Huber, J.D.; McCarty, N. 2004. “Bureaucratic capacity, delegation, and
political reform”. In: The American Political Sciences Review,
98(3), 481-494.
The authors present and analyse a model of delegation and
policymaking in countries where bureaucratic capacity is low. Via this
model, a number of propositions are deduced which go against much
of the conventional wisdom about delegation in developed countries
with ideal-type ‘Weberian’ bureaucracies. The model exemplifies the
importance of conducting research aimed specifically at bureaucracies
in developing countries to understand and enhance the reform processes
aimed at development and economic growth. According to the model
applied, low bureaucratic capacity creates a vicious circle: low
bureaucratic capacity provides few incentives for civil servants to do
their work efficiently or for politicians to undertake reform. The authors
make the distinction between information (knowledge) and capacity
(applying knowledge), and consider the latter as key to development.
They find that there are strong incentives for politicians to politicize
the bureaucracy when bureaucratic capacity is low, and that when
bureaucrats become politicized, incentive to reform bureaucracy is low.
These findings suggest that reform strategies should be comprehensive:
reforming courts to enhance enforcement, reforming bureaucracies
to enhance capacity, and reforming legislatures or executives to
enhance technical expertise are interdependent strategies. Successful
bureaucratic reform depends on successful reform in other areas.
Kamoche, K. 1997. “Competence-creation in the African public
sector”. In: International Journal of Public Sector Management,
10(4), 268 - 278.
Efforts aiming to reform the public sector and enhance
performance should focus on improving human resources management
within public organizations. It is only when the importance of a wellfunctioning human resources function is recognized, and a coherent
and comprehensive strategy to attract, select and retain skilled
professionals is elaborated, that enhanced public performance will
occur. HRM is thus central to the question of skills development and
the management of expertise. Ultimately, HRM may provide solutions
to structural and institutional challenges to reform by identifying
the organization’s core strategic objectives and determining the
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human resources competencies required. HR functions or institutions
capable of privileging the question of incentives need to be fostered
and encouraged. The author raises doubt about the use of training as
a means to improve individual performance, but recognizes that it is
often used as an incentive within the public sector. Kamoche introduces
the notion of competence management when referring to the process of
cultivating a requisite stock of knowledge within an organization that
draws on and reinforces the organization’s core strategic activities. By
using competence management, managers will become more sensitive
to introducing incentives into appraisal and rewarding policies in order
to enhance the capacity of attracting and retaining employees, and
ultimately, enhancing productivity.
Kayizzi-Mugerwa, S. (Ed.) 2003. “Incentive structures and performance
in the public service”. In: Reforming Africa’s institutions:
ownership, incentives, and capabilities. Tokyo: UN University
Press.
The volume explores the public sector’s capacity to internalize
reform in order to achieve economic growth and poverty reduction
– that is, development. Part two of the volume recognizes that African
bureaucracies are simultaneously part of the problem and the solution,
and focuses particularly on the role of civil service pay reform and
incentives. The five case studies (French-speaking West Africa,
Malawi, Kenya, Nigeria and Mozambique) offer rich descriptions
and pertinent analyses of the earlier reform attempts in this area,
their contents and impact, as well as contemporary challenges and
progress. They illustrate and underscore the common challenges these
countries have to face. In general, reforms were triggered by economic
and political crises. The reforms have evolved over time, and the
distinction between first and second generation reforms is useful. First
generation reform aims at decreasing the size of the public sector and
increasing the salaries of the remaining civil servants. Whereas the
former was partially achieved through the removal of ghost workers,
the latter has been financially impossible for many countries. Second
generation reform is linked to the introduction of management and
accountability systems. These are difficult to implement due to the
limited success of first generation reform. In general, incentives and
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structures remain inadequate. Other obstacles are also considered, with
finances and politics cited as the most important ones. In Nigeria, the
issue of corruption is discussed widely. Lack of accountability is a
major problem in Malawi. The observation that some reforms, such
as those based on accountability, cannot be imposed, is commented
on. Such reform may have to be internalized to some degree by civil
servants in order to lead to improved performance. Important steps are
being taken to deal with this situation in Malawi, such as the creation
of an ombudsman. The key to an efficient and accountable civil service
rests on three main interventions: competitive remuneration, an altered
(decompressed) salary structure and performance-based promotion.
Kiragu, K.; Mukandala, R. 2003. Tactics, sequencing and politics
of public service pay reform in developing and middle
income countries: lessons from sub-Saharan Africa. Nairobi:
Pricewaterhousecoopers and Dar es Salaam: University of Dar es
Salaam. Retrieved 8 April 2008 from:
www1.worldbank.org/publicsector/civilservice/Mayseminar/
PayReformStudy.pdf
The study was commissioned by DFID and the World Bank Africa
Region Public Service Reform and Capacity Building Unit. It analyses
pay reform strategies since 1990 in eight African countries – Benin,
Botswana, Burkina Faso, Ghana, Senegal, Tanzania, Uganda and
Zambia. The first chapter provides a useful introduction to the politically
sensitive issue of public sector pay reform in developing countries. The
argument is made that adequate levels of pay are crucial to sustaining the
motivation, performance and integrity of public servants. In a similar
manner, low pay demotivates and stimulates corruption. However, lack
of resources, competing policy objectives and the political rules of
the game often prove to be important obstacles for implementing pay
reform. Chapter 2 gives an overview of comparative pay trends (wage
levels and pay structures), while Chapter 3 considers the techniques,
tactics and sequencing of pay reform in detail. The demonstrated
instability of pay levels across the countries included in this study is
linked to the multiple tools and techniques available to governments.
In many cases, contradictory approaches to pay reform are applied,
making the task all the more difficult. In order to map the various tools,
the authors were able to identify 11 main approaches or techniques.
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Job evaluation, salary re-grading, market benchmarking (one relevant
example of this is Tanzania’s SASE scheme) and performance-based
salary adjustments are among the tools discussed in this respect. In
addition, two models of pay reform are presented – a political and a
rational one. Chapter 4 considers the role of politics in pay reform and
Chapter 5 presents a general framework of a politically responsive
strategy to pay reform, which includes moving from the previously
mentioned political pay reform model to a rational one. The remaining
chapters (6-12) are detailed case studies of various approaches to and
processes of pay reform in Benin, Botswana, Burkina Faso, Ghana,
Tanzania, Uganda and Zambia. The study is comprehensive, detailed
and relevant. The theoretical arguments are supported by rich empirical
evidence and give considerable insight into the use and role of financial
incentives, and the numerous opportunities and challenges inherent to
pay reform.
Lopes, C.; Theisohn, T. 2003. “From perverse to positive incentives”
(Chapter 3) and “ Re-examining the layers of capacity
development” (Chapter 4). In : Ownership, leadership and
transformation: can we do better for capacity development?
London: Earthscan Publications.
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The first part of this volume discusses a number of issues related to
capacity development. Chapter 3 deals with both negative and positive
incentives. It discusses how incentives can lead to development, the role
of incentives within the public service, and the problems of corruption
and brain drain. One of the UNDP’s fundamental principles for capacity
development is to make incentives and motivation converge in order
to create capacity development. Chapter 4 goes beyond incentives
to discuss issues related to developing human resources, institution
building and the participation of civil society. Attitudes, established
interests and power configurations constitute important obstacles to
reform that incentives may help change and evolve. Incentive schemes
that are favourable to development need to be established and those
that are counterproductive need to be abolished. Ultimately, successful
incentive schemes reflect a society respectful of human rights and the
rule of law. In the absence of such incentive schemes and in order to
protect their proper capacity development efforts, donor countries do
not hesitate to offer top-ups to local employees. However, this type
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of compensation contributes greatly to the public sector brain drain
and is counter-productive to capacity development in the long run.
Harmonized incentive schemes are now becoming the norm in order to
deal with this problem.
The authors also discuss other issues linked to incentives and the
presence and influence of donor agencies in developing countries. The
second part of the volume presents a large number of case studies (56),
and these particular experiences offer some relevant lessons concerning
capacity development. The case studies dealing with incentives and
accountability include the following: in India (p. 232), user evaluations
and the grading of public services have substantially improved service
delivery and performance. Also in India, public hearings have been
introduced as an instrument against corruption (p. 234). The Philippines
have introduced an accenture strategy in order to attract and retain local
competences (p. 267), and to encourage civil society to monitor public
expenditure (p. 270). Tanzania has experimented with ways to make
salaries sustainable incentives for public officials (p. 292).
Mamman, A.; Rees, C.J. 2007. Towards the understanding of
development policy failures through the eyes of management and
organizational theories: research agenda. Manchester: University
of Manchester. (Institute for Development Policy working paper).
Retrieved 10 April 2008 from:
www.sed.manchester.ac.uk/idpm/research/publications/wp/mid/
documents/mid_wp18.pdf
The paper addresses issues of policy implementation by drawing
on organizational and management theories in order to explain why
sound policies do not always deliver desirable outcomes. The focus
is on the capacity of organizations in charge of poverty reduction.
According to the authors, one of the reasons is that the institutional level
has been privileged at the expense of poverty reduction interventions at
the organizational level. However, human and organizational capacities
are also crucial in order to achieve poverty reduction. Successful
poverty reduction initiatives depend on the commitment of key
officials, staff salaries and an organizational culture built on openness
and innovation. Research in this area has been neglected for a long
time, with the exception of the private sector, where the links between
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management practices, organizational characteristics and outcomes
have been studied meticulously. This body of knowledge can also be
applied to the public sector and provides relevant insight into successful
capacity development. In order to guide future research, the authors
present a number of relevant research questions, including: what are
the influences on the willingness of organizations and individuals to
deploy their capacities to pursue poverty reduction objectives?
Mathauer, I.; Imhoff, I. 2006. “Health worker motivation in Africa: the
role of non-financial incentives and human resource management
tools”. In: Human Resources for Health, 4(24). Retrieved 16 July
2009 from:
www.human-resources-health.com/content/pdf/1478-4491-4-24.
pdf
110
The study assesses the role of non-financial incentives for
motivation in the health sector in Benin and Kenya. Several studies
have illustrated the limited impact of financial incentives in the health
sector; more money does not automatically lead to higher motivation.
The motivation of health workers in developing countries is generally
low, and evidence suggests that both financial and non-financial
incentives should be used in order to enhance motivation. Non-financial
incentives are those that involve no direct transfers of monetary
values or equivalents. Motivation is defined as “the willingness to
exert and maintain an effort towards organizational goals”. It is a
result of interacting variables on multiple levels, such as individual
self-efficacy, goals, values and motives; organizational determinants
such as the work environment and organizational culture; and cultural
norms and values. Motivation itself is distinguished by two ‘qualities’:
‘will do’ and ‘can do’. The study finds that the ‘will do’ dimension
(vocation and professional conscience) is stronger in explaining
health workers’ motivation and affects the ‘can do’ dimension. The
study is based on interviews and a quantitative analysis. The results
show that health workers are strongly guided by their conscience and
professional ethos, and that a lack of resources and supplies becomes
a negative incentive for motivation. This should be corrected by
introducing adequate human resources management (HRM) tools that
acknowledge health workers’ professionalism and enable them to meet
their personal and organizational goals. Good leadership, supportive
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management, recognition, career development, unpaid holidays, equal
opportunities for training, active staff participation in decision-making,
and team-based performance promotion are examples of such tools.
More attention needs to be devoted to the impact of incentives on
staff motivation, especially non-financial ones, in order to assess
systematically in what ways they affect performance levels.
McCourt, W. 2001. Public appointments: from patronage to merit
(Working Paper 9). Manchester: Institute for Development Policy
and Management, University of Manchester.
The paper explores the implications of moneyless corruption
– ‘patronage’ – and how it can be replaced in a sustainable manner
by its more desirable counterpart, merit. The challenge is relevant for
many developing countries and is of theoretical interest because it
lies at the intersection of the development debate and good practice in
human resources management. According to the author, strengthening
appointment on merit is a neglected, yet efficient way of improving
public effectiveness. Merit matters because it is linked directly to
bureaucratic capacity, anti-corruption, individual performance and
accountability. McCourt also draws on various theoretical perspectives
on patronage. The political science perspective emphasizes institution
building and strengthening voice mechanisms, while organizational
psychology has produced much knowledge about how appointments
based on merit can be implemented. Anti-patronage rules, a clear
definition of merit, auditing appointment practices and detailed job
descriptions matching tasks and skills, are a few steps that may be
taken in order to encourage the use of merit. In developing countries
where a culture of merit has not been nurtured (“culture is performing
some of the functions of structure”), institutional arrangements may
particularly need to be strengthened. Nepal and its public service
commission is a case in point.
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McCourt, W. 2006a. The human factor in governance: findings and
prospects for development (Paper 16). Manchester: Institute for
Development Policy and Management, University of Manchester.
Retrieved 13 April 2008 from:
www.sed.manchester.ac.uk/idpm/research/publications/wp/mid/
documents/mid_wp16.pdf
The paper is a synthesis of the findings of the seven case studies
(Mauritius, Tanzania, Morocco, Swaziland, Sri Lanka, Malaysia and
Namibia) presented in the volume The human factor in governance:
managing public employees in Africa and Asia (2006) by the same
author. McCourt presents the characteristics of HRM in the countries
analysed. Strategic HRM in the form of mission statements was,
for example, used in all of the countries studied, yet the day-to-day
management continued as before. Other issues related to the strategic
framework, strategic integration, line manager ownership and the
institutional framework, as well as downsizing and employment
reform, are also discussed in relation to the case studies. Three
alternative approaches to employee selection are identified. Common
for the three approaches is the emphasis on increasing transparency,
with inadequate attention given to quality concerns. In other words,
the institutional dimension has been privileged at the expense of the
professional dimension. The paper goes on to describe the relative
success of performance management in the listed countries. Mauritius,
Malaysia and Namibia have introduced performance-related pay
schemes and have ended up duplicating many of the errors made by
the countries serving as their models (in particular, the UK and New
Zealand). McCourt uses all of these findings to construct a two-step
normative model of human resources management. The first step
focuses on integrity and a method of bureaucratic rule-following, while
the second focuses on performance through strategic human resources
management. The first step focuses on legislation and downsizing,
while step two implies aligning staffing with organizational objectives
and introducing performance management. The model has implications
for the sequencing of reform – for example, that integrity should
be addressed before performance. In other words, a culture of rulefollowing has to be established before addressing the quality of staff
management. However, the author emphasizes the importance of
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context and the need for ‘thick’ descriptions of political, economic,
social and historical variables. Talking about staff management only
in management terms is not sufficient, since there is no such thing as
politics-free public management. And vice versa: politics alone cannot
successfully implement reform. A comprehensive approach must take
into account the interaction between the micro level (HRM), the meso
levels (policy and strategy), the macro level (institutions) and the meta
level (politics).
McCourt, W. 2006b. “Employment and pay reform in developing and
transition societies”. In: Y. Bangara, G.A. Larbi (Wds.), Public
sector reform in developing countries. New York: UNRISD,
Palgrave Macmillan.
The chapter’s focus is on individual financial incentives in the
wider context of fiscal reform. McCourt describes the various pay
problems encountered by many developing countries, as well as the
so-called transition societies. These consist principally of inadequate
pay on all levels, opaque remuneration systems, unclear links between
pay and responsibilities, unclear links between pay and performance,
and insufficient pay to retain employees with scarce skills. The author
provides several examples from the countries concerned and proposes a
number of solutions to the listed pay problems. These are, respectively,
across-the-board pay rises, the consolidation of remuneration, job
evaluation (which gives a more justifiable basis for pay differentials),
performance-related pay, and pay compression and pay differentials.
McCourt goes through each of these separately and discusses what
progress has been made and what challenges still remain in the area of
employment and pay reform.
McCourt, W. 2006c. The human factor in governance: managing public
employees in Africa and Asia. London: Palgrave Publications.
This book explores the ways in which governments manage
public employees in developing countries and how this in turn has
an impact on the success of national development and governance
strategies. Drawing on governance, development and HRM literature,
it presents seven in-depth case studies from developing countries in
Africa and Asia (Mauritius, Tanzania, Morocco, Swaziland, Sri Lanka,
Malaysia and Namibia). Finally, it proposes the way forward for
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human resources management in developing countries in the context
of government reform strategies.
McLeod, R.H. 2005. Private sector lessons for public sector reform
in Indonesia. Canberra: Australian National University. Retrieved
4 April 2008 from:
http://rspas.anu.edu.au/economics/publish/papers/wp2006/wpecon-2006-02.pdf
McLeod considers civil service reform crucial to improving
Indonesia’s economic performance. The goal of such reform should
be to create an environment of open and fair competition within
public organizations. The development literature’s focus on ‘growth
accounting’ does not ensure bureaucratic efficiency; sound policies are
not automatically implemented in a sound manner. The problem lies
not with the lack of skills, but the lack of strong incentive to use these
skills optimally. Current public organizations are characterized by a
rigid organizational culture, little matching of skills and qualifications
to the tasks to be carried out, no competition from the outside, and the
imposition of seniority requirements. In short, the rules of the game are
weak and the playing field is far from level.
The solution lies in thinking about what makes organizations
effective and drawing on successful examples from outside the public
sector. Progress through emulation is one such strategy. Numerous
examples from sports and the private sector illustrate the importance of
competition in enhancing performance. Competition should therefore
be more strongly emphasized in public human resources management
strategies. Fair competition is basically about transparency. This can
be done by opening up the competition for positions, setting clear rules
governing that competition and making provision for the enforcement
of those rules. In addition, one may establish detailed job descriptions,
offer salaries similar to those in the private sector, and offer career
and promotion prospects. In order for such a change to occur, a leader
capable of creating competition in a traditionally competition-free
environment is crucial.
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Mengesha, G.H.; Common, R. 2007. “Public sector capacity reform
in Ethiopia: a tale of success in two ministries?” In: Public
Administration and Development, 27, 367-380.
The article assesses the impact of public sector reform in two
ministries in Ethiopia – the Ministry of Education and the Ministry
of Trade and Industry. The putting in place of incentive schemes and
monitoring systems is not considered part of this reform, but rather as
an auxiliary to the reform process. They constitute a ‘partnering’ factor
that may protect the reform from backsliding. The author describes
the evolution of the Ethiopian civil service from a ‘bureaucratic
dictatorship’ to the institutional reform in the 1990s. Human resources
management became a key area for reform in the Civil Service Reform
Program (CSRP) introduced in 1996. The most recent reform phase
began in 2001 with the Public Sector Capacity Building Support
Program, which is focused on the improvement of service delivery,
citizen empowerment and the promotion of good governance and
accountability. The CSRP was reformulated in 2003 in order to
cohere with the other reform programmes. One of the CSRP’s main
objectives is to build a civil service that is ethically sound and free of
corruption, nepotism and favouritism. In order to achieve this goal, a
change in bureaucratic values is needed. The two ministries assessed
in this study may prove to be useful examples for future change, as
the reform has been fairly successful and has resulted in substantially
improved service delivery. Decisive factors are political commitment,
well prepared groundwork and the implementation of an appropriate
monitoring system. The issues of incentives and performance appraisal
are not discussed in detail, although they are considered crucial in terms
of sustainability and in order to enhance the momentum of reform.
Mengistu, B.; Vogel, E. 2006. “Bureaucratic neutrality among
competing bureaucratic values in an ethnic federalism: the case
of Ethiopia”. In: Public Administration Review, 66(2), 205-216.
Using the case of Ethiopia as a point of departure, the authors
explore the challenge of preserving bureaucratic neutrality when the
government is structured on the basis of ethnicity. Kaufman’s theory
of competing bureaucratic values is applied to neutral competence
and considerations of representation and executive leadership. The
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authors’ argument makes the assumption that public sector reform
must be accompanied by changes in civil service systems in order to
accommodate this reform. When this does not occur, the civil service
becomes a key obstacle for capacity development. The success of civil
service reform is debatable; one important lesson in this regard concerns
the influence of bureaucratic values that were in place prior to reform.
The main question posed by the authors has important implications for
the role and functioning of incentives – that is, should civil servants
be selected on the basis of competence or ethnic representation?
The latter could be converted into a patrimonial instrument for
political power, which has been the case in Ethiopia. Another factor
to consider is whether the perceived legitimacy of a government is
strong enough to conjure sufficient capacity and will for reforming the
civil service. Civil service reform is difficult to implement. The paper
offers valuable insight into the additional challenges encountered by
developing countries in post-conflict situations, especially in countries
like Ethiopia, where the issue of ethnicity has consequences for the
design of incentives for civil servants.
Mentz, J.C.N. 1997. Personal and institutional factors in capacity
building and institutional development. Maastricht: European
Centre for Development Policy Management.
The central focus of this paper is an analysis of the concepts
of capacity and capacity building and their role in public service
management. The civil service plays a central role not only in economic
development, but also in the development process as a whole. How
does capacity building fit into the process of civil service reform?
Capacity building (or capacity development) does not take place in a
vacuum but in a specific economic, social and political context. It is
therefore necessary to paint in broad brush strokes some of the salient
features of public service management in Africa and some of the
problems it has encountered in recent decades. Capacity and capacity
building have received considerable attention in the current public
management literature and a review of the contributions by some of
the more important authors in this field will be done. An alternative
framework based on personal and non-personal dimensions of capacity
is then presented.
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Morgan, P.; Baser, H. 2007. Building the capacity for managing public
service reform: the Tanzanian Experience (ECDPM Discussion
Paper 570). Maastricht: European Centre for Development Policy
Management.
This recent case study prepared for the project Capacity, change
and performance describes and analyses how Tanzania managed to
build its capacity in order to go through a comprehensive process of
public sector reform. In fact, this process has been relatively successful
compared to other African countries. The theoretical framework
emphasizes the interaction between the core variables of performance,
capabilities and endogenous change. The variables also interact with the
external context and interventions, relevant stakeholders, and internal
features and resources. In relation to incentives, it is the impact of the
latter on capacity development that is of interest. Incentives are evoked
as one important tool in order to build capacity and create bureaucratic
acceptance of reform.
The paper gives a detailed introduction to the history of the
Tanzanian public sector and the wider context of change. The general
success of the reform process is linked to the nature of the Tanzanian
governance structure, which appears to rely less on personalization
and informal structures compared with most other African countries.
Consequently, the incentive to rely on performance rather than
clientelism is greater. In addition, the country’s public organizations
clearly make the distinction between its political and bureaucratic
spheres. Appointments to public organizations are increasingly being
made through public notice and competitive selection. According to
the authors, the reform process gave staff a sense of meaning, which
proved to be more important in fostering motivation and responsibility
than financial incentives. This is interesting because it goes against
the conventional wisdom of financial incentives as key to increased
capacity and performance. However, important challenges remain: the
country cannot afford to pay a living wage to many public officials.
As a result, corruption is a widespread problem. Given the country’s
socialist background, a difficult issue for the government has been that
of pay reform and the awarding of bonuses to key staff. Pay levels
remain compressed and many of the key staff, whose contributions are
critical to improved performance, remain severely underpaid.
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The case study is useful because it addresses both the structural
and social aspects of the context and the process of public sector
reform. The authors privilege the role of internal stakeholders such
as politicians and senior government officials, and address important
issues linked to incentives throughout the paper, albeit as one of several
tools for managing reform.
Mukherjee, R.; Manning, N. 2000. Rewards and incentives. Washington,
DC: The World Bank Group. Retrieved 10 April 2008 from:
www1.worldbank.org/publicsector/civilservice/agency.htm
The brief outlines some key issues for consideration in relation
to civil service pay and incentives for performance. The determination
and structure of civil service pay is described, and distinctions are
made between monetary, in-kind (for example, health insurance) and
intangible incentives. Incentives are further divided into base rewards,
allowances and future expectations, such as pensions. A number of
examples are used to illustrate the relative proportions of the different
types of incentives. In Jordan, for example, allowances amount to
70 per cent or more of the basic salary. The brief goes on to discuss a
number of issues, such as the problem of wage compression; in general,
civil service pay is too ‘compressed’ to provide incentives for career
advancement within the civil service. Linking a civil servant’s pay to
individual performance is an effective tool for improving performance,
but is uncommon in developing countries.
Mukherjee, R.; Manning, N . 2002. Salary top-ups. Paper prepared for
the World Bank’s Governance and Public Sector Reform team.
Retrieved 16 July 2009 from:
http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/
EXTPUBLICSECTORANDGOVERNANCE/EXTADM
INISTRATIVEANDCIVILSERVICEREFORM/0,,conte
ntMDK:20134070~menuPK:1919795~pagePK:210058~
piPK:210062~theSitePK:286367,00.html
This short brief gives an introduction to the practice of salary
top-ups and how they distort incentives and can potentially contribute
to a public sector brain drain. The paper draws on various examples
to illustrate the problem. Three types of top-ups are identified:
position-based, task-based and donor-funded allowances. The first two
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compensate to some extent for the compression of wage levels existing
in many developing countries. The third kind, although officially
frowned upon, is given in order to attract the best staff available to
development projects managed by donors. The practice distorts the
local labour market and further erodes public sector capacity. Increased
transparency and regulation regarding top-ups may improve the
situation.
OECD Observer. 2005. Paying for performance: policies for government
employees (Policy Brief, May). Paris: OECD Observer. Retrieved
16 July 2009 from:
www.oecd.org/dataoecd/13/51/34910926.pdf
This short brief explores the concept of PRP (performance-related
pay), the idea behind it and the widespread yet varying nature of PRP
implementation in OECD countries. PRP has become a major tool for
modernizing the civil service in OECD countries over the past few
years. The idea behind it is that PRP will have a motivating effect on
individuals, allow the public sector to compete with the private sector
for human resources and contain salary costs by reducing the automatic
progression of pay levels. PRP can be given as merit increments or as
bonuses. Over the past few years, the latter has increasingly been used
at the expense of the former.
The brief evokes the difficulties often encountered as well as
the potential benefits of replacing the traditional civil service system
with performance-related pay. When it is applied properly in the right
managerial context, it can indeed be a useful tool for motivating staff.
However, PRP has often proved to be less efficient than expected. Job
content and career development remain more important incentives
for most public employees. This is also linked to the difficulties in
measuring and assessing performance. PRP can have effects contrary
to its intentions if transparency, trust and clear promotion mechanisms
are not already in place. However, the introduction of PRP may have
derived effects leading to organizational and managerial change. Thus,
PRP may be considered not only an individual-level incentive, but can
also function as an organizational incentive, introducing a goal-setting
approach that might enhance the efficiency of the organization as a
whole. Although the brief looks primarily at OECD countries, the
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general lessons that are drawn in the conclusion are of universal
character. The economic difficulties, budgetary constraints and private
sector competition that led OECD countries to seek civil service reform
in the first place are today important concerns shared by many nonOECD countries.
Olowu, B. 1999. “Redesigning African civil service reforms”. In: The
Journal of Modern African Studies, 37(1), 1-23.
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The author asserts that the failure of past civil service reforms
(CSR) is linked to their content and strategy, and not to their poor
implementation, as previously assumed by numerous scholars. These
failed strategies have been much too focused on technical issues of
reducing the size and cost of the civil service, with less attention being
given to developing institutional capacity. An effective civil service is a
necessary condition for an effective state and economic growth in that
it plays an important role in society and the economy as an institution
of employment, governance and policy-making. However, due to faulty
diagnosis and prognosis, civil service capacity has eroded. According
to Olowu, African civil services were not as overstaffed as previously
assumed. In some cases, such as in professional and managerial areas,
they were even severely understaffed. The inability to attract and retain
high quality professionals has been, and still is, the major problem in
African civil services. Past CSR strategies (in the 1990s) focusing on
organizational restructuring, personnel management (retrenchment and
pay reform, leading to wage erosion and compression), and budgetary
and financial reforms have proved to be costly and counterproductive.
There has been a decline in compensation for professional skills, the
merit system has broken down, accountability systems are weak,
and bureaucracies have a tendency of becoming politicized and
centralized. In addition, CSR has been introduced without consulting
key stakeholders, with an extensive focus on short-term results
(because of donor demands), and disconnected from other types of
political or economic reform. Donors are now realizing that a different
set of strategies should be employed. Capacity building (training of
human resources) is but one of the many recent reform elements that
put the issue of good human resources management at the centre of
civil service reform. Such reform should include the restoration
of meritocracy (focusing on the high-skilled levels), improving
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accountability and competitiveness, decentralization, the mobilization
of additional resources, and improving the information base of African
civil services.
Polidano, C. 2001. Why civil service reforms fail (Public Policy and
Management Working Paper No. 16), Manchester: Institute
for Development Policy and Management, University of
Manchester.
The paper focuses on the design and implementation of civil
service reform in order to explain why such reform has a record of
being relatively unsuccessful. According to the author, this is not due
to the actual content of reform proposals, but rather to the difficulty
of getting past the implementation stage. The author thus underscores
the importance of tactical issues when analysing failed reform. Three
main issues are considered: the scope of reform, the role of aid donors
and the leadership of reform. For each issue, the author presents the
principal authors on the subjects and their points of view. The author
also considers the issues of institutional pressures and incentives,
which can lead to reform failing. Concerning the scope of reform, low
administrative capacity, for example, is not only linked to structure,
but to social norms and institutionalized behavioural patterns. In
addition to simply changing incentive schemes, a comprehensive
institutional reform may be necessary in countries with a high degree
of patrimonialism. On the other hand, incentives and performance
measures are so complex that it may be more advisable to introduce
changes as small-scale experiments. Lack of ownership due to an
excessive donor influence and a lack of leadership are other potential
obstacles for reform.
Rahman, A.T.R. 2001. Reforming the civil service for government
performance: a partnership perspective. Dhaka, Bangladesh:
University Press Limited.
Rahman makes the distinction between administrative, civil
service and governance reform. Each chapter addresses these three
types of reform with empirical illustrations from different countries.
The issues of retrenchment, the political neutrality of civil servants,
performance measures and training are discussed. Malaysia, Argentina,
Poland and Uganda are a few of the countries analysed. In Uganda, for
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example, indigenous performance and results-oriented processes have
been introduced to create specific goals for government agencies.
Rugumyamheto, J.A. 2004. “Innovative approaches to reforming
public services in Tanzania”. In: Public Administration and
Development, 24, 437-446.
The author gives a detailed description of Tanzania’s public
reform efforts and the different phases within this long-term process.
The civil service reform phase from 1991 to 1999 managed to
introduce and fully integrate a human resources management and
payroll system, contained growth of the civil service and enhanced
salary levels. However, the reform process as a whole was only partly
successful and the reformulated Public Service Reform Programme
was adopted. Improving the staff incentives framework under severe
budgetary constraints is one of the key issues in the programme. It
goes beyond structural changes and emphasizes the need for a cultural
re-orientation of public servants and the general public in order to
improve performance and service delivery. Stronger demands and
better supply go hand in hand: as incentives for civil servants create
a momentum for increased performance, the public’s expectations are
raised and the external demands for accountability and efficiency are
strengthened.
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According to the author, Tanzania’s reform strategy is particularly
promising because it contains various innovations designed to fit the
specific national context. Pay reform is one example of a politically
sensitive issue that has been handled in an innovative manner through
the SASE (Selected Accelerated Salary Enhancement). The SASE has
replaced previous top-ups that were offered to key civil servants in an
inconsistent manner with little transparency. SASE is a top-up given
to civil servants in charge of reform implementation. It is equal to the
difference between current pay and the medium-term policy targets,
which aim to gradually increase competitive pay levels. As current
pay gradually increases in order to meet this goal, the SASE sum will
gradually decrease. A performance appraisal system has been introduced
in order to evaluate the recipients of these top-ups. However, there are
important political obstacles to the mainstreaming and full integration
of this initiative: limited resources and the legacy of egalitarianism
may contribute to making the SASE a short-lived pilot project. In a
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concluding remark, the author emphasized the importance of political
leadership and commitment for successful reform.
Saasa, O.S. 2007. Enhancing institutional and human capacity for
improved public sector performance. Background paper prepared
for the 7th Africa Governance Forum, Building the Capable State
in Africa, in Ouagadougou, Burkina Faso, 24-26 October.
The first part of this paper attempts to define the meaning, scope
and main elements of capacity building at the institutional and human
resources level. Capacity development is in this context understood
as improving organizational effectiveness, and includes governance,
management capacity, human resources, financial resources and service
delivery. The issue of human resources capacity development is crucial
in order to improve institutional capacity. A large public sector with
low salaries and few skilled professionals has led to capacity erosion,
which has been aggravated further by excessive centralization, ethical
irresponsibility and even corruption.
The second part of the paper presents the main challenges
to effective capacity development at the described levels. Three
interventions are central; they correspond to and aim for improved
performance in public bureaucracy, the process of change in the context
of globalization, and efficient service delivery through decentralization.
Concerning the first type of intervention, instruments for incentives and
rewards for civil servants through proactive personnel management and
strong leadership development are crucial. One important challenge is
the gradual erosion of the concept of merit within the civil service. The
achievement of results should become the dominant ethic of the public
sector.
The last part of the paper presents some capacity development
initiatives and recommends a number of actions related to leadership
challenges, good governance and overall public sector reform.
Schneider, B.R.; Heredia, B. (Eds). 2003. Reinventing Leviathan: the
politics of administrative reform in developing countries. Miami:
North-South Center Press, University of Miami.
The volume addresses the issue of state reform in emerging
economies. A number of scholars and policymakers have contributed
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to the volume. The reform processes in six countries (Argentina,
Brazil, Chile, Hungary, Mexico and Thailand) are described and
assessed. A comprehensive analytical framework for analysing public
sector reform processes is elaborated. The volume presents the initial
efforts of ‘rightsizing’ the state, but focuses on the so-called ‘second
generation’ administration reforms aiming for capacity development.
Three conceptually distinct (yet often overlapping in real life) models
of reform are presented: civil service (Weberian) reform, managerial
reform and accountability reform. The authors identify the determining
factors for successful reform, such as the relationship between the
political and the bureaucratic sphere. If this relationship is close, the
incentive for reform will generally be low, as is the case in Mexico and
Thailand. Another deciding factor is the commitment of the bureaucracy,
which often proves difficult to foster. Reformers must therefore find
the balance between a top-down (an insulated political process) and a
bottom-up reform process, which allows for some consultation. Once
initiated, the challenges of implementing and sustaining reform must
be met. Civil serve reform is the model which seems the most difficult
to implement, because moving towards merit-based appointments and
incentives for performance deprives the elite of important instruments
of power and influence over human resources management.
Sida. 2006. Power analysis – experiences and challenges (Concept
Note, June). Stockholm: Sida. Retrieved 16 July 2009 from:
www.sida.se/English/About-us/Sidas-Publications/
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This paper is a result of Sida’s participation in the OECD/
DAC Task Team on Power and Drivers of Change, and is a useful
introduction to the concept of power analysis. The paper presents
a framework for analysing interests and power configurations in
developing countries, namely power analysis. Power analysis may,
for example, reveal why resources and authority are not transferred to
lower levels of government in spite of decentralization reforms. Power
analysis may also be useful in identifying windows of opportunity for
change and potential change agents. A power analysis and similar types
of analytical assessments are much used by donor agencies in order to
achieve a better understanding of the political and institutional factors
that shape development outcomes. More specifically, a power analysis
can contribute to stimulating thinking about what can be done in order
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to reach policy goals in terms of formal and informal power relations,
structures and the actors or incentives involved. Key issues deal with
articulation and voice – that is, the capacity of civil society to impose
demands upon the state, and responsiveness, or public mechanisms
capable of acting upon these demands. This involves an analysis of
the institutions and structures that shape capacity and the incentives
for actors within the public sector. Finally, institutionalized and
sustainable accountability mechanisms should be a key characteristic
of the interaction between states and civil society. The paper presents a
number of lessons learned when conducting a power analysis, in terms
of process, method and content.
Therkildsen, O. 2001. Efficiency, accountability and implementation:
public sector reform in east and southern Africa (Programme
Paper (Democracy, Governance, and Human Rights) No. 3.
Geneva: UNRISD. Retrieved 16 July 2009 from:
www.unrisd.org/80256B3C005BCCF9/httpNetITFramePDF?R
eadForm&parentunid=37B5E941053B5E8B80256B5E004B59
07&parentdoctype=paper&netitpath=80256B3C005BCCF9/(h
ttpAuxPages)/37B5E941053B5E8B80256B5E004B5907/$file/
therkild.pdf
The study includes examples from Kenya, Malawi, Mozambique,
South Africa, Tanzania, Uganda, Zambia and Zimbabwe. The author
looks at the characteristics, the (mixed) results of civil service reform
in these countries, and their implications for the issues of efficiency,
accountability and implementation. Stronger incentives for performance,
performance-based management and empowering users constitute
important tools in this respect. According to the author, however, there
is generally less emphasis on incentives aimed at accountability than
on those aimed at efficiency. The paper presents competing theoretical
approaches for understanding the erosion of public sector capacity and
how it should be dealt with, followed by a presentation of the World
Bank’s position on the matter. The often-used NPM-inspired measures
are described, and the notion of accountability and the difficulties of
ensuring it are discussed widely. Efficiency measures are generally
linked to a reduction in and refocusing of public sector activities.
Finally, going beyond the content of reform, the author focuses on
issues related to the actual implementation process of reform.
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In the second part of the paper, the author presents and analyses
the case studies (the listed countries) according to the issues already
elaborated theoretically. The paper thus gives a detailed empirical
description and theoretical analysis of key issues linked to public
sector reform. In relation to incentives, the discussions on pay
reform and accountability are particularly relevant. Uganda is a
case in point. The author describes how real wage levels have been
increased substantially (although from very low levels) by reducing
the number of public employees. The pay policy aims to pay living
wages to civil servants and to monetize benefits such as housing and
transport. However, concerns about fiscal stability and reduction in
public expenditure are generally privileged over pay reform. When it
comes to accountability, performance-based management (top-down)
and citizen empowerment (bottom-up) are principal approaches. The
former has been introduced in one form or another in most of the
country studies. However, progress seems to be slow, as is the case
with Results Oriented Management (ROM) in Uganda. Empowerment
has been introduced through citizens’ charters in South Africa and
Zimbabwe. Public complaints mechanisms and user charges are also
much-used tools. The actual accountability outcomes, however, are
uncertain and under-researched.
Ul Haque, Nadeem. 1999. “Incentives and human resource management
in the design of public sector reform”. In: The Pakistan
Development Review, 38(4), 471-488.
The author begins the article by criticizing past Western
development approaches. He describes the consequences of the
evolution of these approaches, from the emergence of the omnipotent
developmental state to the reduction and fragmentation of the public
sector, wage freezes and wage cuts. The present ‘governance’ approach
to development is promising because it places the public sector at
the centre of development. Consequently, the place of civil service
reform is changing from a non-issue to a simple budgetary concern, to
becoming a key issue in public sector reform.
Ul Haque makes reference to the principal-agent and asymmetrical
information paradigms, and incentives and organizations theory, and
lists a number of concepts and arguments that illustrate the importance
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of incentives if a public organization is to become both efficient and
accountable. Public organizations are in need of professionalization
and decentralization. A professional meritocracy can help tie the
individual’s interests to that of the organization, as is the case in the
private sector. The author further assesses the poor state of human
resources management in developing countries and discusses widely
the donor-supported technical assistance programmes and expatriate
advisors that try to compensate for the brain drain in developing
countries. More research should be done on the costs and benefits of the
alternative channels of brain drain repatriation and technical assistance
for development.
Finally, the author draws on lessons from incentive schemes in
the private sector to make recommendations related to the reform of
the Pakistan civil service. However, in most developing countries,
policy analysis and formulation is made by international agencies by
default. In his concluding remarks, Ul Haque therefore underscores
the importance of adapting reform policies to the specific contexts in
question and thus, the imperative of retaining domestic human capital.
Ul Haque, Nadeem. 2006. Why civil service reforms do not work.
Islamabad: Pakistan Institute of Development Economics. PIDE
Working Paper 24. Retrieved 4 April 2008 from:
www.pide.org.pk/pdf/Working%20Paper/Working%20Paper-24.
pdf
Ul Haque recalls the evolution of development discourse in
order to situate civil service reform (CSR) within the governance
paradigm. CSR is an important explanatory variable for an economy’s
performance. The author goes on to describe the failure of past CSR
efforts, as supported and evaluated by the World Bank. By using the
available data, the author illustrates how public wages have declined
in developing countries over time and that this decline has been the
most severe in the poorest countries. Wages have been compressed
in the public sector, while the share of the labour force employed
in the public sector has increased slightly. The author describes the
hierarchical structure of public sector organizations and the lack of
incentives present.
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The paper argues that the failure of previous efforts in CSR is linked
to a lack of knowledge about the theory of incentives in organizations.
He draws on the agency analysis literature and describes six useful
findings concerning how, when and why incentives matter: incentive
compatibility, multi-tasking, teamwork, extrinsic incentives, convex
wage structures and common agency. The author applies these insights
to the public sector in developing countries and draws a number of
lessons from this. Given the heterogenic nature of the public sector,
change agents should not necessarily strive for a broad uniform reform
process. Perks should be eliminated because they are not related to
job performance. The public sector should be public service-oriented
(be efficient and worthy of respect) in order to attract talent. Training
and skills improvement should be invested in. Clear missions and
autonomous agencies perform better. Decentralizing allows a maximum
interface between the beneficiaries of public services and their
providers. Professionalism and leadership are two additional ideas that
have not had much of an impact on human resources management in
relation to incentives. Concerning professionalism, one lesson drawn
by the World Bank is that the extensive use of external consultants in
policy-making leaves little room for professionals to take pride in their
work. Leadership is equally important in order to provide the reform
process with drive, vision and knowledge.
Past interest in CSR was linked to budgetary constraints rather
than to incentives. Reform must be people-centred if it is to succeed
and for change to occur, incentives need to be taken into account. This
is especially important in developing countries. The author emphasizes
the importance of going beyond economic theory and draws on
disciplines like sociology and management.
UNCDF. 2005. Delivering the goods: building local government
capacity to achieve the MDGs – a practitioners’ guide. New
York: UNCDF.
This practitioners’ guide offers a very detailed account of
how local governments can develop their capacity in order to reach
the MDGs. The paper includes examples from Uganda, Nepal and
Bangladesh. The guide is particularly useful as it presents a framework
aimed to address the specific capacity challenges encountered on a
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decentralized level, especially in rural and difficult areas, where good
practices are far apart. The first chapter presents the logic of the Local
Development Programme Strategy approach. Chapter 2 looks into
local government funding and financing strategies. It introduces the
notion of performance-based funding to local governments, which
is considered a promising innovation. Fiscal transfers are used as a
financial incentive in order to improve performance and to increase
the demand for capacity-building support. In Uganda, UNCDF has
worked closely with the Ministry of Local Government in order to
design grant modalities with inbuilt performance incentives. The public
was informed of the performance assessments and the grants awarded,
and thus increased the external demand for accountability. Bangladesh
and Mali have introduced similar schemes. The role of performance
incentives has been taken one step further in Uganda, where they have
been applied to achieve gender mainstreaming. Chapter 3 deals with
local public expenditure management in a relatively detailed manner.
Chapter 4 explores issues of accountability, communications and
information. The focus is on external, downward accountability and user
empowerment. The importance of establishing incentives for making
information available to the public is emphasized. In both Nepal and
Tanzania, the quality of communication activities constitutes a criterion
used for assessing performance. It also considers ‘horizontal’ (between
units on the local level) and ‘upward’ (to government) accountability.
In Uganda, local governments have recently signed the Ugandan
Charter of Accountability and Ethical Code of Conduct. This is seen as
a mechanism for ensuring accountability and improved performance,
but also for preventing recentralization. The final chapter, entitled
‘capacity building’, outlines the preceding chapters. A framework
for analysing local government capacity that addresses the numerous
challenges already highlighted is presented.
UNDP. No date. Practice note on public administration reform. New
York: UNDP. Retrieved 16 July 2009 from:
www.undp.org/governance/docs/PARPN_English.pdf
This UNDP practice note takes a closer look at the content of
administrative reform, a core area for UNDP support, and its role in
poverty reduction and in reaching the MDGs. The note gives a detailed
description of what is meant by public administration, and why and how
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it plays a key role in development issues. This is linked to the concrete
action of the UNDP, and some principal issues and areas for support are
presented: civil service reform, improving the policy-making system
and restructuring the machinery of government. A number of lessons
are given, aimed at creating a government workforce of the right size
and skills composition, with the right motivation, professional ethos,
client focus and accountability. These include a clear mission and a
shared vision, training opportunities for all staff at the central and local
levels of administration, establishment control (who is employed by
the public sector, to perform which tasks and how much are they being
paid), merit-based employment, establishing civil service management
arrangement, improving pay and compensation regimes, gender equity
and affirmative action, performance management, and depoliticization
of the civil service. The issue of donor top-ups is given considerable
attention, as this is a widespread phenomenon with distortionary effects.
Examples from Singapore, Slovenia, Vietnam, Cambodia, Belarus and
Azerbaijan illustrate the different issues. The second part of the paper
gives some practical advice when it comes to public administration
programming from the UNDP perspective. Issues related to the
sequencing of reform, fostering leadership, strengthening human rights
capacities in the civil service, and accountability concerns are also
addressed. Public expenditure tracking systems are cited as a useful
tool for strengthening external accountability.
UNDP. 2003. Civil service training in the context of public
administration reform. A comparative study of selected countries
from Central and Eastern Europe, and the former Soviet Union
(1989-2003). New York: UNDP. Retrieved 16 July 2009 from:
http://unpan1.un.org/intradoc/groups/public/documents/UNTC/
UNPAN013648.pdf
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The study reviews approaches to civil service training in support
of administrative reform. Such training is considered key to the
process of public sector change. The case studies include Lithuania,
Latvia, Armenia, Albania, Hungary and Slovenia. The authors argue
that the creation of a new professional ethic cannot be achieved solely
through the passing of civil service laws. Changing people’s attitudes
and behaviour is of paramount importance. This emphasis on human
resources implies an investment in training to enhance the value and
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prestige of civil servants, to improve performance, and to match
improvement in professional integrity and ethical standards with
commensurate rewards. Most countries have taken steps in order to
unify the framework for job pay, grading, promotion and appraisal.
The study makes distinctions between a position-based and a careerbased civil service system, between pre-service and in-service training
systems, and between supplier-funded and buyer-funded arrangements
for state-funded training. The case studies are analysed according
to these variables. In addition, a descriptive account of the broader
administrative reform process is given for each country. The findings
imply that there is not one ‘best’ approach to training, but some
common factors may be identified. These include overall strategic
guidance, regulation and the existence of a national training institution
combined with a network of training suppliers. The overall objective
of a professional career-based civil service and the establishment of
human resources management structures is considered a crucial factor
in shaping civil service training systems and making them effective.
UNDP. 2006a. Incentive systems: incentives, motivation, and
development performance – a UNDP capacity development
resource (Conference Paper No. 8, working draft, November). New
York: Capacity Development Group, Bureau for Development
Policy, UNDP.
This working draft links incentives to motivation and explores
the analytical linkages and implications between the two, as well as
improved public sector performance. Incentives that have a motivational
effect can lead to improved performance, which in turn leads to
capacity development. The UNDP considers motivation an essential
aspect of capacity development, although it is often downplayed in
comparison with the importance of acquiring new knowledge and
capacity at the individual level. The paper therefore tries to identify
how we can qualify something as having a motivational effect – that is,
identify what measures constitute incentives, and how we can conceive
of incentives in relation to capacity development. According to the
authors, motivation is multi-layered and multi-dimensional: they make
the distinction between tangible and intangible incentives, positive
and negative incentives, individual and organizational incentives, and
internal versus external incentives. The nature of incentives varies
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according to their target group and level of analysis. The differences
between incentives for individual, organizational and societal
motivations are explored and relevant examples are given.
The following section explores how incentives can be used in
order to stimulate better performance in the public sector, retain and
attract talent on the global labour market, encourage local service
delivery in remote areas, encourage people to claim their rights, and
align aid for capacity development. Finally, the authors offer three
alternative incentive strategies used to mobilise capacity and promote
development performance: (1) reducing distortionary incentives by
aligning aid around national pay reform, (2) reducing de-motivation
and valuing non-material incentives for public sector performance,
and (3) conditional cash transfers to strengthen demand. Non-material
incentives need to be recognized, valued and reinforced. Their impact
might be stronger than financial incentives in some cases and they
constitute alternative strategies in countries where it is financially
difficult to raise salary levels. Strategies such as private-public
partnerships or aligning aid between government and donor agencies
may also provide incentives for improved service delivery and public
sector performance.
UNDP. 2006b. Institutional reform and change management: managing
change in public sector organizations – a UNDP capacity
development resource (Conference Paper No. 5, working draft,
November). New York: UNDP.
As the title implies, this working draft explores the concept of
change management within the context of public sector reform. It
refers to both external and internal change, the latter being most closely
related to planned reform imposed on an organization. A typology of
change interventions is presented: top-down, transformational and
strategic. The challenge is to match the models to a concrete context.
However, within the development context, there is little knowledge of
change management and the related issues of constraints embedded in
bureaucratic systems. The example of the complexity of the Afghan
salary scales is a case in point. Such change processes need to be
mapped out step by step (that is, be managed) and be consulted on in
order to reach consensus around a given reform. Nevertheless, such
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reform often fails. Exploring the changing roles and basis of power
during reform provides answers as to why so may change projects
fail.
The authors also look at different tools for managing change
in two decisive phases: (1) managing the environment of change
(creating a momentum for change and assessing the change
context), and (2) executing the change process (facilitating change
and communicating about change). The tools described include
advocacy activities, visioning, empowerment and voice, stakeholder
analysis, consultation, leadership, brainstorming, and measuring and
celebrating progress. Finally, embedding change messages in social
and organizational culture is one of UNDP’s guiding principles, since
organizational culture (in which employees often lack the incentives
of innovating) is often a decisive determinant in the direction and pace
of change.
UN Department of Economic and Social Affairs. 2005. Unlocking the
human potential for public sector performance (World Public
Sector Report). New York: UN.
The volume summarizes the contemporary approaches to unlocking
human potential within organizations. It presents three chronological
yet overlapping models for public sector reform: traditional public
administration, public management (including NPM) and the most
recent approach, responsive governance. Where the traditional
approach is generally rule-based and is accountable to politicians,
public management is inspired by private sector management and
accountability to ‘clients’. The third model, responsive governance,
emphasizes accountability to citizens and stakeholders, and values
empowerment, transparency and participation. By combining
elements from each model, a new theoretical framework for public
human resources management, based on the corresponding values of
impartiality, professionalism and responsiveness, is presented. The
next chapter underscores the link between a merit-based bureaucracy
and economic growth and poverty reduction, via human resources. The
goal of human resources management is therefore to align public staff
behaviour with the public interest. The principal tools for achieving
this are through the building and development of capacity, motivation,
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integrity and leadership. Since public reform has proven to be path
dependent, the importance of context, culture and the history of a
country’s public administration has to be taken into account when
designing an HRM strategy. Global challenges such as demographic
shifts, labour migration and HIV and AIDS also have to be considered
in this respect. Chapter 4 reviews some empirical evidence of recent
public sector reform efforts, such as performance-related pay. The
reasons for the limited success of such efforts are discussed and warn
against the blind application of NPM tools in developing countries.
Options available to policymakers, such as merit-based appointments
and decentralization, are presented. The use of these options should
correspond to the specific needs and priorities of organizations. Key
advice is presented, such as the need for professionalizing HRM,
introducing merit appointments and improving pay, while paying
attention to equity issues. Performance management and quality
leadership are additional tools for improved performance. Finally,
the issue of organizational culture is addressed, in addition to ways
of encouraging and promoting organizational learning, such as by
strengthening the career development system.
Van Lerberghe, W.; Conceição, C.; Van Damme, W.; Ferrinho, P. 2002.
“When staff are underpaid: dealing with the individual coping
strategies of health personnel”. In: Bulletin of the World Health
Organization, 80(7). Retrieved 13 April 2008 from:
www.who.int/docstore/bulletin/pdf/2002/bul7-E-2002/80(7)581-584.pdf
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The paper explores the nature and impact of so-called ‘coping
strategies’ that health personnel develop when they are severely
underpaid. Such coping strategies may have predatory effects and
further undermine the performance of the health sector, such as underthe-counter fees. In other words, health professionals’ way of dealing
with unsatisfactory living and working conditions actively contribute to
capacity erosion. Such unethical behaviour has long been a politically
sensitive issue. More attention should be given to the issue in order
to better understand the phenomenon and elaborate efficient strategies
to deal with the consequences of such behaviour. Coping strategies
create competition for time (many health professionals share their
time between the public and the private sector), a resulting conflict
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of interest and contribute to the brain drain (both inter-country and
rural-to-urban migration). Closing the salary gap will not be sufficient
in order to change the fact that leaving the public sector has become a
sign of success. The problem should also be dealt with openly through
discussion. Incentives that are coherent with the organization’s goals
should be introduced, providing health staff with financial compensation,
a clear sense of purpose and the necessary recognition. Ultimately, such
incentives should target health professionals’ value systems. Pressure
not only from the government and donors, but from peers and users,
may prove an efficient way of ensuring ethical behaviour in the health
sector.
Verheijen, A.J.G. 2000. Administrative capacity development: a
race against time? (Working document W 107). The Hague:
Netherlands Scientific Council for Government Policy.
The paper explores the crucial issues of administrative capacity
development in Eastern and central European countries in the context
of EU membership (the incentive of membership). The author evokes
the administrative requirements for EU membership. The European
Commission has in the past tended to focus on sectoral technical
capacities, but the current debate focuses on so-called horizontal
administrative capacities – that is, a professional civil service, a well
developed accountability system, clear administrative structure and
adequate management functions. The paper identifies a number of
deficiencies in the public administration of these countries and explores
different ways of handling these. The gap between the official statements
for reform and actual progress has been considerable. Common
deficiencies were fragmented, politicized administrations, corruption,
underpaid staff and a high degree of staff turnover. In addition, there were
high levels of citizen distrust in the administrations. Legislation (civil
service laws), training and structure have been identified as important
contributors to change. Legislation can establish transparent systems
of employment conditions for civil servants. Training is considered an
efficient reform tool as it creates a more coherent civil service, changes
mentalities and may create a sense of community among civil servants
(and thus limit fragmentation). Clear coordination and accountability
systems are equally important. Improving policy processes and
internal and external financial control have been emphasized by the
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EU. Ombudsman institutions and citizens’ charters are good examples
of external accountability and voice mechanisms, although they have
proved difficult to introduce because of the legalistic culture in these
countries. The value of legislation has generally been overestimated,
while changing administrative culture has been underestimated (“laws
do not change mentalities”, p. 42). While economic and external
political pressure have pushed for reform, persistent leadership and the
use of a well-balanced set of reform instruments have not been present
or been able to give momentum to the reform process. Developing
innovative incentive schemes has proved to be difficult, since it goes
against the egalitarian mentalities present in many Eastern and central
European countries.
Wescott, C. 1999. “Guiding principles on civil service reform in Africa:
an empirical review”. In: The International Journal of Public
Sector Management, 12(2), 145.
The article reviews civil service reform (CSR) in Africa, as
described and analysed in the Guiding Principles on Civil Service
Reform. These principles were endorsed in 1995 by the Special Program
of Assistance for Africa (SPA) as a tool for better donor coordination
and support to CSR. The conclusions made by the SPA were based
on previous research, donor experiences and in-depth case studies of
selected countries.
The ultimate goal of CSR is to contribute to economic and social
development by enhancing the civil service’s capacity to perform
effectively. Personnel management is considered a core element of the
type of comprehensive reform recommended by the SPA. However,
there is no consensus as to whether such broad-based reform should
generally be ‘top-down’ or ‘bottom-up’. Scholars and practitioners
agree that both strategies will take time to implement fully – from 10 to
20 years in most countries. Reform should be participative, coherent
with overall public expenditure plans, and supported by the political
and administrative leadership. Reform should not be imposed from the
outside; ownership of the reform process is vital and the role of donors
should therefore be limited to one of facilitation (technical assistance)
and consultation. CSR should aim at establishing a professional civil
service with a stronger emphasis on performance. Patrimonial and
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centralized structures, practices of authoritative leadership, and ethnic
loyalties should be eradicated and replaced by ethical standards and
accountability. However, the author warns against the unconditional
transfer of Western concepts and approaches to the African context. The
Weberian bureaucratic model has had a perverse effect on incentives
in Africa, leading to rent seeking and other unintended outcomes, such
as ghost workers. Introducing performance management in African
civil services should reform pay and benefit structures by restoring
differentials, introducing performance-related aspects and monetizing
benefits. Performance management also depends on capacity building
(training of human resources) and organizational aspects, such as
leadership and behavioural norms. CSR policies should be monitored
and evaluated continuously, and supported by aid mechanisms in order
to succeed.
World Bank. 2005. Tajikistan – civil and public sector service wage
note. Washington DC: World Bank Poverty Reduction and
Economic Management Unit, Europe and Central Asia Region.
Retrieved 13 April 2008 from:
www-wds.worldbank.org/external/default/WDSContentServer/
WDSP/IB/2006/03/03/000112742_20060303100758/Rendered/
PDF/32622.pdf
The study assesses the public service reform process in Tajikistan,
with a particular focus on capacity development through wage system
reform. The wage system is characterized as opaque and highly
compressed, with extremely low wage levels. Various allowances and
supplements add to this complexity. Institutional capacity development
is considered crucial in order to sustain the country’s growth levels. The
brain drain is a major challenge. After giving a detailed description of the
country’s political and economic context, the study assesses the reform
agenda and the macroeconomic and fiscal context. Special attention
is given to the reform of civil service wages and the sequencing of
reform. While comprehensive reform is recommended, the country’s
low capacity makes it necessary to take a step-by-step approach to
reform. Building a system that will attract staff and provide incentives
for enhanced performance in a context of limited human, administrative
and financial capacity is a major challenge. The fit between wage
reform and the overall public reform process is an additional challenge
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that needs to be addressed. The paper puts forward a number of steps
that should be taken in order to improve the situation. These include
the integration of bonuses and allowances into a new base pay ration,
change the calculation of the qualification rank payment, introduce a
decompression policy, and establish an incentives fund that may be
used to pay a supplement to staff in positions that are in high demand.
Some of these have already been introduced in pilot institutions. The
study is relatively recent and addresses in a detailed manner the many
challenges linked to the improvement of financial incentives for the
civil service. In this respect, the recommendations put forward in the
case study may be useful for other countries in similar situations.
World Bank. 2008a. Public sector reform: what works and why? An IEG
Evaluation of World Bank Support (Advance Copy). Washington
DC: World Bank.
This World Bank evaluation presents the rationale for public sector
reform. IEG has examined lending and other kinds of Bank support
from 1999-2006 for public sector reform in four areas: public financial
management, administrative and civil service, revenue administration,
and anticorruption and transparency. The main objective of this IEG
evaluation is to help the World Bank learn how to contribute more
effectively to public sector reform in its member countries. Sound
financial management, an efficient civil service and administrative
policy, the efficient and fair collection of taxes, and transparent
operations that are relatively free of corruption, all contribute to good
delivery of public services, and are described and analysed extensively
in this report. One of the main findings is that performance usually
improves for public financial management, tax administration and
transparency through reform, but that this is usually not the case when
it comes to the civil service. The civil service and the administrative
dimensions of public sector reform therefore need to be devoted more
attention.
World Bank. 2008b. Using training to build capacity for development
– an evaluation of the World Bank’s project-based and WBI
training. Washington, DC: World Bank.
This World Bank evaluation considers the use of training as a
capacity development modality. Training is a widely used tool when
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it comes to helping countries build their institutional capacity to
achieve development objectives. The World Bank alone finances about
US$720 million worth of training every year. Many training exercises
help trainees acquire new skills and knowledge, but do not translate
into improved performance in the workplace. For training to contribute
to individual learning, and in turn lead to better workplace outcomes
and stronger organizational capacity, the content of training has to be
targeted carefully to the organization’s needs. Employees need resources
and incentive to apply their learning in the workplace. Various issues
linked to training design, training results, monitoring and evaluation
are discussed extensively in relation to the wide objective of capacity
development.
World Bank Institute. 2007. Tools for development – public sector
governance reform (Capacity Enhancement Brief, May, No. 7).
Washington, DC: World Bank Institute.
The brief introduces the topic of public sector governance
reform by linking incentives to accountability. Incentives can improve
internal and external accountability, and consequently, contribute to
good governance. The World Bank Institute introduces in this brief the
Public Sector Governance Reform Cycle – a framework or inventory
of tools that can be useful for assessing the capacity gaps in the public
sector, and elaborating proper incentives to fill the gaps and strengthen
public sector capacity and accountability. The framework is based on
World Bank research and can help users identify the different tools that
have been elaborated, understand governance problems and develop
proper strategies to address them.
The cycle consists of five phases of reform. For each cycle,
examples are provided of relevant tools that are in use or under
development. The cycle moves from (a) identifying relative strengths
and weaknesses in governance at the country level and create awareness
(for example, World Bank Institute (WBI) governance indicators,
Country Policy and Institutional Assessments (CPIAs) and Business
Environment and Enterprise Survey (BEEPS) to (b) assessing the
scope for political change and reform (commitment, constraints and
risks) (for example, participatory approaches and anti-corruption
diagnostics) to (c) problem specification and reform design (for
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example, tax administration diagnostics and expenditure tracking).
The next step is (d) managing the politics of reform and ensuring
sustainable implementation (for example, stakeholder assessments)
and finally, (e) monitoring and evaluating the results and adjusting the
reform process (scorecards and surveys).
The brief emphasizes the importance of detailed, reliable and
specific data, as well as the use of a range of tools and data sources in
order to enhance reform programmes.
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ANNEX 1
Semi-structured qualitative interviews on incentives in the context
of a literature review of the role of incentives for civil servants in
capacity development policies.
Basic information
Country:
Professional background:
Occupation:
I.
Empirical part
Prevailing practice, experience and views on core incentives and
HRM tools (and their effect on motivation):
Are they useful? Why?
How are they perceived by employees in general?
What changes should be made in order to improve their functioning?
•
•
•
•
•
Training: participate in types of training other than that offered
by the IIEP? In-service training? Did you feel more comfortable
and competent afterwards? Offered to everyone in the ministry
on your level? How are candidates selected? Will the training
help meet the requirements of your job? Will it help you advance
professionally?
Career prospects: progress, promotion process (linked to
performance or seniority)?
How did you end up/why are you working in the Ministry of
Education? (Gives an idea of past motivational factors)
Work environment: good working relationships with colleagues
and superiors? Envy among staff, individual success? Turnover?
Supervision (control vs. support and recognition/ appreciation
and feedback)
Frequency, at regular intervals? Is it taken seriously?
Needs-oriented? Improve personal knowledge, update
knowledge.
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•
•
Leadership: good communication, good treatment of staff. Do you
think supervisors need training on management and leadership
issues? Vision/mission?
Performance assessments: setting and achieving goals. Is it
relevant? Do you know which indicators are used? Are they fair?
How do you think good performance should be rewarded? Is good
performance linked to career development? Do you feel you’re
making an impact?
Financial incentives (salary, allowances, bonuses): performance
or seniority based?
Non-financial incentives (holidays, insurance) ?
II.
Theoretical part
•
•
(The three theoretical questions are based on Mathauer and Imhoff
(2006).)
1)
2)
3)
What does being motivated (boosting work spirit or work morale)
mean to you and what motivates you? (General definition)
Which of these listed aspects currently encourages you to
undertake efforts to do your work well? (Gives an idea of present
motivational factors)
Vocation
Professional conscience
Professional satisfaction
Recognition by supervisors
Recognition by the public/citizens
Good work environment
Means and material available
How do you consider that your motivation and willingness to
perform may improve? (Gives an idea of future motivational
factors)
Better living conditions
Salary and/or allowances
Work environment
Materials and means
Training
Supervision
Recognition
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III
The wider country context
•
Public sector situation in the interviewee’s country. Have things
improved?
Informal practices, unofficial fees, dual practice, unethical
practices. Examples of obstacles to reform: lack of financial
and human resources, political leadership and commitment,
bureaucratic support to reform. Room for change?
Any differences between the situation in the education sector and
other sectors? Sector-specific challenges?
Are issues related to incentives (salaries and beyond) often
discussed and subject to reform in your country?
What do you consider the main challenges/obstacles for an
efficient civil service?
Knowledge of any recent, innovative and successful reforms in
the area?
Donor involvement in this area? Example: World Bank and the
UNDP
What do you think is the key to achieving a successful civil service
that performs well and efficiently while preserving its integrity
and professional ethos?
•
•
•
•
•
•
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The book
Incentive structures play a crucial role when it comes to
capacity development, by motivating individuals and targeting
organizational performance. The lack of impact of some
capacity development efforts has been blamed in part on
the absence of a supportive incentive structure. However, the
creation of such structures is not a simple matter, because of
the financial implications and more importantly, because of
the possible contradictions between individual and organizational needs.
Moreover, the limited impact of many incentives schemes results in capacity
erosion when linked to competing disincentives, such as sustained low wage
levels, a lack of transparency in recruitment or promotion based on political
affiliation. The lack of knowledge about the efficient use of non-financial
incentives and human resources management tools are additional reasons
for failure. This literature review presents several successful approaches to
incentives. They target not only performance, but accountability, team spirit
or other organizational ‘intangibles’ that may have a positive impact on
performance in the long term.
The author
Inger Ulleberg worked at IIEP as a research assistant in the programme
on capacity development for achieving Education for All. She has Master’s
degrees in International Relations and in Corporate Social Responsibility
Management.
International Institute
for Educational Planning
ISBN: 978-92-803-1344-4