Fedblog FedblogFedblog
Government Executive Editor in Chief Tom Shoop, along with other editors and staff correspondents, look at the federal bureaucracy from the outside in.

Pay Perils

ARCHIVES

The financial crisis is a horrible thing, a cascading series of events that has ruined or seriously damaged the lives of millions of Americans. It's also a reminder that pay-for-performance isn't just an issue that the federal government has to figure out: the financial sector has an aggressive pay-for-performance structure. Reihan Salam defends it as an economic system:

But note that bonuses, commissions, and piece-rates are used throughout the economy, and indeed had been fairly common in the service sector long before the financialization of the U.S. economy took off. The reason these forms of compensation proved successful is that, in the so-called "war for talent," they proved a powerful inducement for highly-productive and potentially footloose workers to stay on the team.

As advanced economies have shifted from manufacturing, and in particular forms of manufacturing that involve repetitive tasks, to highly complex services, it hardly seems surprising that we'd see more room for performance pay. The productivity gap between one employee and another matters more. Moreover, the rise of bonuses had another happy consequence. In his 1984 book The Share Economy, Harvard economist Marvin Weitzman called for heavier reliance on bonuses (gain-sharing or contingent compensation schemes) on the grounds that it might smooth out the boom-bust cycle: bonuses would allow firms to lower costs without shedding workers.

But Mike Konczal has doubts. It's definitely interesting to look at the problem from the other side of the mirror. And I'm not sure government or the financial services industry has achieved the right balance.

FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Going Agile:Revolutionizing Federal Digital Services Delivery

    Here’s one indication that times have changed: Harriet Tubman is going to be the next face of the twenty dollar bill. Another sign of change? The way in which the federal government arrived at that decision.

    Download
  • Cyber Risk Report: Cybercrime Trends from 2016

    In our first half 2016 cyber trends report, SurfWatch Labs threat intelligence analysts noted one key theme – the interconnected nature of cybercrime – and the second half of the year saw organizations continuing to struggle with that reality. The number of potential cyber threats, the pool of already compromised information, and the ease of finding increasingly sophisticated cybercriminal tools continued to snowball throughout the year.

    Download
  • Featured Content from RSA Conference: Dissed by NIST

    Learn more about the latest draft of the U.S. National Institute of Standards and Technology guidance document on authentication and lifecycle management.

    Download
  • GBC Issue Brief: The Future of 9-1-1

    A Look Into the Next Generation of Emergency Services

    Download
  • GBC Survey Report: Securing the Perimeters

    A candid survey on cybersecurity in state and local governments

    Download
  • The New IP: Moving Government Agencies Toward the Network of The Future

    Federal IT managers are looking to modernize legacy network infrastructures that are taxed by growing demands from mobile devices, video, vast amounts of data, and more. This issue brief discusses the federal government network landscape, as well as market, financial force drivers for network modernization.

    Download
  • eBook: State & Local Cybersecurity

    CenturyLink is committed to helping state and local governments meet their cybersecurity challenges. Towards that end, CenturyLink commissioned a study from the Government Business Council that looked at the perceptions, attitudes and experiences of state and local leaders around the cybersecurity issue. The results were surprising in a number of ways. Learn more about their findings and the ways in which state and local governments can combat cybersecurity threats with this eBook.

    Download

When you download a report, your information may be shared with the underwriters of that document.