(Reblogged from LSE Business Review) For decades, private sector firms have been aware of the benefits they can derive by investing in the management of their employees. Incentivising employees through individual and group performance pay allows firms to attract the best talent and increases worker effort. Fostering employee ‘ownership’ of the production process through team-working, initially pushed by Japanese manufacturing firms like Toyota, are now widely diffused across industries across the globe. But it is only relatively recently that providers of public services have thought to apply the same techniques in sectors such as education.
These techniques, which collectively have come to be known as “Human Resource Management” (HRM), have yet to be fully tried and tested in the public sector. Initial findings are mixed. For instance, one study on the use of performance pay found it was negatively associated with the performance of public sector workplaces. However, some studies suggest HRM is generally associated with improved school performance.