Evaluation of Goal Setting and Incentive Pay on Motivation and Performance in the Public Sector

Federal agencies have implemented goal setting and "pay-for-performance" measures to improve productivity and increase employee motivation for many years. However, public agencies in California have not widely implemented these measures due to the lack of evidence in measurable positive impacts. This graduate paper examines the implications of goal setting and "pay-for-performance" on employee motivation and productivity between two federal agencies first and then use the results to develop a proposal for comparative analysis between two California agencies with different pay structures. The objectives of this paper are three-fold: (1) document relevant studies on goal setting and "pay-for-performance," (2) compare the motivation attributes between two federal agencies with different pay structures and to measure if there are differences in employee motivation between these organizations, and (3) develop a framework for future comparative analysis between two California agencies with different pay structures. The comparative study between the two California agencies would measure the effectiveness of the goal setting and "pay-for-performance" and provide a detailed analysis of the impact on employee motivation in a public environment. Four variables will be measured to understand the effects of goal setting and "pay-for-performance. These variables are (1) goal setting and correlation with productivity; (2) employee satisfaction with the "pay-for-performance"; (3) impact on job satisfaction; and (4) impact on the relationship with the organizational mission. Other variables that will be evaluated will also include job satisfaction and alignment with organizational mission. As the first step, the existing "Federal Employee Viewpoint Survey" data, which is collected annually from federal employees, will allow for the examination of the differences between a number of factors including employee goal setting, motivation, productivity, job satisfaction, and relationship to the organizational mission between traditional and "pay-for-performance" structures. This analysis was completed for this research paper. Based on this analysis, a framework will be developed for the proposed evaluation of differences between employee motivation and productivity for the two California public agencies with traditional and "pay-for-performance" programs. The research design for the local California agencies study will be based on quantitative research using an online survey methodology using a randomized number of employees working in Orange County (treatment group) and San Diego County (control group). The research will then compare goal setting and performance, compensation, and "pay-for-performance" with job satisfaction and alignment with organizational goals.