The Impact of Extrinsic Rewards and Public Service ...

The Impact of Extrinsic Rewards and Public Service Motivation on Public Employees’ Work Performance: Does Seniority Matter? Wan-Ling Huang National Taipei University, Taiwan
Volume 10 Issue 1, June 2019
Chinese Public Administration ReviewCPAR
An important issue for scholars in public administration has been providing the appropriate motivation needed to increase public employees’ work performance. This study aims to clarify the inconclusive relationship between performance-related extrinsic rewards, public service motivation, and the work performance of public employees. This study also aims to ascertain whether senior civil servants respond to the two types of motivation differently than junior civil servants do. Data for this study come from a 2015 survey of the 569 civil servants of Taipei City Government, Taiwan. Our analysis indicates that public service motivation seems to be a powerful incentive that can effectively enhance work performance, while extrinsic rewards in public organizations tend to have little effect in bolstering work performance. In addition, the use of extrinsic rewards may have similar effects on work performance for both senior and junior civil servants, as do intrinsic rewards.
INTRODUCTION
Since the era of new public management (NPM), governments around the world including the United States and the United Kingdom have
adopted performance-related pay systems in education and public agencies. The performance-related pay system provides a bonus or greater compensation to public employees as a reward for their work outputs. In contrast to traditional payment structures, the performance-related pay system does not ensure wage increases for government workers based on their seniority, but links pay increases to the contribution that individual workers have made to their organizations. However, it has been disputed whether extrinsic rewards are effective incentives to encourage public employees to work more productively (Bertelli, 2006; Binderkrantz & Christensen, 2012; Brewer & Walker, 2013; Kellough & Nigro, 2002). Some scholars argue that intrinsic motivation for public service is more important and effective than extrinsic rewards in public organizations (Crewson, 1997; Perry & Wise, 1990). Even worse, a recent study points out that pay-for- performance is not only unrelated to worker happiness
in the public sector, but also has negative effects on perceived organizational effectiveness (Park, Min, & Chen, 2016).
The Taiwanese government implemented a performance-based bonus plan for the Executive Yuan and its subordinated administrative agencies in 2001, but this initiative ended in 2007. Currently, the performance-related bonuses are only applicable to some public employees who perform exceptional tasks. It is not clear whether the curtailment of performance- related rewards resulted from lack of improvement toward work performance goals, information which is important for determining whether the remaining performance-related bonuses should be maintained. Although prior studies have aimed to ascertain the impact of extrinsic rewards on work performance, no decisive conclusion has been attained.
Prior research has also pointed out that individuals with a higher level of motivation to serve the public are more likely to work in public sector (Steijn, 2008;
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Keywords: performance-based extrinsic rewards; public service motivation; work performance; seniority
12 • Chinese Public Administration Review
Vandenabeele, 2008) and achieve better performance at work (Brewer & Selden, 2000; Kim, 2005; Naff & Crum, 1999; Vandenabeele, 2009). However, it is relevant to examine whether this proposition holds for Taiwanese civil servants, as it is widely believed that the pension plan, not public service motivation, is the main contributor to public sector recruitment in Taiwan.
Based on the discussion above, this study aims to investigate the extent to which performance-related extrinsic rewards and intrinsic motivation for public service can effectively enhance the work performance of public employees in Taiwan. This study also aims to ascertain whether senior civil servants respond to extrinsic rewards and intrinsic rewards differently than junior civil servants do. Data for this study come from a 2015 survey of 569 civil servants of the Taipei City Government, Taiwan. Structural equation modeling (SEM) was conducted to test hypothesized relationships, and multiple group analysis in SEM was employed to examine whether seniority moderates the relationship among performance-related extrinsic rewards, intrinsic motivation for public service, and work performance. Our findings indicate that intrinsic motivation for public service is more effective than performance-related extrinsic rewards to bolster work performance in public organizations. In contrast to our expectations, however, seniority does not significantly moderate the relationship between the two types of motivations and work performance. The curtailment of performance-related rewards may be the right direction to move, while the next managerial challenge will be to discover how to intrinsically motivate public employees to provide public service.
LITERATURE REVIEW AND HYPOTHESES
An important issue for researchers and practitioners in management has been finding the appropriate motivation to increase individuals’ work performance. Traditional theories of motivation emphasize the importance of satisfying an individual’s need to facilitate their work effort and performance (Alderfer, 1972; Herzberg, 1987; Maslow, 1943). Later research classifies motivation into two types, extrinsic
motivation and intrinsic motivation, based on whether the incentives have an external or internal locus of control (Porter & Lawler, 1968; Ryan & Deci, 2000). Extrinsic motivation such as pecuniary rewards, promotion, and recognition come from outside an individual. Such rewards may motivate individuals to behave in a desirable way by providing them with valuable outcomes that cannot be obtained from the work itself. Intrinsic motivation is something driven by personal interest or enjoyment in the work itself. Intrinsic motivation may lead to desirable behavior by promoting an individual’s sense of mission and passion to achieve.
In the area of public management, both extrinsic and intrinsic motivation may play a role. In light of the NPM, it has been commonly accepted that the government should learn from the private sector and that the provision of extrinsic rewards, which have worked well in the private sector, will also be able to promote work performance in public organizations. On the other hand, some authors argue that intrinsic motivation for public service matters more than extrinsic rewards for improving the work performance of public employees (Crewson, 1997). Some studies aim to clarify the relationship between extrinsic rewards, intrinsic motivation, and work performance, but no decisive conclusion has been reached. In this section, we review the relevant literature and propose some hypotheses regarding the relationship between performance-related extrinsic rewards, intrinsic motivation, and work performance in the realm of public service. In addition, we discuss the role that seniority may play in the relationship between the different types of motivation and work performance.
The impact of public service motivation. Given that the primary mission of public organizations should be to pursue public interest, it is important for people who work in public organizations to be intrinsically interested in the pursuit of public values. This intrinsic propensity is what we call public service motivation (PSM). The concept of PSM derives from Perry and Wise (1990) and is defined as “an individual’s predisposition to respond to motives grounded primarily or uniquely in public institutions
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and organization” (p. 368). This predisposition causes individuals to be willing to sacrifice themselves for the sake of other people and to have a strong tendency toward altruism and prosocial activities. Vandenabeele (2007) further clarifies the concept of PSM as “the belief, values and attitudes that go beyond self- interest and organizational interest, that concern the interest of a larger political entity and that motivate individuals to act accordingly whenever appropriate” (p. 547). In line with the idea that PSM is an inherent belief or value that prioritizes public interest, Perry and Wise (1990) posit that an individual’s PSM tends to be positively related to their work performance in a public organization whose primary mission is to improve society’s well-being.
Several studies have been conducted to empirically test whether there is a positive relationship between PSM and work performance in public organizations, either at the individual level or at the organizational level. In terms of work performance at the individual level, Naff and Crum (1999) analyze the randomly selected responses of U.S. federal employees to the 1996 Merit Principles Survey and shows that public employees with a higher PSM report a higher level of performance appraisal ratings. Likewise, Vandenabeele (2009) surveys Belgian civil servants and shows that one dimension of PSM, commitment to the public interest, is positively related to self-assessed work performance. With regards to organizational performance, Brewer and Selden (2000) analyze the 1996 Merit Principles Survey data and finds that the respondents’ PSM is positively associated with perceived organizational performance. By analyzing the survey data of 1,739 public employees in South Korea, Kim (2005) also finds that a higher PSM is correlated with a better perceived organizational performance.
Although many studies provide evidence in support of the positive effect of PSM on work performance (Perry, Hondeghem, & Wise, 2010), there are some exceptions (Alonso & Lewis, 2001; Leisink & Steijn, 2009; van Loon, Kjeldsen, Andersen, Vandenabeele, & Leisink, 2018). Alonso and Lewis (2001) test the link between PSM and job performance in the U.S. federal service using the 1991 Survey of Federal
Employees and the 1996 Merit Principles Survey, showing that the findings differed substantially across the two data sets. Although the analysis using the 1996 Merit Principles Survey reports that PSM has a significantly positive influence on performance appraisal ratings, the analysis using the 1991 Survey of Federal Employees shows that this is not the case. Leisink and Steijn (2009) survey Dutch public sector employees and finds that PSM is not a powerful explanatory factor for self-evaluated work performance when the congruence between job nature and an individual’s commitment to the public interest is not taken into consideration. Similarly, van Loon, et al. (2018) discover that the positive relationship between PSM and work performance is moderated by societal impact potential. When individuals perceive that their jobs provide little opportunity to contribute to society, their work performance will tend to be low even though they hold a high level of PSM.
Based on the above discussion, the present study contends that more research is needed to determine whether PSM is an effective motivator to facilitate public employees’ work performance. Given that the majority of prior studies falls in line with Perry and Wise’s (1990) proposition, we propose the following hypothesis:
H1: Public service motivation in civil servants will be positively related to their work performance.
The impact of performance-related extrinsic rewards. In addition to being motivated by PSM, some authors argue that public employees may be motivated by extrinsic rewards. The expectancy theory proposed by Vroom (1964) assumes that human beings make rational decisions and that they tend to choose those options that lead to the most desirable expected outcomes based on their preference. Accordingly, the theory posits that organizational managers may be able to facilitate employees’ work performance by providing them with performance-related rewards that they value and desire. In line with the expectancy theory, new public management (NPM) emphasizes the importance of performance and contends that the private sector external motivation system, such
The Impact of Extrinsic Rewards and Public Service Motivation on Public Employees’ Work Performance
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as the provision of bonuses and fringe benefits, would also help improve performance in public organizations. Since the 1978 Civil Service Reform Act, the U.S. government has adopted a system of pay-for-performance that links extrinsic rewards to an individual’s work quality with the expectation that the system of pay-for-performance will effectively facilitate civil servants’ work performance.
Some studies aim to investigate whether the system of pay-for-performance does increase government- related work performance, and most of those studies find that the effect of merit pay on facilitating work performance in public organizations is not notable (Bertelli, 2006; Binderkrantz & Christensen, 2012; Brewer & Walker, 2013; Kellough & Nigro, 2002). This indicates that extrinsic rewards have a trivial impact on increasing public employees’ work performance. As shown in Perry and Wise (1990), public managers can increase work performance effectively by relying less on extrinsic motivation because public organizations tend to attract individuals who have a higher level of PSM.
Other authors contend that performance measurement and the system of pay-for-performance may not be merely irrelevant but may actually have a negative impact on work outcomes under certain conditions (Frey, Homberg, & Osterloh, 2013; Langbein, 2010). Speklé and Verbeeten (2014) survey 101 organizational units within the Dutch public sector and finds that using the system of pay-for-performance as an incentive appears to decrease work performance. Bryson, Forth, and Stokes (2017) compare public and private sector employees in Britain and finds out that performance pay has little to do with job attitudes of public sector employees and tends to decreases their workplace performance. This is probably because the outcomes of public service are difficult to measure quantitatively and to compare explicitly to the outcomes in private companies. Therefore, a pay system that relies on output-related performance measures may reduce civil servants’ motivation to work productively on something that is not easy to conceptualize but is relevant to society’s well-being.
In contrast, several studies point out that the effect of performance-related pay may depend upon a variety of contextual factors. For instance, Bajorek and Bevan (2015) report that performance pay tends to work for some types of public service, such as education and health, but findings for other types of public service are less conclusive. Burgess, Propper, Ratto, and Tominey (2017) indicate that performance pay has a substantial positive effect when it is applied to small teams, while the positive effect disappears in large teams due to the free-rider problem. Although few studies point out exceptional findings, a meta-analysis shows that performance-related pay overall fails to deliver on its promise in the public sector (Perry, Engbers, & Jun, 2012). As Bregn (2012) contends, the complexity of most public services makes it difficult to design suitable financial incentives promoting the desired behavior and to obtain perceived fairness by public employees in performance appraisals. Those factors may explain why performance-related pay in the public sector tends to have detrimental effects on performance. Accordingly, we hypothesize:
H2: Performance-related extrinsic rewards in government organizations will not significantly increase the work performance of civil servants.
The moderating effect of seniority. Few studies have been conducted to investigate whether the influence of employee motivation on work performance will vary across people according to the length of time that they have stayed in an organization. Jackalas, Martins, and Ungerer (2016) survey employees in a health insurance company in Botswana and find that the longer employees stay in an organization, the less motivated they are by material rewards. This implies that extrinsic rewards may not be effective for motivating senior employees to work better. Similar conclusions have been made in the public sector. Some authors contend that performance-related extrinsic rewards have little to do with increasing work performance for senior public employees because they have already achieved a high level of career success and consequently are less motivated by the prospect of further promotion and salary increases which will likely be small additions to their current status and
income (Kooij, de Lange, Jansen, & Dikkers, 2008). Accordingly, we expect that junior public employees may be more likely to respond to performance-related extrinsic rewards than senior public employees.
Following the logic described above, senior employees may tend to be motivated by something other than extrinsic rewards. As Maslow (1943) argues, once the physiological needs that constitute the lowest level of Maslow’s hierarchy of motivational needs are satisfied, human beings turn to the pursuit of higher- level motivational needs such as esteem and self- actualization. Kooij, de Lange, Jansen, Kanfer, and Dikkers (2011) conduct a meta-analysis to examine the relationship between age and work-related motives. Their findings show that prior studies generally support that older workers (usually accompanied by job seniority) tend to report greater importance of work-related intrinsic motives. Hence, for senior public employees who have achieved a certain level of job security, PSM may have stronger motivation effects on their work performance. Based on the above discussion, the following hypothesis is proposed:
H3: Junior public employees are more likely to be motivated by performance-extrinsic rewards, whereas senior public employees are more likely to be driven by public service motivation.
DATA, MEASURES, AND METHOD
Data Source. Data for this study come from a 2015 survey of the civil servants of Taipei City Government in Taiwan. The Taipei City Government was selected for this study because Taipei City is the national capital of Taiwan and the number of civil servants in the Taipei City Government is the greatest among all local governments in Taiwan. An official version of the employee directory published by the Taipei City Government Department of Personnel in May 2014 was used as a sampling frame. Due to the particularity of their jobs, police and fire departments, public schools, public hospitals, and public enterprises are excluded from this study. After removing those whose contact information was not available in the directory, 6,166 individuals remained. We then classified
the organizations under the control of Taipei City Government into four strata (Secretariat, first-level agencies, second-level agencies, and administrative districts), and proportionately drew a random sample from each stratum, resulting in about 2,000 respondents in total. Before the final survey was administered, 200 employees were proportionately and randomly drawn from each stratum for a pilot study. With 49 responses received, item analysis, reliability tests, and factor analysis were conducted. Questions with low variation or poor validity were removed. The final survey was implemented online using Survey Monkey from the middle of January 2015 to the end of February 2015. Three email invitations were distributed, followed by one phone call follow-up. Each of the invitations was labeled individually with a unique password directing the individual to the survey website.
Of the 706 respondents, 14 were removed because of insufficient information. The final sample size was therefore 692 respondents. Among the 1,800 individuals to whom the survey was distributed, 563 explicitly refused to answer the survey, 51 were unreachable, and 222 had left the Taipei City Government at the time of the survey (i.e., they were ineligible for participating in this study). According to the RR4 method of the American Association for Public Opinion Research (2009), the response rate was about 45%. Given that structural equation modeling requires complete data (Carter, 2006), the observations that contain a missing value for the variables included in the analysis were removed using pairwise deletion. The final number of observations is thus 569.
Variables and Measure Validation. Endogenous variable. The endogenous variable is Work Performance. This variable is measured using four questions developed by Vandenabeele (2009) (six-point Likert scale, 1=strongly disagree and 6=strongly agree). Higher values indicate greater work performance perceived by the respondents. The Cronbach’s alpha for Work Performance is .88.
Exogenous variables. There are two exogenous variables of interest: Public Service Motivation and Extrinsic Rewards. Public Service Motivation is
measured using the questions developed by Kim et al. (2013), which was tested in the Taiwan context and found to be suitable to measure both public and private employees’ PSM (Lin, 2015). By testing this measurement instrument in twelve countries, Kim et al. (2013) converge the 16-item measures of PSM into four dimensions: Attraction to Public Service (APS), Commitment to Public Values (CPV), Compassion (COM), and Self-Sacrifice (SS). However, our confirmatory factor analysis (explored further below) reports that only three factors, APS, COM, and SS, have sound convergent and discriminant validity. We thus use eleven out of sixteen questions from Kim et al. (2013) to measure PSM (six-point Likert scale, 1=strongly disagree and 6=strongly agree). The Cronbach’s alpha for the three dimensions ranges from .79 to .86.
Extrinsic Rewards is measured using three questions that ask the respondents to indicate their agreement on the following statements (six-point Likert scale, 1=strongly disagree and 6=strongly agree): (1) My agency fires people for continued poor performance; (2) The greater performance I achieve at work, the more tangible rewards (e.g., leave days, bonus, etc.) I will get; (3) Work performance is the basis of my promotion. Although Taiwan does not currently adopt a comprehensive pay-for-performance system, some public employees who perform exceptional tasks are eligible for various types of bonuses.1 In addition to bonuses, promotion and job tenure can be also considered as extrinsic rewards for work performance.2 Thus higher values of Extrinsic Rewards mean that respondents perceive a greater degree of match between their work performance and extrinsic rewards received. The Cronbach’s alpha for the three dimensions is .75.
Moderating variable. The moderating variable is Seniority. This variable is captured by a question asking the respondents to indicate how long they have served in public organizations. The respondents’ answers were then re-coded using a month as a unit.
The present study also controls for some factors that may affect public servants’ work performance. In
Taiwan, only the individuals who pass the national civil service examination hold a career civil service status, and their salaries increase with their grade levels. Grade 1 to Grade 5 are called Juniors, Grade 6 to Grade 10 are Associates, and Grade 11 to Grade 14 are Seniors. Since people who have a lower level of job security and achievement may work harder than others who have already attained these, this study controls for Grade Level, which refers to the grade levels that public servants hold. Individuals who do not hold a career civil service status are coded 1, Juniors are coded 2, Associates are coded 3, and Seniors are coded 4. Higher values indicate higher ranks in the public service system.3 This study also controls for gender because males generally encounter less conflict between work and family life and thereby may be more focused on work than females (Duxbury, Higgins, & Lee, 1994). Staff Position is measured using a question asking the respondents whether they hold a staff position or a line position. It is coded 1 for a staff position, and 0 otherwise. Prior research has found that education level is positively related to individuals’ work performance (Bright, 2005; Perry, Brudney, Coursey, & Littlepage, 2008). Thus, this study controls for Education, which is coded 1 if the highest level of education the respondents completed is high school, 2 if it is college, and 3 if it is graduate school. Managers is coded 1 if the respondents hold a managerial position, and 0 otherwise. The empirical model is presented in Figure 1. Table 1 shows the question details and the descriptive statistics for all observed indicators included in the analysis.
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1 In our sample, about 11.6% of the respondents are eligible for any of the following types of bonus: (1) Bonus for revenue officers ( ); (2) Construction bonus for the employees of administrative agencies (); (3) Bonus for employees of centers for chronic disease prevention, local health centers and health services centers (); (4) Bonus for public officers who deal with violations of environmental protection laws (); (5) Performance bonus for car mechanics serving the Department of Environmental Protection (); (6) Performance bonus for refuse incineration workers (). 2 In our sample, about 10.5% of the respondents do not hold a career civil service status. 3 Individuals without career civil service status (e.g., temporary workers or contract-based employees) are typically not assigned a grade level. They do not receive job protection and are not eligible for defined benefit pension plans so that their job security is much lower than others who have career civil service status.
Table 1. Descriptive Statistics Constructs / Observed Indicators Obs Mean SD Min Max
Work Performance WP1: In my opinion, I contribute to the success of the organization 569 4.73 0.75 1 6 WP2: I think I am performing well within this organization 569 4.88 0.66 1 6 WP3: I think I am a good employee 569 4.96 0.67 1 6 WP4: On average, I work harder than my colleagues 569 4.72 0.77 1 6 PSM: Attraction to Public Service APS1: It is important to contribute to activities that tackle social problems 569 4.98 0.65 2 6 APS2: Meaningful public service is very important to me 569 5.05 0.66 2 6 APS3: It is important for me to contribute to the common good 569 5.14 0.65 1 6 PSM: Compassion COM1: I feel sympathetic to the plight of the underprivileged 569 4.99 0.74 1 6 COM2: I empathize with other people who face difficulties 569 4.94 0.67 2 6 COM3: I get very upset when I see other people being treated unfairly 569 5.02 0.61 2 6 COM4: Considering the welfare of others is very important 569 5.02 0.63 2 6 PSM: Self-Sacrifice SS1: I am prepared to make sacrifices for the good of society 569 4.76 0.81 1 6 SS2: I believe in putting civic duty before self 569 4.50 0.90 1 6 SS3: I am willing to risk personal loss to help society 569 4.15 1.05 1 6 SS4: I would agree to a good plan to make a better life for the poor, even if it costs me money 569 4.57 0.92 1 6 Extrinsic Rewards ER1: My agency fires people for continued poor performance 569 2.68 1.33 1 6 ER2: The greater performance I achieve at work, the more tangible rewards (e.g., leave days, bonus, etc.) I will get 569 2.44 1.37 1 6
ER3: Work performance is the basis of my promotion 569 3.72 1.40 1 6 Seniority How long have you served in public organizations (unit: month) 569 173.8 115.7 2 494
Constructs / Observed Indicators Obs Frequency Percentage Grade Level: Please indicate your official grade level 569 1. No career civil service status 60 10.54 2. Juniors 120 21.09 3. Associates 370 65.03 4. Seniors 19 3.34 Male: What is your gender 569 0. Female 318 55.89 1. Male 251 44.11 Staff Position: Do you hold a staff position 569 0. No 338 59.4 1. Yes 231 40.6 Education: What is the highest level of education you completed 569 1. High school degree or below 9 1.58 2. bachelor's degree 347 60.98 3. Master's degree or above 273 37.43 Managers: Are you a manager 569 0. No 368 64.67 1. Yes 201 35.33
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Figure 1. Framework of Empirical Model
We performed a confirmatory factor analysis to examine measure validation for the constructs operationalized by multiple observed indicators. According to Table 2, the ratio of chi-square statistic to its degrees of freedom is slightly greater than 3 (χ2/ df= 3.321), meaning that the measurement model is not entirely adequate. This is probably because our sample size is large and the chi-square statistic tends to be exaggerated (Byrne, 2009; Ho, 2006). Other model fit indicators, however, suggest that the measurement model represents an adequate fit to the data. In terms of the adequacy of individual indicators, all factor loadings are greater than the recommended .5 cutoff and are statistically significant (Bagozzi & Yi, 1988), meaning that the selected observed indicators well represent the meaning of each of the latent constructs. In addition, all the composite reliabilities (CR) are greater than .76 and the average variance extracted (AVE) for all constructs is greater than .5, suggesting that the convergent validity of the measurement model is sound (Bagozzi & Yi, 1988). Table 3 further shows that the square of average variance extracted (AVE) for each construct is greater than its correlations with
other constructs included in the analysis, meaning that the constructs in our analysis have fine discriminant validity (Hair, Black, Babin, & Anderson, 2010).
ANALYSIS AND RESULTS
We performed a structural equation model using AMOS 22 to test the hypothesized relationships. Since our data do not follow a multivariate normal distribution (kurtosis=51.489, C.R.=27.193), Maximum Likelihood Estimation (MLE) is likely to underestimate standard errors although parameter estimates may still be unbiased (Gao, Mokhtarian, & Johnston, 2008). This study thus adopts a bootstrap resampling approach to recalculate standard errors of parameter estimates (Bollen & Stine, 1992). Table 4 presents the model fit and estimation results produced using the Maximum Likelihood Estimation (MLE) of a bootstrap sample. The first column reports the estimation results for all samples. To investigate whether the relationship among extrinsic rewards, PSM, and individuals’ work performance differs by seniority, we classify the sample into two groups,
Table 3. Discriminant Validity of Variables Measured by Observed Indicators
Construct 1 2 3 4 1. Work Performance 0.83 2. Attraction to Public Service 0.39 ** 0.75 3. Compassion 0.35 ** 0.71 ** 0.74 4. Self-Sacrifice 0.32 ** 0.67 ** 0.60 ** 0.78 5. Extrinsic Rewards 0.01 -0.01 -0.04 0.10
Note: *p < .05, **p < .01, ***p < .001.
Table 2. Confirmatory Factor Analysis
Constructs / Indicator Labels Factor Loading t value C.R. AVE Cronbach’s α Work Performance 0.90 0.68 0.88 WP1 0.70 18.79 *** WP2 0.94 28.62 *** WP3 0.89 26.55 *** WP4 0.75 20.47 *** Attraction to Public Service 0.79 0.56 0.79 APS1 0.80 21.69 *** APS2 0.71 18.27 *** APS3 0.73 19.16 *** Compassion 0.82 0.54 0.82 COM1 0.69 17.83 *** COM2 0.80 21.78 *** COM3 0.61 15.02 *** COM4 0.83 23.09 *** Self-Sacrifice 0.86 0.61 0.86 SS1 0.76 20.26 *** SS2 0.83 23.25 *** SS3 0.80 22.02 *** SS4 0.72 18.93 *** Extrinsic Rewards 0.76 0.52 0.75 ER1 0.70 15.77 *** ER2 0.86 18.97 *** ER3 0.57 13.04 *** Model Fit Indices χ2= 415.082 (p = .000), df= 125, χ2/df= 3.321 GFI= .925; CFI= .946; RMSEA= .064; RMR= .031
Note: *p < .05, **p < .01, ***p < .001.
Ta bl
e 4.
E st
im at
io n
R es
.
senior civil servants and junior civil servants, based on the length of time they have served in public organizations. The second and third column present estimation results for the sample of senior civil servants and junior civil servants, respectively.
For the model containing all samples, the ratio of chi-square statistic to its degrees of freedom is slightly greater than 3 (χ2/df= 3.58), suggesting a misfit between the observed data and model expectations. However, other model fit indexes show that the hypothesized structural model well fits the data. Squared multiple correlations for Work Performance is .216, meaning that the hypothesized model can explain about 22% variance in Work Performance.
Hypothesis 1 predicts that the higher the level of public service motivation (PSM) that civil servants possess, the better the presentation of their work performance. As shown in Table 4, Public Service Motivation is positively related to Work Performance at the significance level of 0.001 (coef.= .447, p< .001). A one unit increase in Public Service Motivation will result in about a 0.45 unit increase in work performance. H1 is thus supported.
Our results also provide some evidence for Hypothesis 2, which predicts that extrinsic rewards would have no significant impact on perceived work performance by civil servants. Table 4 shows that Extrinsic Rewards is negatively associated with Work Performance, while the correlation coefficient is not statistically significant (coef.= -.006, p= .9). This means that perceived performance-related extrinsic rewards are not strong incentives for civil servants to dedicate themselves to work. H2 is thus supported.
Since senior civil servants may be motivated by different factors for work compared to junior civil servants, hypothesis 3 predicts that seniority will moderate the relations among performance-related extrinsic rewards, public service motivation,
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and work performance. Multiple group analysis was adopted to test the moderating role of seniority (Byrne, 2009; Jöreskog, 1971; Kline, 2010). We first divided all respondents into two groups using K-means clustering analysis: senior civil servants (N=263) and junior civil servants (N=306). The length of time that senior civil servants work in public organizations is longer than the length of time that junior civil servants serve. The result of independent samples t-test shows that the two groups vary significantly regarding their seniority (mean difference= 204.148, p< .001).
Before testing whether the estimation results of the model vary considerably between the groups of senior and junior civil servants, we first need to examine whether the model fits the data containing the samples of senior and junior civil servants, respectively. As shown in Table 4, all model fit indexes satisfy the recommended cut-off points. The sound model fits allow us to further investigate whether the hypothesized relationship among variables of interest significantly differs by seniority of civil servants.
To test the moderating effect of seniority, we created two models. One is a default model, and the other one is a moderating model. The default model specifies that the relationship between two variables differ between senior and junior groups, and the moderating model specifies that the relationship between two variables is equal across the two groups. A significant difference between the two models indicates the moderating role of seniority with regards to civil servants. Regarding the impact of extrinsic rewards on work performance, the chi-squared difference test for the default and moderating model is not significant (Δχ2 (1) = .56, p = .45), meaning that perceived extrinsic rewards have a similar effect on work performance for both senior and junior civil servants. Likewise, the chi-squared difference test for the relationship between PSM and work performance is not significant either (Δχ2 (1) = .002, p = .96), meaning that there is no significant moderating effect of seniority for the impact of public service motivation. Accordingly, H3 is not supported.
In terms of control variables, Grade Level, Male, and Staff Position show no notable influence on work
performance in the models with all samples, the senior and junior group samples. This means that civil servants with higher ranks, civil servants with a staff position, and civil servants that are male report similar work performance compared to their counterparts. Education and Manager are positively associated with Work Performance at the significance level of .1 and .05, respectively, although the impact becomes insignificant in the model with the sample of senior civil servants. Our analysis indicates that civil servants who have a higher level of education and those who hold a managerial position tend to report a better work performance.
Examination of Common Method Variance Given that all variables included in the models were measured using self-reported survey data, it is possible that the estimation results would suffer from common method variance (CMV) bias (Podsakoff et al., 2003). This study employs the unmeasured latent method construct (ULMC) approach (Widaman, 1985; Williams, Cote, & Buckley, 1989) to examine whether CVM exists, and if so, the extent to which CVM biases the estimated relationships among constructs. First, we compare a CFA model allowing observed items to be loaded on their theoretical constructs (Figure 2) with a CMV model additionally including a latent CMV factor on the basis of the CFA model (Figure 3). The result shows that the CMV model has a better model fit than the CFA model does (Δχ2 (14) = 69.989, p< .001), meaning that some variations in the responses are attributable to the measurement method.
Due to the existence of CMV, we take a step further to test whether the CMV problem significantly biases our model estimations. We construct two models: a default model and a comparison model. The default model is the CMV model specified above (Figure 3), which allows a covariance matrix among latent constructs to be estimated freely. The comparison model is based on the CMV model but specifies the covariance matrix among latent constructs to be identical to those in the CFA model (Figure 2). The result of model comparison indicates that the two models are not significantly different (Δχ2 (28) = 23.921, p = .686), suggesting that CMV does not have
a fatal influence on the hypothesized relationships among latent constructs.
DISCUSSION AND CONCLUSIONS
This study aims to clarify a theoretical debate in the literature concerning public management: can performance-related extrinsic rewards and public service motivation effectively enhance work performance in public organizations? Does the impact of extrinsic rewards and PSM vary across the groups of senior and junior civil servants? Our analysis shows that public service motivation is a powerful inducement that can effectively enhance work performance, while on the other hand, extrinsic rewards in public organizations tend to have little effect on facilitating work performance. Moreover, it seems that senior and junior civil servants do not respond differently to
extrinsic rewards and intrinsic motivation to public service. That is, the use of extrinsic rewards tends to have similar effects on work performance for both senior and junior civil servants, as do intrinsic rewards.
Our analysis presents two implications. First, this study supports the perspective that public service motivation is more important than extrinsic rewards for enhancing work performance in public organizations (Crewson, 1997; Perry & Wise, 1990). This indicates that the system of pay-for-performance deriving from the idea of NPM should be revisited and that our general curtailment of performance-related rewards in government agencies is appropriate. Instead of providing performance-related extrinsic rewards, government should focus on ensuring that civil servants’ PSM will not decrease as the time they work in government increases, given that prior studies
Figure 2. A CFA Model
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indicate that red tape, as well as inflexibility in public organizations, may reduce civil servants’ passion for public service (Moynihan & Pandey, 2007). Moreover, it is important for public organizations to develop work environments that provide opportunities for individuals with high PSM to exercise their commitment to the public interest (Bright, 2007; Wright & Pandey, 2008) so that the positive impact of PSM on work performance can be utilized.
Secondly, this study does not support the idea that senior and junior civil servants respond differently to different types of motivations. The recent public service pension plan reform in Taiwan may provide an explanation. Changes in the public service pension plan indicate a potential reduction in monetary returns that civil servants can get from work. In this context, people who are still eager to work in the public sector
may be those who are mainly attracted by opportunities to make society a better place. Accordingly, those newcomers (junior employees) would be less likely to be motivated by extrinsic rewards and more likely to be driven by PSM. Even though senior public employees may tend to be motivated by public service motivation, the contextual factor in Taiwan mixes up the role of seniority on the effects of different types of motivations on work performance.
Despite its promise, this study has some limitations. First, it should be noted that Taiwan has not adopted a comprehensive system of pay-for-performance; merit pay is only available for civil servants who undertake certain types of tasks. Therefore, the applicability of our analysis to civil service systems in other countries should be considered with caution. Secondly, data used to measure the variables of interest in this study all
Figure 3. A CMV Model
come from a single source: self-reported survey data. Possible common method bias threatens the validity of this study. However, our analysis shows that although CMV exists, CMV is unlikely to bias our results significantly. Finally, the measures of public service motivation are likely to suffer from social desirability bias, one source of common method variance (Podsakoff et al., 2003). That is, the respondents will have a tendency to report answers that are socially desirable (Kim & Kim, 2016), thereby masking the true relationships among variables. Although our analysis shows that the possible CMV bias may not notably distort our analysis results, future studies may consider preventing or reducing social desirability bias by using forcedchoice items or a randomized response technique (Nederhof, 1985).
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