Transition in government pay policies: The problem of legitimacy

In this article the problem of legitimacy is discussed in the context of pay-for-performance in government agencies. The doctrine of a new public management implies a direct single track between individual performance and organizational result. In practice, however, this seems to be much more complex. It will be argued on theoretical and empirical grounds that public agencies will be hard-pressed to resolve the tension between quality and efficiency imposed by the new pay system. An examination of four empirical cases in different national agencies reveals that the bonus system creates a delicate management problem and poses a risk for the perceived legitimacy of public sector pay.