direct employer, its application to the health service and local government was
limited. In the civil service, it is questionable whether PRP was eVective. In terms of
pay bill control, there was such a strong expectation amongst employees of an
across-the-board cost-of-living increase that any attempt to use PRP to motivate
employees required supplementary funding to the existing pay bill. Research that
examined PRP in the UK Inland Revenue Department cast major doubts on the
motivational eVects of such schemes (Marsden and Richardson 1994 ). Adopting
the tenets of expectancy theory, the authors found PRP was unlikely to motivate
public servants. The setting of tangible performance objectives for public servants
is diYcult given the range of stakeholders they have to serve and the nature of their
work; the clarity of the link between such objectives and pay is likely to be poor
given various pay constraints; and typically civil servants place less weight on pay
relative to other rewards, especially where the amounts of performance pay avail-
able are small.
TheseWndings have been accepted by the OECD, formerly a leading advocate of
PRP, and they conclude that ‘PRP is unlikely to motivate a substantial majority of
staV, irrespective of the design’ (OECD 2005 : 6 ). Nonetheless, inXuenced by the
work of Marsden ( 2004 ), they argue that PRP has an important role to play in
encouraging goal-setting and appraisal, in stimulating managerial change, and in
renegotiating eVort norms upwards.
- 2 Changing Organizational Structures
An important component of the NPM comprised changes in organizational struc-
tures and the breaking up of monolithic public service organizations into separate
units with more devolved management practice. Apart from more direct budget
responsibilities, the devolution of responsibility for HR practice to local managers
allowed greater scope to alter job roles and develop other forms ofXexibility. These
developments also enabled line managers to play a more active role in developing
workplace reforms (Bach 1999 ). These forms of organizational fragmentation were
often accompanied by competition between service units, designed to produce an
operational dynamic which was diVerent from that underpinning the traditional
state bureaucracy.
The most visible part of these reforms was a program of privatization in which
most of the UK nationalized industries covering gas, water, electricity, steel, and
coal had been privatized by 1997. In most cases, privatization led to substantial job
losses. Collective bargaining remained the dominant form of pay determination in
privatized companies, but it became more decentralized, management grades were
often excluded, and the ability of trade unions to mobilize their members dimin-
ished. Senior managers experimented with new forms of HRM; some developed
more abrasive styles of macho-management designed to marginalize trade unions
478 stephen bach and ian kessler