8.6 Conclusion
The focus of the public sector on providing services to ministers and to the public means that performance in public-sector delivery is very difficult to quantify and therefore involves subjective judgment in its measurement. The public service probably differs from the private sector in that there is lower volatility in the demand for its services. In both circumstances, internal labour market tournaments have advantages: they do not require absolute measurement of performance, but utilize relative rankings instead, while lower volatility means that variations in performance may more certainly be ascribed to productivity differences.
While tournaments provide an efficient means of allocating labour market resources to different positions, their value is increased by the selective introduction of external contestability for positions. Contestability of positions reduces the potential for internal tournaments to be driven by negative or unproductive aspects of labour market culture such as collusion on low effort, sabotage and narrow views of what constitutes good performance.
The literature in personnel economics suggests that if the public sector aims to achieve a substantial change in its ability to provide ministers with new advice, or to increase productivity, then this will require changes to the structure of compensation and reward both to change incentives and to change the type of people that are attracted to public-sector organisations. As the importance of team-based environments within the public sector increases, the literature suggests that more attention will need to be given to staff training, team-based incentives, the remuneration of those who have the strongest team leadership skills and the ability of the public sector to ensure that individuals in the team display a diversity of complementary skills.
Identifying exactly how to implement those changes to organisation and remuneration is beyond the scope of this paper. Neither have we investigated whether consideration of such changes to public-sector remuneration and employment structures is currently under consideration. But our observation is that if the government wishes to obtain different types of advice, and have alternative types of policy development skills at its disposal, then that work will need to be done.
