Key message 4 – Non-financial incentives can provide powerful and cost effective strategies for motivating government workers
Offering non-financial incentives can be an effective way for governments to motivate employees, particularly because rigid civil service pay scales may limit their ability to offer financial incentives. Non- financial incentives include rewarding high achievers through social recognition, leveraging career concerns through performance-based promotions or postings, or offering in-kind benefits such as subsidised housing.
Although it is quite common for governments to offer non-financial incentives, few of these schemes have been rigorously tested. One exception is an experimental study that directly compared the effectiveness of using non-financial versus financial incentives to motivate public health extension workers in Zambia to sell condoms for HIV prevention (Ashraf, Bandiera and Jack, 2014). Non-financial rewards proved to be surprisingly effective: agents who received social recognition for their sales (via earning stars on a thermometer-type display) achieved double the sales versus those earning a commission of up to 90% on condom sales.
Another example with promising results is a recent IGC evaluation of a performance-based postings scheme in Pakistan that gave tax collectors an opportunity to be transferred to more desirable locations depending on their performance on revenue collection (Khan, Khwaja and Olken, in progress).
Innovative non-financial incentive schemes have the potential to help governments raise performance in a cost-effective manner. There are also numerous examples of governments offering employees in-kind benefit programmes that are riddled with inefficiency so the justification for offering non-financial incentives over cash needs to be well-supported.