Salary Bonuses in Revenue Departments : Do They Work?
Compensation provides a major incentive for workers to perform well. Accordingly, bonus payments are often used to enhance staff effectiveness and efficiency-and have become increasingly common in revenue departments around the world. A recent World Bank study analyzed the bonus systems applied by revenue authorities in seven countries, and was complemented by questionnaires completed by tax and customs administrations in seven others. Though the sample was small, the study generated interesting findings and points to areas requiring further analysis. The countries analyzed indicate that bonus systems are fraught with danger and so must be designed with the utmost care. There is no evidence that bonuses automatically increase the effectiveness of revenue departments. And because staff performance is influenced by factors other than salaries and bonuses, it is not easy to determine the effects of such systems. This note reviews reasons for introducing bonus systems and discusses a number of crucial design features, particularly the importance of effective and transparent performance appraisal systems based on clear performance measures.
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| Language: | English |
| Published: |
World Bank, Washington, DC
2004-01
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| Subjects: | AUDITORS, AUDITS, BONUS SYSTEM, BONUSES, BUREAUCRACIES, CIVIL SERVICE, ECONOMIC MANAGEMENT, HUMAN RESOURCE MANAGEMENT, MANAGEMENT REVIEWS, MANAGERS, PERFORMANCE APPRAISAL, PERFORMANCE CONTRACTS, PERFORMANCE CRITERIA, PERFORMANCE INDICATORS, PERFORMANCE MEASURES, PERSONNEL, PERSONNEL MANAGEMENT, PUBLIC SERVICES, REFORMS, REVENUE COLLECTION, SUPERVISORS, TAX, TAX ADMINISTRATION, TAXATION, TEAMS, WORKERS, |
| Online Access: | http://documents.worldbank.org/curated/en/2004/01/5177510/salary-bonuses-revenue-departments-work https://hdl.handle.net/10986/11282 |
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| Summary: | Compensation provides a major incentive
for workers to perform well. Accordingly, bonus payments are
often used to enhance staff effectiveness and efficiency-and
have become increasingly common in revenue departments
around the world. A recent World Bank study analyzed the
bonus systems applied by revenue authorities in seven
countries, and was complemented by questionnaires completed
by tax and customs administrations in seven others. Though
the sample was small, the study generated interesting
findings and points to areas requiring further analysis. The
countries analyzed indicate that bonus systems are fraught
with danger and so must be designed with the utmost care.
There is no evidence that bonuses automatically increase the
effectiveness of revenue departments. And because staff
performance is influenced by factors other than salaries and
bonuses, it is not easy to determine the effects of such
systems. This note reviews reasons for introducing bonus
systems and discusses a number of crucial design features,
particularly the importance of effective and transparent
performance appraisal systems based on clear performance measures. |
|---|