Pay for Performance in Private Sector Higher Education Institutions in UAE.
| Author | Bose, Indranil |
| Position | United Arab Emirates |
Introduction
Variable pay-for-performance has become an increasingly fashionable proposal over the last few years, in private companies as well as in the public sector. Many firms have given up fixed salaries and have resorted to pay their employees in variable pays. Firms try to match payment to objectively evaluated performance. It is reflected in such popular concepts as stock options for managers and various types of bonuses. In the public sector, efforts to raise productivity in the wake of growing informalization of workforce have also resulted in attempts to adjust variability of the compensation for performance. Thus, firms and public administrations increasingly rely on price incentives. According to Osterioh and Frey (2009), extrinsic motivations have become more popular than the intrinsic motivation techniques across the sectors in many parts of Europe and USA. UAE has not remained any exception (Ahmed &Royen, 2010). According to them, with the growing corporatization of business and the workforce, the emerging practices of 'pay--for- performance' have started dominating the compensation scenario in both public and private sectors in UAE. The same study has further highlighted a few industries, those catching up the phenomenon. Higher education has been shown as one of them.
Pay-for-Performance in Higher Education in UAE
Some studies and reports found the practices of 'pay-for-performance' prevailing in higher education in UAE. It is well known that the diverse higher education sector in UAE is dominated by the western models and a large number of foreign universities and institutions are operating in this country for past many years. According to a report published by Social Research Foundation(2016), more than two hundred small, medium and large campuses of the private institutions of higher learning are operating across the country. Many such institutions are accredited to local and federal government bodies and many are not. However, according to the report a large number of educators are employed in full time and regular positions with these universities. Suhail and Aslam (2009), in their study, have estimated the approximate number of such educators as more than three thousand. In 2018, such number has increased a few folds. Suhail and Aslam (2009) have further discussed on the employee relations practices in these private places of higher learning in UAE. They have found many innovative practices, adopted in the sector to attract and retain the employees, mainly the educators. Another study by Husaini and Ruckjah (2010) observed that both intrinsic and extrinsic motivational techniques are adopted by majority of the private institutions and universities in UAE. They have listed such benefits as fringe benefits, performance-based incentives, occasional bonus, research grant, healthy working environment, autonomy etc.
Literature Review
The present research attempts to review the available literature on the concepts and implications of intrinsic and extrinsic motivations. The available studies and some empirical evidences on motivation crowding effects have also been discussed. The research gaps in the context of above discussions and reviews have been identified.
Extrinsic motivation exists when employees are able to satisfy their needs indirectly, most importantly, through monetary compensation. Money as such does not provide direct utility but serves to acquire desired goods and services (de Charms, 1968; Deci, 1972). Another survey conducted by Heckhausen (1991) has also shown that though many firms attempted to motivate the employees by linking employees' monetary motives with the goals of the firm, yet in many cases it did not happen. Here he has identified such a system as ideal incentive system that is strictly based on 'pay-for-performance'. In contrast, motivation is also identified as intrinsic, which has been defined as 'the internal feelings and happiness of an individual for its own sake and that appears to be self-sustained" (Calder &Staw, 1975/According to Csiksztmihalyi (1975), intrinsic motivation can be directed to the activities flow. It has also been identified to be directed to the self defined goal (Loewenstein, 1999), or to the obligations of personal and social identities (March, 1999). The ideal incentive system resides in the work content itself, which must be satisfactory and fulfilling for the employees. Intrinsic motivation is emphasized by the behavioral view of organization. This approach has a long tradition in motivation based organization theory (Argyris, 1964; Likert, 1961; McGregor, 1960). More recent examples are the critics of the transaction cost theory (Ghosal & Moran, 1996; Donaldson, 1995), as well as the literature on psychological contracts (Morrison and Robinson, 1997; Rousseau, 1995). They emphasize intrinsic motivation and identification with the firm's strategic goals, shared purposes and the fulfillment of norms for its own sake. Intrinsic motivation has been dealt with very few authors in economics; examples are trust (Arrow, 1974), sentiments (Akerlof & Yellen, 1986; Frank, 1992), firm royalty (Baker & Murphy, 1998),managerial incentives (Guth, 1995) and implicit contracts or norms (Akerlof, 1982). Some economists admit the existence of intrinsic motivation but leave it aside because it is difficult to analyze and control (Williamson, 1996).
For a long time, it has been taken as a matter of course that extrinsic motivation raises performance. It seemed to be a well-established result in both the psychological (Eisenberger & Cameron, 1996) and the managerial literature (Blinder, 1990; Lawler, 1990) that positive reinforcement of a particular action increases the future probability of that action. Mechanisms of instrumental and classical conditioning lead to the (relative) price effect, which is fundamental for economics (Becker, 1976, Stigler & Becker, 1977; Frey, 1992). However, according to Osterioh & Frey (2009), rewards crowd out intrinsic motivation under particular conditions. The most important conditions are, first, that the task is considered to be interesting and second, that the reward is perceived to be controlled by the recipient. This effect has been called the 'hidden costs of reward' (Lepper & Greene, 1978) or the corruption effect of extrinsic motivation (Deci, 1975). Frey (1997) has introduced it into microeconomics as the 'crowding-out theory'. Extensive surveys given by Lepper and Greene (1978), Pittman and Heller (1978) and Lane (1991). Kohn (1993) and Deci and Flaste (1995) provide popular applications.
The crowding out effect is based on cognitive evaluation theory (Deci, 1975; Deci & Ryan, 1985) and on psychological theory (Schein, 1965; Rousseau & McLean Parks, 1993). According to cognitive evaluation theory, intrinsic motivation is substituted by an external intervention that is perceived as a restriction on acting autonomously. The locus of control shifts from inside to outside the person (Rotter, 1966). The person in question no longer feels responsible but, rather, attributes responsibility to the person undertaking the outside intervention. However, according to Williamson (1996), this shift in the locus of control does not always take place. According to him, each external intervention-e.g., rewards has two aspects, a controlling and an informing one. The controlling, aspect strengthens perceived external control and the...
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