Insights on the effectiveness of reward schemes from 10-year longitudinal case studies in 2 Italian regions.

BACKGROUND: Pay for performance (P4P) programs have been widely analysed in literature, and the results regarding their impact on performance are mixed. Moreover, in the real-life setting, reward schemes are designed combining multiple elements altogether, yet, it is not clear what happens when they are applied using different combinations.

OBJECTIVES: To provide insights on how P4P programs are influenced by 5 key elements: whom, what, how, how many targets, and how much to reward.

METHODS: A qualitative longitudinal analysis of 10 years of P4P reward schemes adopted by the regional administrations of Tuscany and Lombardy (Italy) was conducted. The effects of the P4P features on performance are discussed considering both overall and specific indicators.

RESULTS: Both regions applied financial reward schemes for General Managers by linking the variable pay to performance. While Tuscany maintained a relatively stable financial incentive design and governance tools, Lombardy changed some elements of the design and introduced, in 2012, a P4P program aimed to reward the providers. The main differences between the 2 cases regard the number of targets (how many), the type (what), and the method applied to set targets (how).

CONCLUSION: Considering the overall performance obtained by the 2 regions, it seems that whom, how, and how much to reward are not relevant in the success of P4P programs; instead, the number (how many) and the type (what) of targets set may influence the performance improvement processes driven by financial reward schemes.