Incentives and Human Resource Management: The Critical Missing Link in Public Sector Reform in Developing Countries

Abstract:
There is a broad recognition that civil service reforms in developing countries have been less than successful in the past, as they tended to focus on downsizing and procedural changes without radically changing the outmoded incentives system. Drawing on the incentives literature, this paper argues that the success of reforms in the future is conditional upon the adoption of a combination of productivity-based incentives at an early stage of the process, granting organizations more autonomy in their daily operations, and introducing an efficient system of human resource management. The paper concludes that managing human resources must be at the center of any public sector reform effort, and highlights the important role of leadership, vision and a clear mandate for reform.