Policy expectation moderates the relationship between merit pay policy effectiveness and public service motivation

We explored how policy expectation influences the relationship between public service motivation (PSM) and perceived merit pay policy effectiveness among public sector employees. Using survey data from 581 Chinese compulsory school teachers, we tested the influence of merit pay policy on PSM using multiple regression analysis. The results demonstrated that the relationship between the perceived effectiveness of merit pay policy and PSM is U-shaped. That is, teachers’ PSM declined in the case of a weak perception of policy effectiveness but improved when teachers perceived that policy effectiveness was high. In addition, policy expectations moderated this link, suggesting that taking this variable into account can help to improve teachers’ acceptance of the reward policy. The theoretical and managerial implications relating to strategies for implementing performance pay systems, study limitations, and possible future research directions are discussed.