In every organization, public or private, performance is driven by an engaging leadership. According to Richard Heeks of the University of Manchester’s Institute for Development Policy and Management in his seminol international text on implementing e-government titled, “Implementing and Managing e-Government“, before digging deep to the function of leadership, staff performance in any agency, especially in the public sector, demands a performance management that follows a standard pattern of target setting, measurement, evaluation and control. The main question is how to drive performance. How do you do more with less time and money? This is where the question of leadership in government agencies emerges.

‘Psychic pay’ is a system which uses non-financial rewards such as performance awards, personal recognition from senior staff and career development opportunities to drive performance. These alternative performance boasters are very significant for individual performance and are widely the prerogative of an organization’s leadership. Successful leaders are those in touch and in tune with their work force, inducing a sense of responsibility and empowering their employees through multiple mechanisms.

One person inclined to agree with psychic pay model was John Quincy Adams, the sixth President of United States from 1767 to 1848 who said “If your actions inspire others to dream more, learn more, do more, and become more, you are a leader.”

Observing from the City Hall of Savannah in my position assisting the mayor, I find that here in Savannah the mayor’s office is mostly occupied with signing citations, letters of recognition, stopping at employees’ desk and having casual conversation, all in my opinion to motivate city employees to do their best. In my estimation, the public sector does not have the luxury to give out sweeping bonuses, gainsharing or to offer skill-based pay which is common in private businesses.

This is why the concept of psychic pay is more important to students of Public Administration than those in private business because the risks are not the same. The business administrator is profit minded, mostly motivated by money just as the employees they supervise. They work hard because of the prospect of financial gain and bonuses once their targets are met. Public administrators across the world are faced with a persistent lack of financial resources and financial alternatives to drive performance while also needing to balance the ever-changing concerns of their citizens. The difficulty of harnessing the types of leadership skills that motivate and influence employees to do more even without financial incentives reflects the fact that incentives that work in the business world, cannot be copied in the public sector. New thinking, such as psychic pay, may be part of the answer.