The title of the dissertation is: "Performance-related Pay for Police Commissioners ". The aim is to examine the use of performance-related contracts for the Danish Police Commissioners in the period 2007-2010. The focus of the dissertation is on the content of the contracts, in order to provide an overview of the theoretical implications the application of performance-related contracts can have. In 2007 the Danish police were divided into twelve new police districts as a result of the police reform. Each police district is headed by a commissioner, who is responsible for the police operational work as well as the administration of the finances and personnel. The reform was followed by the introduction of annual performance-related contracts for the twelve commissioners. The annual contracts contain the required aims for the commissioners’ performances. The contracts are a continuation of the political agreements, and the Public Prosecutors and National Commissioners contracts. In the dissertation, principal-agent and transaction cost theory are applied to treat the use of incentive contracts. An optimal contract, according to principal-agent theory, is a contract that motivates the agent to act in accordance with the principal’s goals. According to transaction cost theory, on the other hand, an optimal contract is the most cost efficient contract. According to the theories, the use of performance-related pay may lead to unintended behaviour and additional costs. The analysis is carried out deductively through four theoretical elaborated hypotheses. The 48 collected performance-related contracts of the respective commissioners are examined through the hypotheses. The aim is to identify theoretically based barriers that may discourage an efficient application of the incentive contracts. It is concluded that there exists a level of asymmetric information between the Police Commissioners and the Public Prosecutor and National Commissioner. It is noted that the performance-related contracts are increasingly specified throughout the examined period and that contracts are signed in the ongoing contract period. This increases the risk of adverse selection. Furthermore, it is concluded that the balance between the contracts’ goals does not account for any divergence between the districts and that contracts does not completely relate to the commissioners’ responsibilities. The inadequate balance and coverage can cause a risk of distorting the commissioners’ work effort. In relation to the final evaluation of the contract goals and the performance-related pay, the conclusion is that it is partially done through a subjective estimation, which increases the risk of moral hazard. Furthermore, it is concluded that the increasing level of specification of the contracts implies a rise of the direct costs, due to the more complex negotiations, monitoring, and final evaluations. It is also stated that the increase of direct costs in the long-term may counteract unintended behavioural consequences. Through the dissertation and the analysis of the performance-related contracts for the Police Commissioners from 2007-2010, several theoretical barriers, which can discourage an optimal contract, are identified. The identified barriers occur in terms of risk of adverse selection and moral hazard, a balance problem, a coverage problem, and a risk of arbitrary estimations. There is also found an increase of the direct costs.
|Educations||Administration, (Bachelor/Graduate Programme) Graduate|
|Publication date||14 Jun 2011|
- new public management