For-Profit welfare : contracts, conflicts, and the performance paradox
By: DIAS, Janice Johnson
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Contributor(s): Maynard-Moody, Steven.
Material type: 
ArticlePublisher: London, UK : Oxford University, apr. 2007Journal of Public Administration Research and Theory - JPART 17, 2, p. 189-211Abstract: This article examines how financial inducements in performance contracts shape the inner workings of a for-profit welfare-to-work training program serving long-term recipients. Our work pays particular attention to how contract requirements shape relationships between manager and line staff and their treatment of clients. We argue that contract design, coupled with bottom-level management efforts to meet contractual obligations, leads to a performance paradoxthe same actions taken to achieve contractual results ironically produce negative program practice and poor client outcomes. Thus, rigidly constructed legal agreements between the government and private service providers can distort incentive structures, causing programmatic conflicts between management and staff, and do little to reduce long-term welfare use and diminish recipients' poverty
This article examines how financial inducements in performance contracts shape the inner workings of a for-profit welfare-to-work training program serving long-term recipients. Our work pays particular attention to how contract requirements shape relationships between manager and line staff and their treatment of clients. We argue that contract design, coupled with bottom-level management efforts to meet contractual obligations, leads to a performance paradoxthe same actions taken to achieve contractual results ironically produce negative program practice and poor client outcomes. Thus, rigidly constructed legal agreements between the government and private service providers can distort incentive structures, causing programmatic conflicts between management and staff, and do little to reduce long-term welfare use and diminish recipients' poverty
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