This article explores employee responses to the performance-based pay schemes introduced into the Australian Public service in 1998 and 1999. Many federal public sector employees were aware ofthe subjectivity and enhanced mana gerial discretion inherent in these schemes. In response, employees took the initiative away from supervisors to ensure that performance criteria and indicators were specific and job-related. Employees were also aware of the importance of regular feedback during the appraisal cycle. The prime challenge for Australian public sector employees and their unions is seen to be the development of an approach to performance management that would serve to ameliorate the individualistic and competitive cast of individualized merit pay compensation processes, principally through the pur suit of procedural justice in the formulation and implementation ofsuch schemes
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