Master Slide

1
Performance Related Pay in the Civil Services
of OECD and EU countries
Anke Freibert SIGMA Conference on Civil Service
Salary Systems in Europe Bucharest, 25 April
2007
2
Performance Related Pay in theCivil Services of
OECD and EU countries

• Before 1980s?Pay per grade
• In the 1980s
• ?PRP in UK, NZ, NL
• ?Some moves in Austria, Australia, Denmark,
  Finland, France, Germany, Norway, Spain
• ?Canada and USA had had PRP for a long time for
  senior and middle managers

3
PRP for management positions

• Used mostly to fill the remuneration gap between
  managers in the private and the public sector
• Problems
• ?Internal equalization of salaries (pressure to
  increase salaries across the board)
• ?No evidence found of links between PRP for
  managers and improvement of performance in public
  organisations

4
PRP for non-managerial positions

• Little evaluation of the effects of PRP for
  non-managerial positions (most evaluations refer
  to Australia, UK and USA)
• Very limited success
• Staff rate the scheme often as de-motivating
  (only a few staff get bonuses)
• The performance appraisal scheme put into
  question altogether (de-legitimising the scheme)

5
Negative side effects of PRP

• Increases in personnel costs (escalation of
  personnel ratings and payments)
• Unions tend to see PRP as a negotiable part of
  the salary
• No PRP scheme can be completely objective (the
  tiny line between subjectivity and arbitrariness
  is easily trespassed)
• No evidence found that PRP has increased
  productivity or better quality of public services
• Bureaucracy increased in HRM

6
Some (negative) conclusions(EIPA survey 2002)

• PRP is costly and time-consuming to implement
• PRP schemes only applicable for managers
• Small pool of money for PRP
• Mostly pilot projects in specific agencies
• PRP schemes do not address underperformance
  problems
• Measurement of non-quantifiable outputs is almost
  impossible
• Additional remuneration not seen as a significant
  motivator

7
Some (positive) conclusions

• Regular formalised discussions between superiors
  and subordinates on performance, target-setting
  and progress achieved have positive effects on
  motivation

8
Performance Management an alternative?

• Late 1990s and 2000s Performance Management as a
  new approach in NZ, Australia, Canada, UK and
  USA)
• Meant to link management with institutional goals
  and strategies
• But is difficult to find working linkages between
  individual, unit and institution target-setting
• And consistency throughout the political,
  policy-making and managerial processes is
  difficult to ensure
• And, again, it is difficult to measure
  performance even if in some countries
  performance audit was introduced

9
Accountability and Motivation

• Objectives of Performance Management More and
  better accountability and motivation of public
  servants
• Experience shows that motivation is better
  achieved through pay predictability and reduced
  or non-existent discretion in determining
  individual salaries and by de-politicisation and
  reduction of patronage
• PRP may distort the whole pay system of the
  public service by making it opaque and
  bureaucratic Accountability is lost?

10
Performance Dialogue is to be encouraged

• Career planning
• Assessing potential promotions
• Individual training needs
• Horizontal mobility
• Sense of an individual contributing to the
  objectives of the institution