PAY FOR PERFORMANCE
GROUP 1
by Chitral Amarasiri, Sri Lanka
13th International Symposium Public Personnel Management
Budapest Marriott Hotel,
May 15- 19, 2005
GROUP 1
Bahrain
Germany
Malta
South Africa
Sri Lanka
Taiwan
Trinidad & Tobago
World Bank
United States
- Ahemed A Al-Bahar
(Team Leader)
- Ingrid Barb-Priebe
- Joseph Izzo
- Odette Ramsingh
- Chitral Amarasiri
- Ruey-Hong Chang
- Earl Blugh
- John Lavelle
- Lynda S Von Bargen
- Neil Reichenberg
Content
Objective of the session/
Presentation
Current Status
Obstacles & Barriers
Performance Appraisal system
Non-Financial Benefits
Rewards structure
OBJECTIVE
To understand country specific
“Pay for Performance” (PFP)
systems in brief and to share
knowledge on selected specific
areas.
Current Status of PFP - Bahrain
Grade and Step System
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–
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Executive,
Professionals,
Judges,
Regular,
Teachers
Annual Increment
– Blanket cover – fixed increment
– Based on cost of living
Introduced a Pay for performance scheme
and it was not successful at the 1st attempt
Current Status of PFP - Germany
Grade and Step System
– Very structured system
–
Annual Increment
– Blanket cover – fixed increment
No Bonus Scheme or PFP in operation
Current Status of PFP – Malta
Grade and Step System
– In operation since 1990
– 4 sectors (A, B, C, D) and altogether 20
classifications
– A sector salary is 4 times of the D grade salary
– One grade to another through an examination
Annual Increment
– A sector no increment
– B,C,D sector – blanket cover fixed increment
Bonus Scheme or PFP in operation
– A sector static Salary + PFP Bonus
– BCD sector Salary + increment no Bonus
Current Status of PFP – South Africa
Grade and Step System
– Equate levels 1 -12 (Structured)
– Levels 13 – 16 (Structured but based on individual need)
Annual Increment
– Increments are based COL
– Union Negotiate increment once in three years
– Snr. Management – by the ministry
Bonus Scheme or PFP in operation
– PFP based Cash Bonus for levels 13 to 16
– Merit awards for levels 1 to 12
– Birthday Bonus
Current Status of PFP – Com Bank Sri Lanka
Grade and Step System
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5 Grades and 12 classifications
Promotions – Non-Executive to Executive by an Exam
Other Promotions based on performance
Many perks tag with the grade
Performance Standardization
Annual Increment
– Non Executives : Union negotiate increment for three years
– Executive staff : increment on performance only
– Major salary anomaly issue
Bonus Scheme or PFP in operation
– Executives 4 grades – PFP Bonus + Holiday allowance
– Others categories of employees – No bonus
Current Status of PFP – Taiwan
Grade and Step System
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–
–
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Commence 40 years ago
14 Grades with different classifications
Promotions are based on seniority
Strategically driven – cascaded to agencies
Agency level performance committees
No negotiations
Annual Increment
– Fixed Increment
Bonus Scheme or PFP in operation
– 3 years ago PFP Bonus scheme commenced
– Professional merit awards, cash rewards (CEO,
Units:80%, Individual:20%)
Current Status of PFP – Trinidad
Grade and Step System
– Job classification and point based system in place
– Snr MGT, Judicial, legal officers determined by the SRC,
Judicial and legal salaries based on guide chart method of job
evaluation
– Snr. Management : flat scale salary rates
– Salary structures for teachers, police, fire and prison services
are based on negotiations by unions + guide chart method.
– 64 salary grades in the civil service and salary rates are based
on position classification method of Job Evaluation.
– Professional, technical staff salaried below the mkt rate +
special allowances
Annual Increment
– Based on satisfactory performances
Bonus Scheme or PFP in operation
– No PFP Bonus scheme
Current Status of PFP – World Bank
Grade - Hay System
– Job classification grades
– Salaries are adjusted as per the Market rate
comparison with selected international
agencies.
Annual Increment
– Based on performances rating Matrix
Bonus Scheme or PFP in operation
– No PFP Bonus scheme
Current Status of PFP – Montgomery College
Grade System
– Job classification grades
– Snr. Management, Staff (14 grades), Faculty
– Negotiation process for staff/faculty categories
Annual Increment
– Snr Mgt : performance based increment
– Staff : COL adjustment + Merit performance
– Faculty: one scale, COL + Merit performance
Bonus Scheme or PFP in operation
– No PFP Bonus scheme
Obstacles and Barriers
Issues pertaining to subjectivity
Applicability
Funding issue
Right awareness : training issues
– Knowledge of supervisors & Job incumbent
Cultural & Communication issues
– Consider the interest of various stakeholders
Legislation issues – parliament, etc
Some are not keen, since they feel that PFP in the
public sector will be more a de-motivator
Performance Mgt. System
Considered as a powerful management tool
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Strategically driven – Long/Medium term, cascaded
Planning & implementing – KPIs/KRAs, clear measures,
employee feedback, industrial relation,
training and development,
succession planning, etc
Success depends on;
– System (Process), Simplicity (Format), Supervisors,
– Training : Mandatory, but many create the need, structured Tra.
Can we abandoned the Performance appraisal
system in the public sector?
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Credibility is an question, Does it serve the purpose?
Is it a grievance handling mechanism
Is it waste of executive time and paper?
With technology world is changing is this out dated?
More a employee de-motivator than a motivator
Is it too clinical? Assigning 4.99 or 5.00 to a human output
Is too democratic and too transparent?
Non financial benefits
Should not link with the PFP system
(entitlement mentality) and it should be
at the discretion of the direct
manager.
Recent survey in USA has revealed
that people value leisure time than
money, thus now companies give a
day-off as a benefit.
Training, Sabbatical, long years of
awards, appreciations awards, etc.
Today’s Challenges
 Characterized by uncertainty and challenge
 Customer/Beneficiary is more sensitive than before
 Funding are under pressure
 Increasing role of technology
 Creation of a new type of workforce
 Leaner and flatter structure
 Attracting and retaining talent
 Shift from seniority to performance
 Developing ownership and empowerment
Pay for Performance or
Performance Appraisal System
Employees:
“I don’t understand
what it takes to do well
here. Success is all
about who you know.”
Managers:
“I dread giving that
person feedback. I’m
waiting for her to just
quit.”
HR Director:
“Why are we always
cleaning up the
problems? Where is the
accountability for
individuals?”
Leaders:
“Everybody here is
working hard - I don’t
understand why we
aren’t meeting our
business goals.”
Total Rewards
Total Rewards cover everything an employee gets as a
result of working for an organization, including all aspects
of the work environment, as well as all elements of
compensation (remuneration and benefits).
Affiliation
Career Value
Work Content
Indirect Financial Rewards
Direct Financial Rewards
Total Rewards Approach
 Reward mix decisions made in context of all
forms of rewards: cash, benefits & work
environment;
 Remuneration is a hygiene factor
– Additional investment in remuneration will only
lead to marginal improvements in employee
engagement and in turn business results;
– Additional investment in the work environment will
lead to superior improvements in engagement and
in turn lead to better business results.
Total Rewards Approach
Beyond the “fair and reasonable level” : Studies show that marginal ROI is significantly higher if
you invest in building a more rewarding work environment - specifically focusing on the key drivers
of engagement.
Maximising Return on Reward Investments
% ROI
Work
Environment
Investment
Superior
Returns
Remuneration
Investment
Competitive
Returns
Fair/Reasonable
Investment
Additional
Investment
$ INVESTMENT
Types of incentive pay plans
Plan
Design
Objective
Target
Performance
Focus
Funding
Profit Sharing
Share in
Company
profits
Foster
teamwork
All employees
Corporate,
Business Unit
Profits
Business
Incentives
Linked to
Financial &
Non-financial
targets
Increase focus
Corporate,
on Corporate, Top & Middle
Business Unit,
division, &/or Mgmt
Team, Indiv
indiv goals
Incremental
financial
performance
above targets
Productivity/
Gainsharing
Share in
economic
benefits of
improved
productivity
Support major
productivity/
Plant or unit
quality
employees
initiative
Savings
Plant, Facility,
Team
Types of incentive pay plans
Plan
Team/Group
Incentives
Individual
Performance
Awards
Design
Reward
achievment
of team
targets
Reward
achievment
of individual
targets
Objective
Foster
teamwork
Reward
individual
performance
Target
Project
Teams/
Groups
Individual
Performance
Funding
Focus
Team
Cost
savings,
budgeted
amounts,
increased
revenues
Individual
Cost
savings,
budgeted
amounts,
increased
revenues
Thank You!
Chitral Amarasiri- Sri Lanka