Last year it was the Borders Agency. This year it is HMRC that is taking the flak. For quite a few years now Civil Service Departments have met their performance-pay obligations by paying additional non-consolidated, non-pensionable payments to individuals according to how well they have met their personal performance targets. Linked to their appraisal rating in other words. Unfortunately, for the Civil Service (CS), these are referred to as ‘bonuses’ and as such are easy fodder for press headlines.
A year ago bonus payments within the Borders Agency were contrasted with the fact that some bits of the Agency had ‘lost’ a few thousand asylum seekers. This year the Revenue have embarrassed themselves by discovering that lots of people had underpaid, or overpaid, through PAYE because their computers had messed up. So how, according to the press, is it right to pay bonuses within these ‘failing’ organisations. Of course, in a private sector business such large-scale problems might well have affected profits (though not always) and had a consequential effect on any profit share bonus. But they tend to be in addition to any payments linked to personal performance.
One headline this week is headed “Tax officials’ bonuses to be curbed after bumper 2010″. It states that the Department paid out almost £800,000 more on staff bonuses in 2010 than in 2009. However, that is only around 6% of the bonus pot and a tiny percentage of the total pay bill. A spokesman is quoted as saying “We have said we will restrict performance related payments from 2011-12 and are conducting a review into pay structures”, that “bonuses will be curbed in line with the rest of the public sector” and that the number of Senior Civil Servants who will receive a bonus will also be dramatically reduced in future in line with commitments made by the Prime Minister.”
The ‘bonuses’ are a form of re-earnable pay and do not necessarily represent an increase in costs. Unions have never liked these payments for the simple reason that they are against any form of performance-related pay. Heaven forbid there should be any reward for doing your job better than the next person.
Some of the bonuses in the Senior Civil Service may have risen to a level that is a little embarrassing in absolute values (one of the consequences of working in percentages, of course). But there is a danger of throwing out the performance-pay baby with the adverse publicity bath water. Where there is no perceptible benefit from performing above the average the incentive to do so is significantly reduced.
Once upon a time the two greatest incentives were keeping your job at one end of the performance spectrum and promotion at the other. Dismissal is not quite the ready threat it once was and, within the CS, there are many ‘workhorse’ sections were promotion opportunities are, for practical reasons of organisation structure and location, fairly limited.
Previous posts related to this topic:
A policeman’s lot – public sector bonuses
Performance pay in the public sector
