Flexible performance related pay proposed by pay panel for all central govt staff

Seventh pay commission tweeks earlier reports to bring back incentives to the staff

GN Bureau | November 20, 2015


#govt staff   #commission tweeks   #RFD system   #Performance Related Pay   #PRP  

In tech driven world the speed of services matters and the government service delivery is no exception. This delivery of service is linked to performance of each employee. The 7th pay commission, which submitted its report on Thursday evening, tweaks earlier suggestions on performance-linked pay and gives each department the flexibility to work out its own matrix.

The panel has suggested that the incentive could be in the form of a "non-additive cash component" of their current pay, paid at the end of the fiscal year and should not be linked to savings.

The commission says that ay flexibility reforms are not a silver bullet, and involve trade-offs and risks. A study of the literature on the subject reveals that employee motivation and performance are not exclusively linked to Performance Related Pay (PRP) which may only enforce temporary compliance.

It acknowledges that it may be relatively easier to implement PRP in private sector organizations which are, generally speaking, guided by profit motives. In the governmental context, on the other hand, the targets are more in the nature of social and public goods. These may not necessarily be tangible and discernible within a stipulated period.

Proportioning credit for such a larger public good amongst various departments may not be possible so as to reward some and leave out others. The commission also worried that the PRP may also degenerate into routine entitlements.

However, the potential good of PRP cannot be overlooked. It feels that recognition for good effort and achievement through an incentive can, over time, energize the bureaucratic culture of the civil service into one that is focused on meeting citizens’ and the government’s expectations for speedy and efficient delivery of services.

In this direction the commission has issued certain guidelines. Any attempt to implement PRP in a governmental framework has to be preceded by proper understanding of the system, adequate planning and capacity building at various levels.

The commission feels that given the enormous size of the government and the wide diversity in the basic structures, sizes and patterns that are observed across ministries/departments/divisions, it would be erroneous to recommend a one-size-fits-all model for PRP. The commission is of the view that prescribing any particular model for PRP may not be sustainable. Ministries and departments should be given enough flexibility to design individual models suiting to their requirements.

 In addition to the guidelines suggested above, the commission notes that introduction of PRP should be done keeping in mind two important aspects.

 First, need to evolve proper criteria to measure performance along with setting a context where individual and organizational goals are clearly aligned, and second, need to devise a performance appraisal system in which the objectives of the appraisal system match with that of the reward system.

The commission opines that the results framework document (RFD) can be used as the primary assessment tool for linking the targets of the organization with that of the individuals. Suitable changes in the existing Annual Performance Appraisal Report (APAR) can provide the necessary linkage between the targets of the appraisal system with those of the RFD document.

The Commission notes that the PRIS Guidelines based on VI CPC recommendations also based the performance measurement methodology on the RFD system. However, at that time, the RFD system was still being put in place and many departments were still adopting this system. 

The RFD system has taken firm roots now and has emerged as a powerful tool for evaluation of actual achievements of a department against annual targets. The commission notes that presently 72 Central Government ministries/departments are implementing RFDs.

This commission is of the view that the RFD system can be harnessed as an anchor for PRP. It can provide the platform through which organizational and individual targets can be clearly aligned.

The financial rewards should be linked with the performance rating under the RFD, to be undertaken by independent experts, as is done under the MoU system for central public sector enterprises.

In conclusion, the commission feels that any Performance Related Pay (PRP) for Central Government employees should provide a credible framework to drive performance across ministries/departments. Rather than a new system design, the favoured approach should be an incremental adaptation which can operate within the existing framework of rules with minor changes that can enable smooth implementation and operationalization of PRP.

Hence, the commission recommends introduction of the PRP for all categories of central government employees, based on quality RFDs, reformed APARs and broad guidelines, as enumerated above.

The commission also recommends that the PRP should subsume the existing bonus schemes. The commission notes that there could be a time lag in implementing the PRP by different departments. Till such time, the existing bonus Schemes should be reviewed and linked with increased profitability/productivity under well-defined financial parameters.

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