Public sector against performance-related pay

Efforts to reform public services will be undermined unless public sector employees recognise that their salaries should also reflect their performance rather than simply tracking the cost of living, according to the Chartered Institute of Personnel and Development.

Its annual Employee attitudes to pay survey reveals that just one in three public sector workers think their salary should reflect their individual performance, compared to more than half of private sector workers. In the private sector, 54% believe that their salary should reflect their own performance, 36% inflation/the cost of living and 32% their experience. In the public sector, workers feel their pay should reflect inflation/the cost of living (55%), individual performance (36%) and their experience (33%).
The survey also found that how individuals would like to get paid also influences how they think other workers should get paid. Private sector workers feel strongly that those in the public sector should be paid according to individual (55%), organisational (33%) and team performance (26%). Public sector workers agreed that private sector workers should be paid based on how well they should perform, but are more reluctant to see their own pay linked to individual performance (36%), that of their team (11%) or that of their organisation (5%). Three in ten public sector workers (30%) believe that pay levels should be decided via a trade union negotiated pay deal. This is the highest it has been since 2010 and possibly a reaction to the recent pay restraint in that sector.
Charles Cotton, rewards adviser at the CIPD, says: “Establishing a closer link between pay and performance in the public sector is a key element to improving service delivery and value for taxpayers.  What’s more, unless the public sector starts linking pay to performance or better engages with those in the private sector about why their taxes should reward public sector workers differently, public sector employers could find it hard to legitimise pay decisions in the eyes of the private sector.
“However, linking pay to performance does not come without its management challenges. It’s encouraging to see that there is some appetite in the public sector for performance related pay, with one in three workers agreeing that their salary should reflect their performance, but if performance related pay is introduced, public sector managers will undoubtedly find it challenging to retain levels of motivation and engagement amongst those who think other factors should determine their pay. Public sector employers would need to be prepared to invest in explaining why it thinks such reforms are needed and communicate the changes in the wider context of changes in the public sector ’employment deal’. On the other hand, with younger employees more likely than older generations to expect to see their pay reflect their individual achievements, the public sector could face issues recruiting staff in the future if it does not start linking pay to performance.”
Other findings from the annual Employee attitudes to pay survey include:
– the percentage of workers getting a pay rise increased from 45% to 48% last year.
– Just 20% of public sector workers got a rise in 2012, compared to 73% in 2008. 56% of those in the private sector got a rise in 2012, compared to 64% in 2008
– Of those who got a pay rise, only 26% got one that matched or bettered the cost of living
– Of those who received no salary increase in 2012 (47%), 22% report that they have had no pay rise since 2008 and beyond
– 26% of employees work for employers that operate a bonus scheme. Of those eligible for a bonus, 71% received one
– Satisfaction with pay rises is higher amongst those who received an explanation from their employer than those who did not
– Employees who got a pay cut but received an explanation were more satisfied than those who got a pay freeze but no explanation
– Two-thirds (63%) of middle managers and above see their pay levels as fair. The proportion of all groups below this level of seniority who perceive their pay as fair is even (between 48% and 51%)
– By region, those employed in the north-east of England (42%) and Wales (43%) have been less likely to have seen their pay rise over this period, while those working in the east of England (56%) have been more likely to have enjoyed a salary increase.

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