Public-sector performance pay 'fundamentally flawed'

Performance-related pay systems covering more than 700,000 public servants are "fundamentally flawed", according to a leading employment relations analyst.

Performance-related pay systems covering more than 700,000 public servants are "fundamentally flawed", according to a leading employment relations analyst.

Only 18 per cent of senior managers in the public sector thought they improved productivity and only one-quarter said they enhanced commitment, Industrial Relations Services (IRS) found.

The approach is used to reward all civil servants, and the Government intends to press ahead with the system for teachers despite a High Court ruling halting the process.

Senior managers in the public sector think their staff are deeply cynical about it. Some 34 per cent of public servants believe there is a quota system, so that a set number of employees will receive an increase whatever their performance.

A survey of 125 organisations showed that compared with private industry, employees in public services are more likely to feel that line managers are inadequately trained in assessment techniques.

Around three-quarters of private sector firms believe merit schemes are "fairly successful", compared with less than half in the public sector. Nearly 75 per cent of senior officials in public services said the pay awards were too small to motivate employees and 29 per cent said that it was more costly than the system it replaced.

Jeremy Baugh, editor of the IRS Pay and Benefits Bulletin, said that performance pay systems in state organisations were "less successful and more problematic" than those in private industry. "The findings are likely to make uncomfortable reading for the Government and will add to the mounting body of evidence which suggests that performance pay in the public sector is fundamentally flawed."

Last month, the High Court declared the system being introduced in schools was unlawful as the Government had not consulted teachers or Parliament. The Department for Education and Employment is now engaged in a consultation process and the first payment of £2,000 to teachers will probably be made later this year.

Mr Baugh said that in parts of the Civil Service individual performance pay had been a "disaster". Whitehall was switching to group merit pay, where whole sections or departments qualified.

"You would have thought they would have learned the lesson from the Civil Service, instead they have embraced it with vigour for schools. They could end up with egg on their faces if the problems are replicated and I see no reason why the same problems should not arise," Mr Baugh said.