In an announcement made earlier this month by Cabinet Office Minister Pat McFadden, radical reform plans were announced for the UK Civil Service. It appears that the overall strategy is to create a smaller central Civil Service. These reforms are based on performance-related pay, which means that senior civil servants who do not meet expectations may be “incentivised to leave”.
While few details are known, these tactics signal a change in the way performance is managed in the public sector. McFadden says that in addition to performance-related pay for senior civil servants, they will face new measures, such as development plans and possibly even dismissal.
Is this Labour move a clever way to improve the nation’s services? McFadden is he a haughty Elon Musk, wagging a chainsaw in the face of a supposed public sector bureaucracy without any thought?
The data collected by systems that reward performance can be used to encourage new growth.
Performance-based pay is designed to align motivation, efforts and results with the organisation’s goals. This seems like a good way to maximize the value of investing in people and ensure that work is relevant and high quality.
Linking pay to performance feels just as fair from a human perspective. Shouldn’t organisations compensate their employees for the value that they create? We often hear managers complain about their failure to differentiate between high and low performers on their salary slips or in the opportunities they provide.
Incentives can encourage people to do more for their colleagues, customers and other stakeholders. Incentives encourage people to go the extra mile for their co-workers, customers and stakeholders in exchange for a fair reward.
The message at the core of the variable-pay strategy is one that strong performers are likely to welcome: “We value you not just for sitting behind a desk 35 hours.”
Only those who are performing at a low level or who have a poor performance record, and those who want to be compensated for simply showing up, would reject compensation linked with performance.
Some may argue that the private and public sector owes a duty to care to employees who produce the best results.
It is easy to ‘game the system’ when it comes to performance measurement.
The question is complex, as are most issues relating to people and their organisations. Performance-related rewards can be difficult to achieve due to a variety of factors.
Collaboration is key to
By design, organisations are made up of people who share common goals. Rarely is it possible for one person to achieve a goal without the help of others, whether they are in the same team or not. People in HR, compliance, and technology enable product sales.
The performance of a company is a collective effort. Anglo-Norms of individual compensation can be difficult to apply across a complex value chain. It is possible that this is why team based performance measurement is becoming more popular, even though it takes us right back to the beginning, when rewards for an individual could be lacking merit.
Outcomes versus value
Individual performance is difficult to measure or define when collaborative processes are involved. Contributions themselves are no different. Although my primary objective is to close deals, I can make a huge contribution to the team by supporting colleagues and championing culture and values.
Performance is often measured by concrete results. We create a lot of value along the way through building relationship and by enabling practices which serve long-term goals, even if such efforts aren’t written in the job specification. It is difficult to define performance.
In the same way, performance-related compensation strategies tend to focus on extrinsic incentives, while many employees are more interested in the intrinsic rewards that come from doing a great job. Simple management strategies can miss the mark.
Outcomes versus bad luck
We may not reach our goals no matter how hard we work. Collaboration is…
- Colleagues may let us down.
- The global markets can change.
- Customers can resign.
- Budgets can be cut.
- Systeme can produce incorrect data (see the Post Office Scandal).
The complexity of the systems we work in makes it difficult for managers and HR teams to assess or define the value of individual contributions.
While performance-related pay might seem fair in theory, it can leave people feeling resentful – or secretly pleased that they get paid more than what they deserve.
Hacking the system
People are known to “game” performance measurement systems by bending themselves out of shape in order to achieve the key performance indicator (KPI) that is used to assess them. Some cheat by saying: “I will rate you Excellent on the 360-degree appraisal if I do the same thing for you.”
This type of gaming is a mockery to the variable-pay system. It also distracts individuals and teams from what’s most important for their colleagues and customers. Imagine, for instance, a civil service where employees are paid based on the number of calls they take, not on how well they solve citizens’ problems.
It is best to use variable pay as a carrot, rather than a stick.
The problems of bureaucracy
KPIs are intrusive, and this brings us back to the larger issue of bureaucracy. This is the scourge McFadden & Musk want to eradicate (or hack down with a chainsaw). As I explain in How Relationships Beat Systems, performance management systems are usually bureaucratic exercises in goal-setting and evaluation.
Another complication is the risk of variable pay. When organisations try to measure what cannot be measured and employees strive to hit simplistic targets, this detracts from vital relationship-building and the creative solving of shared problems.
This demotivating mantra will rattle and alienate a Civil Service already worried about a href=”https://www.bbc.co.uk/news/articles/cdek2ygzz8eo” rel=”noreferrer noopener” target=”_blank”>savings targets/a>, despite the fact that they are based on bureaucratic culture. This demotivating slogan will rumble and alienate an already concerned Civil Service about saving targets – a bureaucratic tool.
What can we take away from the Cabinet Office’s latest plans and policies? What can we learn from the Cabinet Office’s latest plans?
Every system should be designed to take into account the complexity of today’s work. Recognising that people matter, and accepting that performance is not easily defined, measured or seen requires humility. Recognizing that numbers are just a seductive fantasy about the real world goes a long ways.
Any attempt to reduce bureaucracy by bureaucratic means will only worsen the problems it is intended to solve.
