Friday, 28 February 2014

Mollifying the Mandarins - the payment of 'bonuses' to the Civil Service


It’s clearly that time again when having run out of other things to moan about, media ire is instead focused on the fact that the Civil Service have been paid bonuses this year. Stories in today’s media show that some £140m was paid out last year as bonuses for staff, including some departments where every member of staff received one. The bonus debate is a hugely emotive issue for many – to the public it brings to mind the images of bankers and makes them think of civil servants getting similar large pay outs just for doing their jobs. For many in the civil service though, the bonus brings up a sense of frustration – firstly for the fact it exists, and secondly because of the flak that they take because of it, when none of them ever asked to get one in the first place.

The whole argument in favour of paying a bonus is built on a very basic principle – namely the need to save money. It originates with the idea that by taking some of the annual pay award and awarding it as a special bonus, it is non-consolidated – in other words it doesn’t contribute to pensions. The more money paid out as a bonus in the short term , the less that is paid to the retired civil servant as a pension in the medium – long term. It’s a simple idea, but one that has quickly become very emotive to all concerned.

From a practical perspective the idea of recognising staff who go the extra mile is sensible. There are relatively few ways in Government to recognise the efforts of people, many of whom work extremely hard for the taxpayer and do a genuinely good job. There is no staff discount, no means of hosting a thank you party or throwing a Christmas drinks party and the nature of the work means many people often spend years in the same grade due to limited promotion prospects. The notion of an annual cash award to those who have gone the extra mile in comparison to their peer group makes a great deal of sense – but implementation is more tricky.

As a friend of the author once described – how do you work out in an office of 20-30 people, all of whom do the same job (e.g clerical work with very fixed references and very little opportunity to do more), how do you identify those who’ve gone the extra mile. In its early days the system provided a 50/50 chance of award – in other words, half the MOD got one and half did not. In the office of 30 with everyone doing the same job, it was an easy way to destroy morale overnight due to the seemingly arbitrary way in which the award was given.

Later efforts refined the system a bit more, and in some parts of government at least it is now firmly linked to the attainment of objectives. In other words, if you do your job to the standard expected, you receive a payrise and possibly a small amount of money as a non-consolidated lump sum (compared to previous years when you’d have got the full amount as a proper payrise). Reach beyond this, and you may find yourself getting a slightly larger amount in recognition of your efforts. Fail to meet the standard and you get no payrise and no bonus. Again, a good system and one that needs effective management and a good understanding of setting realistic objectives to succeed. Done well though and it hopefully acts as an incentive to staff to do their job against measured objectives (and failure to do so can start down the path to dismissal), and also encourages people to invest time in training to understand how to properly do objective setting.

How do you get the next generation of high quality civil servants?

 The sums involved are not large. The vast majority of people were earning maybe £200-300 before tax, if that. But, the fallout from it highlights the difficulty in the much more thorny issue of Civil Service pay. This was touched on earlier this week in the discussion about how much the MOD was having to pay on consultants to bring back in skills of people in DE&S who’d left in previous redundancy rounds because no one left had the skills to do the job. The challenge was to see whether it would be possible to use some of the consultancy money to adjust pay bands in DE&S to try and retain people rather than lose them and pay for a consultant.

How you balance off the natural desire to keep the Civil Service headcount and wage bill as low as possible, while simultaneously getting people to stay in with niche skills is a real challenge. No one likes paying more than they have to for people, and no one will ever win many votes for suggesting a large payrise for the Civil Service. But, there is clearly a growing issue that it is growing harder to retain people in technical and specialist areas if the money isn’t as good as it used to be.

 Ultimately MOD has need of people with very niche skills, these can take a long time to develop and train, and will be hugely valuable to other companies. As the MOD shrinks, promotion opportunities decline and people look to their career advancement and worry about paying bills, loyalty to the civil service is perhaps diminished. People see an organisation which while offering interesting work and a decent overall package doesn’t compete with employers for the mid seniority and specialist roles –in other words good project managers, technicians and so on. It is very common to see reasonably competent people leave MOD and go to the private sector for a 20-30% payrise, not because they want to leave the CS, but because the pay and prospects is simply not enough anymore.


While it is very easy to knock the civil service for failing to deliver, you can only work with the people and resources that you have to hand. People will walk for better money and the chance of development or career progression. If you are a mid-seniority C2 or C1 in somewhere like Abbey Wood  (middle management grades) then your chances of progressing up and through the system, or rising up the payspine to earn a salary which reflects your skills are slim. The only option is to leave and go to the private sector or become a consultant.

There is no easy way to fix this issue. No one ever joins Government to get rich, but equally plenty seem to be leaving to earn a living wage outside. Relocation of departments is one option – sending people to different parts of the country where the cost of living is lower and where a salary goes further. But if you look at the case of Bristol, where the cost of living is rapidly approaching London standards but without the equivalent London package, its very hard to keep a reasonable lifestyle ans attract good quality talent to join. The DE&S was looking for experienced project managers recently and was offering a starting salary of £36,000. Realistically how many people with the right experience would be willing to take a salary hit to join an organisation which still faces a very uncertain future.

The public image of a civil servant?

Humphrey wants to be clear – he is emphatically not suggesting that the civil service deserves vast pay rises. Frankly, for the more junior parts of the Civil Service, the payscale is very reasonable and roughly in line with the private sector. There is also a generous leave package available and reasonable employment conditions. But, as the economy gradually improves and  the private jobs market increases, the battle for talent will intensify. As jobs open up, it will be ever harder to encourage more experienced people to join an organisation where the salary scales simply do not offer credible return needed.

The danger is that the Civil Service gets excellent new entrants, but as they gain experience they will inevitably look outside. Much like many of the best Army officers leave in their late 30s, its likely that many of the best civil servants do the same, simply because they know the package on offer doesn't make it credible to stay.

When you consider that many civil servants can no longer afford to change locations as relocation expenses are not routinely paid any more, the real worry is of a civil service which over time becomes localised, with very little change of roles and experience for most staff, and led by a London centre where staff there are reluctant to leave the city, knowing they could never return. Humphrey would love to work out of London, but knows that the cost of doing so in terms of selling up and moving on would then price him out of ever returning to the London housing market.

Is it all doom and gloom? Probably not – the Faststream continues to generate far more applicants than are ever appointed, and most are of a very high quality indeed. There are always the idealists who will stay in the system for the long term, or those who do work which cannot be replicated outside of Government and for whom no salary can replace the challenging nature of what they do. Humphrey continues to believe that there is a good employment offer for many civil servants who enjoy not unreasonable salaries, and a reasonable set of conditions. But, he does worry that skills will be lost which are commercially transferable, and that over time this could present a real problem.

The real 'Sir Humphrey' - Sir Norman Brook - a great example of a truly great civil servant

The issue is one of whether Government is willing to risk all that most people that do stay on do so for the challenge, the opportunity and the nature of the work rather than fiscal and material reward. While it is easy to quibble over small things like performance related bonuses, it does add up to the question of what do you want your civil service to be, and what level of excellence do you want to attract into it at all levels? Exercise too much constraint on pay and the really good people that you either want to keep, or that you want to recruit in at more senior levels will simply not come.


There is no right answer to this age old problem, but it is a real issue. How do we ensure the Civil Service we have attracts the right talent, at the right levels and costs the right amount of money that the taxpayer is willing to bear? Answers to No11 Downing Street please! 

18 comments:

  1. Why should you expect a bonus for doing your job?

    A company advertises a position (including its "terms & conditions”) you apply for the job and are successful.
    This, in theory, means that you are content with your lot in life.

    Then why should your employer feel obliged/be forced to give a bonus for you doing your contracted job?

    I suppose that if you show initiative, perform "above & beyond" that which is expected of you then you could reasonably expect your employer to show their appreciation of your efforts - but not necessarily with "coin of the realm."

    We live in a free society. Should you become dis-satisfied with your job you can always move on to pastures new – you could also negotiate new terms with your present employer.

    Next we could consider the difference between “for profit” and the “not for profit” types of employer – but it still comes back to the main point – nobody forces you to take the job – if you are unhappy then move on.

    Why should you expect a bonus for doing your job?

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    Replies
    1. Yes, the best and most marketable specialists could move on - and what impact do you think that will have on the quality of work? Bear in mind that we're talking about defence of the realm here. But no civil servant outside a very small number of very senior individuals brought in on personal contracts at inflated salaries for specific jobs has the ability to negotiate their own terms with the Government. Our contract simply doesn't work that way. And I don't expect a bonus for doing my job. I think the system's iniquitous, counterproductive, corrosive and largely driven by poliitcal ideology rather than evidence. On the other hand, I don't see why I should be expected placidly to take a 20% real pay cut over 4-5 years while being insulted and derided for it by idiots who can't be bothered to actually spend the time to look at the problems we are trying to manage.

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  2. Bonuses are there if people meet targets, they are generally laid down in someone's contract. I would expect a bonus if I had met the requirements for the bonus. CS are the same, if they've done what is needed to get it then fair enough. Plus the sums are small fry £300, there's far bigger fish to fry in the MoD than CS bonuses.

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  3. My employer pays a "bonus" (a derisory amount) which has been funded through an across the board pay cut which was forced on staff without consultation. And it did because it was directed to do so by ths Treasury

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  4. UK cvil servants should not be receiving bonuses- they should be receiving pension and pay cuts though. UK civil servants are amongst the least productive and most over-paid and pensioned people in the country. There laziness is statistically proven through everything from productivity statistics to the outrageous numbers of sick days they take. Then there are the out of control pensions whereby government steals from hard working private sector workers to line the pockets of lazy civil servants who were overpaid through their entire careers.

    Bonusses are a side issue but the obvious answer is "no".

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    Replies
    1. You obviously have no idea of the Civil Service and you probably work for the Torygraph or daily whail. What a shame. What could have been a good and thoughtful reply was let down by you complete lack of knowledge of the CS and most of the people in it.

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    2. Loathe though I am to comment on the thinking of someone who can't use "their" and "there" correctly, I've most commonly heard this overpaid civil servant line from someone who's read a Daily Flail article on how the average civil service wage is higher than the national average wage - forgetting to mention that the private sector is full of minimum wage jobs, whereas the civil service has been denuded of lower-ranking staff over the last couple of decades.

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    3. Public sector workers still earn 2.7% more than equivilant private sector workers: http://www.theguardian.com/society/2014/mar/11/public-sector-workers-earnings-squeeze

      Sorry but civil servants are lazy parasites and their pay has been cut nowhere near far enough given that productivity did not grow at all between 1997 and 2010: http://www.ons.gov.uk/ons/rel/psa/public-sector-productivity-estimates--total-public-sector/2010/index.html

      Try whining less and working more and you might get some sympathy

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    4. That would be the lack of productivity shown by a defence civilian workforce that fell by about 50,000 between 1997 and 2010 while the rest of the Civil Service grew like topsy, while simultaneously supporting the two largest sustained overseas combat operations the Armed Forces have conducted since the Second World War and also carrying on doing all the other things we have to do, I take it?

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  5. Being a trusting soul, I usually make a habit of believing anonymous posters on t'interweb. After all, much like yourself, they always seem so sure of the facts. On this occasion however, I am curious enough to ask if you could post links to your 'proof' so I can see it for myself. Please note, Daily Mail articles, or the bloke down the Pub who seems to know what he's talking about, do not constitute 'proof'.

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  6. Ian etc: read the article. The bonus system was imposed ten or so years ago on MoD staff by their employer, who took away 2.7 % of the salary pot which it had previously agreed to use to pay peoples' wages, and declared that this chunk would henceforward be withheld from peoples' wages and instead reserved for performance-related pay, or 'bonuses'. That way, peoples' real salary would be reduced, and the future pension based on the salary would also be reduced.

    In other words, the employer helped itself to a chunk of our salary settlement in order to pay us less overall and reduce its future liability. None of the staff thereby short-changed, betrayed and cheated (that's all of us) wanted this. It was effectively theft. And because no proper consideration of the effects on morale had been undertaken by the employer, and because it had not thought through how to properly administer this unwanted bonus system, it's been a complete dog's breakfast since its inception, with changes being made to the rules almost every year.

    This year, thanks to the nasty ideologues in the current regime (step forward Francis Maude in particular), MoD civilians are being punished in an especially vicious way: after two years of gross salary stasis during which take home pay dropped every year because of the government picking our pockets in order to renege on the pension they'd contracted to pay us, then a pay increase last year of 1% which was also not actually paid to us because they took away a bit more to fund the pension theft, this year it has been decreed that a mandatory 5% of staff - one person in every group of twenty colleagues of the same grade - MUST be deemed to be 'underperforming'.

    Regardless of the work these people actually do, of its importance to the nation, of the skills and qualifications and experience and training it requires, or the dedication and intelligence brought to bear during the discharge of their duties, one in twenty of each group of colleagues MUST be declared to be an 'underperformer'. In most cases, tiny shortcomings in individuals' presentation of how they have 'demonstrated the core competences of the civil service' will be teased out by the managers tasked with this grim duty, in order to determine the recipient of the black spot: much will hinge on how well you can spin your own narrative to present yourself in the most advantageous light.

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  7. To continue: There will be of course be genuine cases of staff who fail to perform to the required standard, but many, many more where, because somebody HAS to be found, somebody will be culpable of nothing more than being profoundly unlucky. Everyone is scrambling to avoid being that person, spending days and days writing and rewriting their 'evidence' of 'performance', trying to spin what they've done during the year without being actually mendacious. It is a deeply flawed, unfair and obnoxious system.

    And for what? That one person in twenty, whether socks actually need to be pulled up, or whether stress has impacted performance (hardly uncommon, believe me, when you're trying to live on a steadily declining income), or whether just plain unlucky, or a bit naive, or too honest, will get no 1% pay increase this August, will have 0.6% of their pay taken away this April in yet another increase in pension contributions, and will, accordingly, have their pay cut. Again.

    Of the rest of each group of twenty colleagues, no more than five (this also has been decreed by Maude) deemed to be the highest-performing will receive a 1% pay increase plus a bit of performance-related pay, or bonus. How much that might be has not been revealed, but it is highly improbable either that it will be, for the majority, more than small multiples of a hundred quid, depending on grade (Senior Civil Service 'mandarins' excepted: they've always got a generous sub), or that it will represent distribution of the whole of the 2.7% of the salary pot that was set aside for the purpose all those years ago.

    The remaining Maude-decreed 'up to 70%' (or up to fourteen of the group of colleagues) in the middle of the group will get no bonus, but will get a 1% pay rise in August. But, of course, it won't actually be a 1% pay rise because of the removal of the 0.6% of gross pay back in April.

    At least, though, they will not actually be poorer, unlike that single mandated one person in their group of twenty. And let's just remind ourselves of what that actually means: no pay rise at all in 2011 and 2012, 1% in 2013, pension contributions increasing in each of those years, meaning take-home pay goes down every single year, and now down again this year, during which period the cost of gas, electricity, train and bus fares, petrol and diesel, food and clothing has shot up every year and stayed up. These items are the amongst the basics necessary to maintain yourself and to get yourself to work and to turn in a decent performance when you get there. But one MoD civil servant in each group of twenty colleagues will, because Maude has decreed that they must, have even less to live on from this April until, if they try harder at their 'evidence' drafting next year, August 2015. Or by that time they might just have given up and taken some way out.

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  8. And finally:
    So we're not 'getting a bonus to do our jobs'. We're being forced to scrabble in a hugely undignified manner to get a minuscule increase in our pay. Five in twenty of us will get a bonus, which should have been part of the pay of the entire workforce in the first place, but which our employer took away from us some years ago in order to pay us less and reduce our pensions. This slice of our salary pot used to be distributed reasonably widely, albeit grossly unfairly, across the workforce. From this year, it's being withheld from three-quarters of us and partially paid out to up to a quarter of us who have been able to demonstrate that they've been exceedingly competent during the last 12 months. But not all of it will be so paid out: where the rest will go is anybody's guess, but it certainly won't be used for the purpose for which it should be being used - paying the salaries of MoD civil servants.

    These necessary corrections to your perception aside, you're spot-on: people shouldn't be given a bonus for merely doing the job they're paid for and no more than that. But they should be paid decently for doing their job well, and for doing demanding work of national importance well, and for doing it with huge dedication and diligence. And they should not be subjected to deliberate and systematic impoverishment for years on end. And they should not have the pensions which their employer contracted to provide stolen. And they should not, if they're struggling to survive on less and less pay and they're under stress and they cannot shine brightly at work under these circumstances, be punished by being made even poorer.

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  9. Would much rather have a pay rise that at least kept up with inflation, than a bonus (which I've never heard of in the SG), to be honest. Would also be nice if our employer wasn't trying to steal the pension that they had previously contracted to pay us.
    If the new pension arrangements are so great, then why don't the politicians adopt them as well?

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  10. I'm not eligible for a bonus, as I'm on a MoD graduate scheme, for which I am exceedingly thankful to be spared the drama. My idealism and loyalty to the CS lasted less than 12 months. It wasn't the year-on-year real-terms pay cuts, the stressful uncertainty over whether I would even have a job soon or be fobbed off to the private sector, constant vitriol from government and media or incessant top-down interference. No, it was the grinding, smothering, head-bangingly depressing experience of working there. Morale is in the toilet, every team is woefully understaffed and the vital specialists (commercial, financial etc.) are overwhelmed with work. And as we aren't allowed to wipe our figurative arses without their written permission, nothing gets done quickly. Meanwhile our user base wants everything done yesterday as they're getting posted soon and can't understand why shouting loudly doesn't make it happen faster. We're shackled with idiotic bureaucracy and so many rules even HR doesn't know how to follow them all. Common sense is out the window and we're totally at the whim of the political winds. It takes a higher level of authority to sign off on tea & biscuits for a supplier than it does for the multi-million pound contract we want them bidding on. I can't even get important international visitors a parking space other than "Try McDonalds?". We're a joke professionally, and it's embarrassing.

    Now I'm on attachment to a defence prime. I get my own desk (no time-consuming hot-desking), IT that works and morale actually exists here. But then the department performed well last FY and exceeded targets, so everyone got a substantial bonus. Without the media crying about it or taking most of the following year to decide on the distribution. It's night & day.

    "No one makes you work for MoD, if you don't like it, find another job" you might say. Too right. When I finish my training why would I stay? The considerable loyalty I had to MoD & Crown when I started is gone. The government has shown that they'll treat Civil Servants like crap as they wish, and I would be a mug to stay out of idealism if I get a better offer.

    And now to add insult to injury I'll loose 1.5 days holiday (remember when those were privilege days just a few months ago?) if I stick around to regrade, just because. And rising up payspines? Somewhat out of date there Sir H, pay increments are the devil and have been stopped. So if I was to get promoted, I would (bar the holiday entitlement) get paid the same as someone who has been at that grade for years. What an incentive for that person to work hard and feel that their skills are valued, eh? And if they ever do make it to the next stop up the greasy pole, then they loose a week's holiday as a reward (plus that 1.5 days reduction of the total) and have to earn it back.

    If I sound bitter, well I am. I've become a selfish mercenary and I hate myself a little for it, but I am what I have been made...

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  11. Please, stop calling it a "bonus". It is not a "bonus" it is Performance Related Pay. As mentioned already, the Treasury took 2.7% of the pay pot and said it would now be paid annually as PRP,which will not be included in the sums for our pensions. It was then (in the MOD at least) paid to everyone who achieved a minimum standard, with those getting better scores getting a larger share. Fair enough so far. Then they decided that it should be a 50/50 split which caused consternation. Which 50% would I fall in?

    Next came the 5/70/25 split. The bottom 5% will get nothing and be place under a Performance Improvement Plan (even though they could be in the bottom 5% purely because of numbers and not that they are bad at their job). The middle 70% get nothing. The top 25% get a share of the 1.7% pot.
    Hang on...it was 2.7% earlier. Did I forget to mention that the SofS decided to pay back 1% to the Treasury as a cost saving measure? He did you know...they removed that money from our pay pot (PRP pot) and decided we would do with just 1.7% - yet another pay cut for the good old CS.

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