OECD Rewarding Performance

Rewarding
Performance
The use of Performance-Related
Pay in OECD Countries
Robert Ball
Public Governance and
Territorial Development
OECD
Public Employment and
Management Network
Paris
22-23 October
Background
• 2005 report on Performance-related Pay
Policies for Government Employees
• Part of broader PEM work on
compensation
• Requests by PEM delegates for additional
work on PRP following 2011 PEM Network
meeting
2
Outline
Our current work examines:
1. Performance-related pay in practice in OECD countries,
and the variations among countries
2. The use of bonus awards to improve performance
3. Rewarding senior executives
4. How performance management systems contribute to
the effectiveness of their PRP programmes
5. Preparing managers to manage employee performance
6. Planning reforms to the compensation system
3
Use of PRP in Central Government
Use of PRP in central governments (2012)
35
30
25
20
15
10
5
To whom does PRP apply?
How is PRP
provided?
>40% or no set maximum
21-40%
11-20%
6-10%
1-5%
Permanent pay increments
One-off bonuses
Only a few organisations
Senior staff only
Most staff
PRP in use in central
government
0
What is the maximum proportion of basic salary
that PRP can represent?
Source: Information provided by governments in response to a request for information issued by the OECD Public Governance
and Territorial Development Directorate to national delegates to the Public Employment and Management Network in June
2012; and 2010 OECD Survey on Strategic Human Resources Management in Central/Federal Governments.
4
Use of PRP in Central Government
Extent of the use of PRP in central government (2012)
Composite indicator
OECD33 average
1.0
0.9
0.8
0.6
0.5
0.4
0.3
0.2
0.1
No PRP in central
government
0.7
Brazil
Czech Republic
United Kingdom
Switzerland
Slovenia
Denmark
Estonia
Japan
Finland
New Zealand
Canada
Korea
Hungary
Israel
Italy
United States
Australia
Chile
France
Sweden
Slovak Republic
Norway
Germany
Spain
Portugal
Ireland
Austria
Netherlands
Iceland
Belgium
Greece
Mexico
Poland
Turkey
0.0
Source: Information provided by governments in response to a request for information issued by the OECD Public Governance
and Territorial Development Directorate to national delegates to the Public Employment and Management Network in June
2012; and 2010 OECD Survey on Strategic Human Resources Management in Central/Federal Governments.
5
Variations in PRP Programmes
• Use of performance bonuses and pay raises is
roughly equal
• Some countries have added team rewards to
supplement individual rewards, but extent is
limited
• Six countries have policies that limit the number
or percentage of staff who receive PRP
• Many countries prevent poor performers from
receiving awards, but decreasing pay due to poor
performance is rare
6
PRP Lessons Learned
• Involvement of all stakeholders from the outset of
the programme
• Need for transparency and consistency in
performance ratings
• Focus on evaluation and continuous
improvement of the programme
• Importance of communication and change
management: employees need to know what to
expect
7
PRP: Questions for Discussion
• What are the goals of performance-related pay
programmes, and how they can be assessed?
• Does performance-related pay motivate public
servants to perform better?
• What has prompted the continued
implementation and expansion of PRP
programmes in the public sector over the last
several years?
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