The reliance on bonuses and performance pay across the public sector has been much discussed lately.
The PSA has always been opposed to performance pay because it is too arbitrary, open to bias, and ultimately unfair. However we also recognise that for many years this has been the only way workers have received recompense for increases in stress, costs of living, productivity and demands of the job.
A recent OECD paper by Francisco Cardona (referred to in the Feb 2003 PSA Journal) found massive problems with performance pay. Click here to view the paper (MS Word format).
In Australia, performance pay systems for senior officers were abandoned after only four years, and a recent academic study by Michael O'Donnell has damned them totally. Click here to access the study and other material on performance pay.
Many of the arguments in the Australian study are familiar here. An over-reliance on performance pay can lead to:
* work assessments becoming inherently subjective
* demotivation of staff
* 'politicisation' of the public service
* workplace divisiveness and erosion of co-operation
* increased administrative burdens and costs
* an undermining of teamwork
* reduction in open feedback within the workplace
In his updated research, O'Donnell found that performance culture had been damaged, rather than improved, by the introduction of performance pay.
The systematic use of performance pay in the New Zealand public sector is now being phased out. On 11th June 2001 the Government revised its parameters for such payments, saying that normal performance should be recognised in salary, and determined by systems with transparent and fair processes.