Overview of Civil Service Salary Systems in EU Member States and some Reform Trends

1. Overview of Civil Service Salary Systems in EU Member States and some Reform Trends • Sean Fitzpatrick • Bucharest, 25 April 2007

2. CV • Irish Civil Servant for 35 years • Recent career in Ministry of Finance dealing with Public Service reform • Seconded to the Bahamas • Seconded to EIPA • Currently reforming the Budget and Estimate process • Pay study for EIPA 2002, OECD Study 2005

3. OECD Report 20 May 2005 224 pages ISBN: 9264007555  Price:   €28 | $36 |  £18 | ¥3700 | 

4. OECD Report • Overview of PRP policies for government employees in selected OECD Member countries from 1985 • Strengths and weaknesses of PRP policies assessed. • Explores the various paths of reform in each country, why PRP policies are being implemented and how PRP operates concretely. • Outcomes of PRP policies at individual and team levels are evaluated. • Recommendations are made on what should be done or avoided with the implementation of PRP. • The report includes a number of case studies.

5. EIPA’s PRP Study 2002 • Spanish proposal, • Questionnaire drafted and agreed by EUPAN, European Public Administration Network, Ministers responsible for Public Administration in Member States • www.eupan.org • Report presented to Ministers at La Rioja, June 2002

6. Private Sector Ideas Minister Front-line staff Middle Mgmt Top Mgmt Minister Top Mgmt Middle Mgmt Front-line Staff Support and resources

7. Reform Trends • New Public Management • Budgetary Reforms • Organisational restructuring • Marketisation • Efficiency and effectiveness • Customer orientation • Pariticipation • Requires Buy-in from staff – for what rewards?

8. Salary Systems Changing • Responses indicate that reward systems are under continuous review • While there are similarities, the range of rewards differs substantially across public administration • The focus of both studies was on pay systems linked to productivity or performance; it is clear that there is a significant move under way in most developed countries to consider individualising pay to improve performance

9. Pay bargaining “An important argument in favour of decentralisation of bargaining is that it allows to adapt more flexibly than unified and centralised systems to specific occupational or regional and local labour market situations. This should increase efficiency and effectiveness of the public service.” • Labour relations in European public service: towards convergence within divergence?, 2002 • Koen Nomden and Marie-Laure Onneé-Abbruciati

10. Spread of Salary Reform • 1980s – Canada, Denmark, Netherlands, New Zealand, Spain, Sweden, UK, US • Early 90s – Australia, Finland, Ireland, Italy • More recently – Germany, Korea, Switzerland, Czech Republic, Hungary, Poland, Slovak Republic • 2004 – France – pilot scheme in 6 ministries for top level civil servants

11. Salary as a Motivator • Most replies say employees see link between pay and performance but no analysis to support this • Danish motivation survey showed that additional money was not a significant motivator for employees • Employees motivated to produce if they can taste the fruits of their labour • However, when creating a compensation strategy, clear communication of the scheme’s aim is vital.

12. What produces dissatisfaction? • Time delays in filling vacant positions • Too few rewards for good performance • Formal job descriptions bear little relation to the actual job • Poor selection of candidates in recruitment process • Limited opportunity for promotion • HRM / Personnel policies poor • Lack of mobility • Need for fair systems of promotion and reward • Complaints of citizens • Poor image of public administration

13. Is invidiualisation of salary enhancing performance and motivation • Studies show different implementation in practice (scope of awards, individual or team) • Studies show rather disappointing results • Paradoxes: Employees want to be rewarded individually but not that colleagues are better paid • Failure to get it may be seen as punishment of those who perform normally • Demotivating when the bonus is not repeated • BUT … Changes can help improve performance

14. So, what is motivating … ? • Interesting work (content) • Responsibility in the job • Challenges – career development • Good working conditions (pressure, holidays, flexible working time, nice colleagues, etc.) • Pay • Job placement. The right position for the right person • Good leadership

16. Reward System is a method of reinforcement • Reinforcement is the key to human motivation. People behave in anticipation of positive and reward consequences. By using reinforcement appropriately, you can significantly increase motivation. • Appropriate reinforcement means Rewards should always be contingent on performance; if you give rewards when they aren’t deserved, they will lose their reinforcing value. • Don’t give too much reinforcement; too much is as bad as none at all. • Reinforcement is personal; what suits one person may not suit another. • Find out what is pleasant for people and use these pleasant consequences as reinforcers. • Dispense reinforcers as soon as possible after their desired performance occurs. Then the employee will be more likely to associate the reinforcer with the performance.

17. Make sure that effort pays off in results • Effort is the currency of motivation; this is how people demonstrate it. If effort does not pay off, there will be a tendency to stop trying. • A popular principle of human behaviour, the “principle of least effort”, applies here. People will expend the least effort necessary in order to obtain satisfactory results. • This principle indicates that effort is a scarce and valuable commodity. If effort does not result in reward, effort will be withheld, just as money will be withheld if its purchasing power decreases too much. • Motivation is the effective management of effort.

18. Be concerned with short-term and long-term motivation • Sometimes rewards and incentives are so remote in time that their motivating impact is weakened. • People should be given short-term, as well as long-term, reinforcement. Conversely, people who receive only short-term reinforcement and incentives tend to fall short of optimal motivation: they lack a long-term perspective on their jobs. • Effective motivational programmes utilise a complementary set of short-term and long-term incentives and rewards.