A/477020 Performance-related Pay Policies for Government Employees OECD ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
Table of Contents Executive Summary 9 Glossary 17 Parti Performance-related Pay Policies for Government Employees: An Overview of OECD Countries Chapter 1. Performance Pay in the Wider Management Context 25 1. Introduction 26 2. The development of PRP over the past two decades 27 3. An overview of the current state of play in performance management 31 4. Why have governments introduced PRP? 32 5. PRP and the delegation of human resources and budgetary responsibilities 35 6. Conclusions 38 Notes 38 Chapter 2. Key Trends in Performance-related Pay in OECD Countries. 41 1. General trends in the overall design of PRP systems 42 2. Performance appraisal systems: highlighting the trends in the criteria and systems used 49 3. Performance payments: form and size of payments 55 4. Conclusions 61 Notes 61 Chapter 3. Implementation and Impact of PRP: Lessons to be Learned. 63 1. Introduction 64 2. Design and implementation issues: lessons to be learned 64 3. The impact of PRP: incentive for change? 73 4. Conclusions 81 Notes 84 Conclusion 85 Selective Bibliography 87 PERFORMANCE-RELATED PAY POLICIES FOR GOVERNMENT EMPLOYEES - ISBN 92-64-00753-9 - ffl OECD 2005
Part II Case Studies Chapter 4. Country Case Studies 93 Performance-related Pay in Canada 94 Performance-related Pay in Denmark 98 Performance-related Pay in Finland 105 Performance-related Pay in France 114 Performance-related Pay in Germany 120 Performance-related Pay in Hungary 126 Performance-related Pay in Italy 130 Performance-related Pay in Korea 137 Performance-related Pay in New Zealand 146 Performance-related Pay in Spain 150 Performance-related Pay in Sweden 153 Performance-related Pay in Switzerland 159 Performance-related Pay in the United Kingdom 165 Performance-related Pay in Chile 174 Chapter 5. Case Studies of Performance-related Pay Schemes 181 Performance Pay for School Teachers in England and Wales 182 The National Institute of Social Security (INSS), Spain 190 Ministry of Defence, United Kingdom 194 The Department for Work and Pensions (DWP), United Kingdom: An Example of Team Pay 196 The Case of the Revenue Agency, Italy 204 Annex A. Performance-related Pay Policies Across 12 OECD Countries: Brief Overview 209 List of Boxes 1.1. Performance-related pay in the private sector 28 1.2. What does the literature say about PRP? 32 1.3. Rationales for service incremental pay scales 33 2.1. Introducing PRP: the Danish case 43 2.2. Introducing PRP: the case of the Department of Work and Pensions (DWP) in the United Kingdom 44 2.3. How to monitor the highly decentralised pay systems in Denmark and Sweden 46 2.4. Committees to control evaluation criteria and ratings 47 2.5. Performance criteria and rating systems: country examples 52
2.6. Performance agreement for senior civil servants in the United Kingdom 53 3.1. Negative effects of PRP mentioned in the Danish survey (2001) 68 3.2. Common weaknesses of the objective setting process 69 3.3. The case of France: the conclusions of the committee of enquiry into the cost and efficiency of public services (April 2004) 71 3.4. The introduction of PRP in developing countries 72 3.5. Impact of PRP in the private sector: the example of a survey of PRP in 5 000 private organisations in the United Kingdom 75 3.6. The impact of performance pay: the case of Statistics Finland 77 3.7. The impact of PRP: the example of Finland 79 3.8. Impact of the collective PRP system in the National Institute of Social Security in Spain 81 Recommendations 83 List of Tables 1.1. Milestones in the development of PRP policy 30 1.2. Index of delegation in human resources management 37 2.1. Methods of introduction of PRP 42 2.2. Degree of centralisation of design of PRP policies 45 2.3. Influence of unions on the operation of the performance appraisal system 47 2.4. Advantages and problems linked to different forms of performance payments 57 2.5. Form and maximum size of individual PRP payments 58 4.1. PRP policy in Korea 138 4.2. Appraisal grade, payment scope, and performance pay rate 140 4.3. Appraisal frame for the performance-based bonus program 140 4.4. PRP relating to appraisal ratings 162 4.5. Target figures for ratings 163 5.1. Classroom teachers' responses to the CEP questionnaire survey... 185 5.2. Head teachers' responses to the CEP questionnaire survey 187 List of Figures 1.1. PRP and performance management: interdependent elements 28 1.2. PRP in the overall pay structure 29 1.3. Relationship between delegation and link between performance appraisal and pay in OECD member countries 36 2.1. Criteria for assessing performance across OECD member countries. 51 3.1. The four missing components for an effective performance appraisal process 72 3.2. The overall impact of performance-related pay on performance... 82
4.1. Result contract and director contract 100 4.2. The three elements in the new Danish pay system 101 5.1. The old and the new classroom teachers' pay spines 183