Public and Commercial Services Union

This guidance is part of a series covering the four key strands of the PCS national strategy for personnel management issues.

The initiative stemmed from the special Personnel Policy Forum held on 22 February 2006 where negotiators and reps from across the union explored ways in which PCS could develop a national strategy on these issues.

The four key areas, which formed the basis of discussions at the Forum, revolved around the general headings of “Development and Career Opportunities” and “Well-being at Work”, with equality as a central theme. Each of these areas was then divided into two, namely “Performance and Appraisal” and “Learning and Skills” and “Managing Attendance” and “Work-life balance”.

This guidance is based on consultations held at a number of PCS events and has been developed in conjunction with the National and Equal Pay Unit (N&EPU).

It addresses both the personnel management aspects of performance and appraisal and sets out the PCS case against linking performance management with pay.

PCS acknowledges the legitimacy and indeed the benefits of good performance management processes but rejects performance related pay as a means to motivate and reward public sector employees.

The Gershon efficiency agenda has undermined many of the once good employment practices in the government sector, and has lowered the morale and well-being of the workforce. PCS’s national campaign against job cuts is part of its response to this.

The Well-being at Work guidance is intended to help negotiators at all levels to push the government and the contracted companies who deliver its services towards adopting personnelmanagement practices that result in government sector organisations being good places to work.

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How to use this guidance

This guidance is designed to help negotiators, particularly at group level, to engage with members and management to improve policies and procedures. It can be used to:

• Review current agreements, policies and procedures;
• Identify issues that need to be tackled and negotiate around them;
• Engage members in a discussion about their ideas and needs;
• Mount a campaign in conjunction with the PCS campaigns unit;
• Review and issue updated guidance to reps on taking forward personal cases related to the topics covered in the campaign.

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What employers want from performance management and appraisal

Current methods of performance management and performance related pay in the government sector stem from the Modernising Government agenda of the late 1990s, and are based on a number of studies and reports which tend to be known by the names of their authors – such as Bichard and Makinson.
The aims of performance management in this context include:

• Linking individuals’ objectives to business objectives
• Incentivising people to seek more challenging responsibilities, develop their competences and demonstrate leadership
• Encouraging continuous improvement
• Offering significant rewards for excellence (rather than time served)
• Helping to confront poor performance
• Supporting the development of the workforce and being non-discriminatory

The Government has chosen to tie performance management to pay policy in its annual Pay Remit Guidance. In 2006, the guidance stated
“…pay should reflect output, results and performance with the best performers (both individual and/or teams) and those who contribute the most receiving the highest reward”.

This approach is now reflected in the statement of Civil Service Reward Principles, published in 2006.

Following representations from trade unions some of the less acceptable ideas, for instance relative assessment schemes, were removed.

However the Principles strongly promote an increase in the proportion of the pay pot devoted to “variable” pay – in particular non-consolidated bonuses – and are intended to support employers to “develop relevant, effective and affordable reward systems” designed to

• “Improve service delivery through engagement, recruitment and retention of the right staff
• Drive an engaged and productive workforce
• Achieve an appropriate degree of consistency across the civil service as a whole”.

PCS has issued a critique of these principles and is working on an alternative model as part of the pay toolkit.

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What is wrong with performance and appraisal management and PRP?

Reviewing how well the organisation and individual employees carry out their work is central to good management. Performance appraisal systems can help managers recognise and build on successes and strengths and take action on weaknesses.

But much of the time, money and energy devoted to performance management is not cost effective and does not have a real impact on the effectiveness of individual employees or organisations, particularly in public service organisations.

There are also questions about how fair performance appraisal schemes are. Research has consistently shown a cultural bias which disadvantages certain groups of workers, in particular those from black and minority ethnic (BME) groups, part-time workers and those in the lower grades.

Some ways of assessing performance and rationing rewards - such as relative assessment, team based pay and quotas for box markings - further reduce transparency and fairness. The level of markings and awards awards are often limited by the overall budget allocated to this element of pay.

There are also political dangers in paying a larger part of salaries in bonuses. Recent press reports based on Freedom of Information enquiries concerning the value of bonuses paid by departments have been very critical of this process.

Questions have been raised about why civil servants in the CSA, the DVLA and the Foreign Office have been paid large sums in bonuses when their departments have been failing to meet their corporate targets.

Inconsistent interpretations of the role of bonuses by ministers and senior managers have demonstrated the lack of clarity about what the bonuses are actually designed to reward.

PCS recognises that managers must manage the performance of individual staff, their teams and the organisation.

We accept that poor performers can have a detrimental impact on their colleagues and on service users and we expect managers to be resourced and trained to resolve such issues and address the underlying problems.

Good performance management systems provide a way of enabling staff to access learning opportunities that build on their strengths and address areas of weakness. However, such aims are undermined when systems are introduced that:

• Fail to value the “ordinary” work that staff do
• May encourage staff and managers to concentrate on particular targets rather than the quality and fairness of the service
• Undermine the cohesiveness of the workforce
• Fail to take into account individual capacity in carrying out tasks 
• Are not sufficiently well funded to address problems 
• Do not provide appropriate training
• Do not seek to develop skills beyond those required for the current work role.

PCS concerns centre on the following areas:

• The lack of evidence that performance targets and rewards really result in better staff motivation and competence or better service delivery
• The cost effectiveness of the time, energy and resources devoted to performance management systems and PRP
• The ability of managers to implement the system fairly and effectively.

The introduction of appraisal systems and PRP to the government sector is a result of the view that what works in the private sector will be equally effective when applied to the public sector.

This assumption is basically flawed. Studies have shown that even in the private sector schemes need to be carefully structured around the objectives and targets that an organisation wants to reward, and failure to do this can result in negative consequences.

Even when appraisal is not connected to pay awards, these problems can cause perceptions that the system is unfair and lead to demotivation, rather than enhancing performance as it is intended to do. This is reinforced when linked to pay, or even worse, quotas for bonus awards when thay can actually undermine the commitment in the workforce.

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PCS objectives

Negotiators should try to persuade management to move towards fairer and more effective appraisal systems which are focused on developing skills at all levels of the workforce.

We are asking employers to

• Break the link between performance appraisal and performance related pay
• Concentrate instead on investing in improvements that reinforce the factors that genuinely motivate people working in the public sector – such as resources to allow them to do their job well, and terms and conditions that are stable and secure
• Redesign performance targets and indicators to reflect quality and effectiveness in service delivery
• In line with the public sector duties to promote race, disability and gender equality, carry out equality impact assessments on current and new systems and follow up with regular monitoring and review
• Consult with staff and trade unions when introducing changes
• Ensure that all staff are given induction and follow up training that allows them to understand their work
• Provide training for managers that encompasses diversity awareness
• Enable managers to encourage and support their staff in fulfilling their potential
• Empower managers to manage individual staff appropriately, taking into account their individual capabilities
• Allow managers to access resources for individual adjustments where necessary
• Make serious efforts to understand why individuals experience problems in performance and address such problems sensitively
• Encourage all staff to take up learning opportunities that build on their strengths and address areas of weakness
• Provide opportunities for advancement or alternative work to meet training and career development needs
• Continuously review the effectiveness of the systems.

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Evidence to support the PCS position

Cultural bias

A study undertaken by the Institute of Employment Studies (IES) for the Cabinet Office and the CCSU in 2000 found statistically significant variations in performance markings across a very large sample of civil servants.

Some work was done on addressing these problems, but more recent surveys of particular organisations (for example in the Qualifications and Curriculum Authority) have continued to show the same bias. The N&EPU is currently engaged in updating information from Bargaining Units on this topic.

Motivation in the public sector

 A number of studies over the last 20 years have demonstrated that implementing performance related incentives is more problematic in the public sector than in the private sector, particularly in relation to administrative roles.

A study undertaken in 2003 by Simon Burgess and Mariso Ratto for the Leverhulme Centre at the University of Bristol, suggested some reasons why this might be the case:

• The difficulty of defining and measuring output for jobs based on decision-making where effort and output are often not observable
• The complexity of setting and monitoring targets in organisations that do not have a single clear goal and where workers are often multi-taking and working for more than one “principal” (for example, different teams or managers, or for both the manager and the client, who may be interested in different outcomes)
• The prohibitative cost of management information systems to track performance effectively
• The intrinsic motivation of public sector workers which may make them less incentivised by performance linked rewards.

The authors’ comments on the last point give an interesting insight into the conflict between public service values and private sector reward mechanisms:

“Given the nature of the output in the public sector … managers and workers may care about the amount produced, and therefore be less inclined to shirk. For example they may care about the sick, the old or the unemployed. If the welfare of the clients is the sole goal of the organisation itself, workers will internalise the objectives of the organisation. Setting financial rewards based on performance may actually be counter-productive in that it may send the signal that the relationship between the workers and the organisation is a pure market relationship”.

In Recruitment and Retention: A public service workforce for the 21st century, published in 2002, the Audit Commission reported that 42% of respondents to its survey cited “making a difference” as their main reason for joining the public sector but that many workers felt that too much bureaucracy prevented them from realising their ability to fulfil that aim. It found that stress was the main reason why people were leaving the public sector – not pay levels.

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Helping members through the appraisal process

Whilst seeking improvements to the design and implementation of appraisal systems, PCS also wants members to use the existing systems to improve their working lives and enhance their career prospects.

The following tips have been developed by black members in the London and the South East region in conjunction with PCS Learning Services.

1. Remember that the appraisal meeting is a a discussion and dialogue between you and your supervisor
2. Prepare for the meeting in advance
3. Use normal interview techniques – maintain good eye contact, attentive posture, and a professional manner
4. Listen and take notes
5. Reflect back to your supervisor your understanding of what is being said
6. Compare your actual performance results and behaviours to the targets and standards that have been set.
7. Explain any difficulties you have encountered in carrying out your work but try not to blame others or make excuses
8. Talk about your strengths and potential for development as well as addressing any problems and areas that need improvement
9. Provide ideas on how to improve your working environment and improve your performance and ask for any training that would help
10. If you don’t agree with your employers assessment, give specific examples to demonstrate why they are wrong
11. Set goals, expectations and standards together – remember thay should be “SMART” – specific, measurable, achievable, relevant, timebound
12. Contact your local PCS rep immediately if you have any concerns.

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For updated information and more links:

• Call the PCS Reps helpline - 020 7801 2650 or email info@pcs.org.uk 
• Speak to your Regional Office or Bargaining Unit 
• Contact PCS Research Officer - Pamela.Cole@pcs.org.uk or 020 7801 2639
• Contact National & Equal Pay Unit – nepu@pcs.org.uk