UK loosens rules on pay and bonuses – but with no new money

By on 23/05/2019
Whitehall: departments must find the cash to fund new pay freedoms (Image courtesy: Prioryman).

The UK government is set to ditch further aspects of its ‘forced distribution’ performance management framework – allowing more senior civil servants (SCS) to receive bonuses – and give departments the freedom to pay higher salaries for some specialist staff. But unions have pointed out that, with no new money on offer, the effect of the changes will be limited.

The changes were announced in documents submitted by the Cabinet Office to the independent Senior Salaries Review Body. “Departments report that the two issues that act as the main blockers for staff productivity and engagement are mandatory forced distribution and the 25% cap on the percentage of SCS eligible to receive an end-of-year performance bonus,” the documents say.

Forced distribution was introduced under the Tory-LibDem coalition government in 2012, requiring line managers to identify fixed proportions of their staff as performing well, acceptably or poorly. Following stiff opposition from senior leaders and unions, the Cabinet Office began retreating from the system in 2016, but some elements have survived.

Quotas ‘barrier’ to honest conversations

The Cabinet Office submission accepts that “the focus on needing to compulsorily identify a specified number of low performers irrespective of their absolute performance against objectives causes disengagement with the system”. The use of quotas also “forms a barrier to honest developmental conversations between staff and line managers at checkpoints throughout the year that could have identified poor performance in early stages”, it says.

Following the changes, SCS whose performance is measured as falling outside the top 25% will be permitted to receive bonuses during 2018-19. Departments had voiced “serious concerns” about the “cliff-edge” created by the current cap, the report says, noting that under the current arrangements “SCS who have exceeded their objectives and narrowly missed the top box marking due to forced distribution receive a disproportionate reduction in their reward”.

Removing the cap will incentivise performance and mean SCS are likely to view performance bonuses as more achievable, the document adds. Evidence from a new approach to performance management piloted in the Department for Education, it says, reveals that ditching forced distribution can improve overall performance: “There are fewer people who have consistently underperformed through the full year, leading to increased productivity overall”.

However, the pot of money available to pay the bonuses will remain the same – totalling 3.3% of the overall SCS pay bill. Individual end-of-year awards will continue to be capped at £17,500 (US$22,200), with in-year bonuses limited to £5,000 (US$6,300) per official.

Bringing in specialists

Meanwhile, the Cabinet Office also plans to give departments greater flexibility to offer higher pay rates for “market facing” or “niche/department specific” roles. The former covers job markets where the civil service lacks capability and must compete against higher-paying private businesses to recruit, starting with finance, digital, data and technology jobs. The latter will apply to deep specialists working in fields where there are very few individuals with the necessary skills.

The changes have, the Cabinet Office says, been guided by its aim of “evolving beyond the concept of ‘generalists’.” However, departments are not being given additional funds to support higher salaries. And the additional pay freedoms may create additional problems in the form of internal tensions and obstacles to career progression: officials choosing to move from one of the higher-paying specialist roles to a non-specialist role would face a reduction in their pay, the document says.

Lucille Thirlby, assistant general secretary at the FDA Union, told Civil Service World that the offer was “smoke and mirrors”, given that there was no new money. “We believe that the large number of pay anomalies in the senior civil service framework should be resolved through a direct process funded over and above the main pay award,” she said.

About Colin Marrs

Colin Marrs is a journalist specialising in local and national government, as well as architecture and the built environment. Colin previously worked as digital content editor at Campaign, the advertising industry "bible".

2 Comments

  1. Warren

    26/05/2019 at

    Hi,

    Do you have a link to the document that states this please? As this is quite an important document for those Civil Servants who have been constrained at a maximum of 1% by Cabinet Office rules.

    Many thanks

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