Willing to link your work peformance to your pay? Take home less? (CIPD)

[private]CIPD welcomes robust focus of Will Hutton’s fair pay report on the need for greater use of performance related pay in the public sector

Will Hutton has produced an intelligent and thoughtful set of recommendations for reform of public sector pay, according to the Chartered Institute of Personnel and Development (CIPD), many of which reflect the recommendations in the CIPD’s own report, Transforming public sector pay and pensions, published last year.

Charles Cotton, CIPD Reward Adviser, says: “We particularly welcome Will Hutton’s robust recommendations that top public sector pay should be better aligned to an assessment of individual and organisational performance. In the current climate the word ‘bonus’ has become a dirty word, but taxpayers will benefit if variable pay is effectively tied to performance measures that can demonstrably improve the delivery of public services.

“We recognise there will be challenges in setting meaningful and stretching performance targets and methods of assessment, but these challenges can be met in a way that ensures pay set in this way does what it is meant to do – which is drive real improvements in performance. In going down this road, it is important to ensure that bonuses are used as an alternative, though complementary, reward tool. They should not simply replicate or replace what is already being rewarded and recognised through pay awards and promotions.”

Charles Cotton continues: “Hutton’s focus on transparency is also welcome. A clear explanation of the rationale behind senior pay is important in helping build confidence among taxpayers that their money is being put to good use. Transparency will also help set realistic reward expectations amongst public sector workers.

“We’re pleased to see no reference in the report to the misleading use of the Prime Minister’s salary as a benchmark for other public sector jobs, and also that the report abandons proposals for an arbitrary pay ratio. We need to move the debate on from how much public sector employees earn to what they actually do for this money. Linking pay to performance and explaining the rationale behind top pay will be more effective than headline grabbing approaches to the reporting of pay.

“There is a danger, as we noted in our own report, that pay transparency may uncover some ‘nasty’ surprises in some organisations. For example, there may be legacy issues that are no longer justified, and internal inconsistencies resulting from line managers acting to recruit or retain particular individuals. But the short-term cans of worms that pay transparency may open are less important than securing an approach in which reward reflects personal and collective achievements rather than prejudice, bias and managerial weakness.”

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