For once, the Left is right

Written by YRK Reddy | Updated: Oct 13 2007, 05:24am hrs
The Sixth Pay Commission is reportedly toying with the idea of introducing performance linked salaries for government employees even as the Left unions condemn it. It is indeed curious, if not amusing, that the Pay Commission not only thought of it, but has constituted a study group to evolve a model for its consideration.

For some years now, aggressive managerialism has made inroads into public administration, confusing fads with workable solutions for better civil administrative functioning. The new public management, which began by adopting citizen charters, service standards and measures, has progressed somewhat controversially in the UK and US. In both countries, civil service managers in some departments have been given greater authority to bargain with collectives, hire, discipline and pay for performance along the lines of market principles adopted by corporates. There is much disaffection alreadyand there is now a call in the UK for coherence and harmonisation.

Performance linked pay is popular in the corporate world as a way to achieve two broad results. First, to gain flexibility in employees salaries so that some part of the fixed costs can be made variable and overall costs can be managed better. Second, to improve productivity levels by establishing stiff targets and drive employees to achieve them through a complex system of goal setting, tracking and rewarding. The latter has been popular in highly competitive industries.

Performance linked pay for civil servants is an exceptional practice, limited to just a few countries and in only some departmentseven as research continues to affirm that performance pay has not been a sustained success even in the corporate world. It is unworkable for the Indian civil service for several reasons.

First, performance is difficult to define and measure for most government jobs without some contrived thinking. Second, where such a system has been introduced, it has resulted in disproportionate earnings for higher echelons, aggravating disparitiescivil service unions in the US pointed this out. Third, civil service jobs in India are not subject to job evaluation, and hence their categorisation into grades, cadres, pay scales do not match their actual worth. Thus, there will be no foundation at all for objective performance-linked pay. A few state and Central Pay Commissions had toyed with the idea of job evaluation in the past four decades, and found that it would result in an unmanageable upheaval. Even rationalisation and harmonisation of grades, and overall civil service reform, are languishing for the same reason.

Fourth, where it has been introduced in the case of public enterprises, it has resulted in higher overall costs; performance pay has not been in lieu of any existing package or potential revision in fixed elements of pay. Thus, such performance pay, instead of improving efficiencies or motivating employees, has turned out to be an added burden and deferred salary (like a statutory bonus).

Fifth, it has been internationally noted that due to various pressures and cultural preferences, decision-makers tend to rate everyone well. In the US, the Comptroller General had reportedly found that the average rating was a meaninglessly high 4.6 out of 5, and has been at pains to make this more sensible. Finally, and most relevant to India, such a system can become a lever for political patronage and make corruption an aggravated crony affair.

The Sixth Pay Commission should note the conditions laid down by the General Accounting Office in the US for any federal agency to adopt performance pay: a clear link between individual performance goals and the agencys objectives; methods of gauging meaningful distinctions about the performance of different employees; a final review of all rating decisions by an impartial arbiter; a grievance process to address employee concerns about ratings; annual publication of overall performance ratings and pay decisions; and periodic employee surveys to measure satisfaction with the system. In sum, the Sixth Pay Commission should quickly abandon the idea.