Perform. It will be rewarded.
The Pay Commission has recommended performance-based incentives (PBI) to promote meritocracy, excellence in the public service and reduce service delivery cost.
The report that was made public last night, states that PBI would improve the efficiency of public servants to achieve individual and organisational targets, benefiting both employees and the country.
The PBI, which is already a trend in some public corporations, especially Druk Holdings and Investment companies, will be payable at the end of the year.
“This part of the pay also forms a part of forced savings for public servants, which will enable them to make bulk purchases of required items,” states the report.
The PBI is recommended to serve as a motivating factor to enhance performance and maximise productivity. “Such an incentive will also promote efficiency and effectiveness in the public service delivery,” the report states. “PBI creates a win-win situation as the organisational targets set will be achieved and the employees will receive additional financial benefits.”
The Pay Commission recommends an additional allocation of 10 percent of annual pay to be earmarked, of which 5 percent will be for agency-level performance and the other 5 percent for individual-level performance.
The PBI is linked to Government Performance Management System (GPMS) and Managing for Excellence (MaX) where performance at the agency level is evaluated using the GPMS and the individual performance through the MaX system.
For performance management, government agencies are categorised into agencies with Annual Performance Agreement, agencies with Annual Performance Targets (APT) with evaluation, agencies with Annual Performance Targets (APT) but without evaluation and agencies without APA or APT.
In recommending PBI, the Commission studied several cases in countries from Asia to Africa to Europe.
For the successful implementation of the PBI, the Commission recommends target setting to be objective and quality of targets verified by the National Technical Committee for ensuring alignment, credibility, and integration with national priorities prior to signing or finalising of the APA and APT.
The PBI budget will be with the finance ministry under general reserves and released upon completion of the performance evaluation process.
To be eligible for PBI, agencies will have to follow either APA/APT with evaluation or an equivalent system.
In addition, the Commission recommends assessing the agencies as per the number of corruption incidences, audit observations and cost efficiencies on the utilisation of capital and current budgets during ratings for APA/APT.
Simplifying for the average civil servants to understand, the Commission took pains to calculate the PBI.
For instance, in an agency with 48 employees, the total PBI allocation of 10% of the total annual pay amounts to about Nu1,272 million, which is about Nu.636M each for agency and individual level performances.
If the agency is rated in category I, the full 5% PBI or Nu.636M will be provided. If the agency is rated in category IV, none of the employees will be provided PBI except the employees in Operation and ESP categories, as they are not subject to performance evaluation.
At the individual level, if his or her agency is rated in category I, as per Agency Categorization Framework or forced ranking of MaX 3% of the employees will be rated as Outstanding, 17% in Very Good, 80% in Good and 0% in Need Improvement. The PBI provided to the agency accordingly will be Nu.462.324 million. If the agency is rated in category IV, none of the employees will be rated in Outstanding, 14% in Very Good, 84% in Good and 2% in Need Improvement. The PBI provided to the agency will be Nu.172.197 million.
While at the agency level, the full 5% of the PBI will be provided to the agency, at the Individual level due to forced ranking, only 3.7% of the earmarked 5% of the PBI will be provided to the agency. Therefore, only 8.7% of the total 10% of the PBI will be utilised.