It’s clearly that time again when having run out of other things to moan about, media ire is instead focused on the fact that the Civil Service have been paid bonuses this year. Stories in today’s media show that some £140m was paid out last year as bonuses for staff, including some departments where every member of staff received one. The bonus debate is a hugely emotive issue for many – to the public it brings to mind the images of bankers and makes them think of civil servants getting similar large pay outs just for doing their jobs. For many in the civil service though, the bonus brings up a sense of frustration – firstly for the fact it exists, and secondly because of the flak that they take because of it, when none of them ever asked to get one in the first place.
The whole argument in favour of paying a bonus is built on a very basic principle – namely the need to save money. It originates with the idea that by taking some of the annual pay award and awarding it as a special bonus, it is non-consolidated – in other words it doesn’t contribute to pensions. The more money paid out as a bonus in the short term , the less that is paid to the retired civil servant as a pension in the medium – long term. It’s a simple idea, but one that has quickly become very emotive to all concerned.
From a practical perspective the idea of recognising staff who go the extra mile is sensible. There are relatively few ways in Government to recognise the efforts of people, many of whom work extremely hard for the taxpayer and do a genuinely good job. There is no staff discount, no means of hosting a thank you party or throwing a Christmas drinks party and the nature of the work means many people often spend years in the same grade due to limited promotion prospects. The notion of an annual cash award to those who have gone the extra mile in comparison to their peer group makes a great deal of sense – but implementation is more tricky.
As a friend of the author once described – how do you work out in an office of 20-30 people, all of whom do the same job (e.g clerical work with very fixed references and very little opportunity to do more), how do you identify those who’ve gone the extra mile. In its early days the system provided a 50/50 chance of award – in other words, half the MOD got one and half did not. In the office of 30 with everyone doing the same job, it was an easy way to destroy morale overnight due to the seemingly arbitrary way in which the award was given.
Later efforts refined the system a bit more, and in some parts of government at least it is now firmly linked to the attainment of objectives. In other words, if you do your job to the standard expected, you receive a payrise and possibly a small amount of money as a non-consolidated lump sum (compared to previous years when you’d have got the full amount as a proper payrise). Reach beyond this, and you may find yourself getting a slightly larger amount in recognition of your efforts. Fail to meet the standard and you get no payrise and no bonus. Again, a good system and one that needs effective management and a good understanding of setting realistic objectives to succeed. Done well though and it hopefully acts as an incentive to staff to do their job against measured objectives (and failure to do so can start down the path to dismissal), and also encourages people to invest time in training to understand how to properly do objective setting.
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The sums involved are not large. The vast majority of people were earning maybe £200-300 before tax, if that. But, the fallout from it highlights the difficulty in the much more thorny issue of Civil Service pay. This was touched on earlier this week in the discussion about how much the MOD was having to pay on consultants to bring back in skills of people in DE&S who’d left in previous redundancy rounds because no one left had the skills to do the job. The challenge was to see whether it would be possible to use some of the consultancy money to adjust pay bands in DE&S to try and retain people rather than lose them and pay for a consultant.
How you balance off the natural desire to keep the Civil Service headcount and wage bill as low as possible, while simultaneously getting people to stay in with niche skills is a real challenge. No one likes paying more than they have to for people, and no one will ever win many votes for suggesting a large payrise for the Civil Service. But, there is clearly a growing issue that it is growing harder to retain people in technical and specialist areas if the money isn’t as good as it used to be.
Ultimately MOD has need of people with very niche skills, these can take a long time to develop and train, and will be hugely valuable to other companies. As the MOD shrinks, promotion opportunities decline and people look to their career advancement and worry about paying bills, loyalty to the civil service is perhaps diminished. People see an organisation which while offering interesting work and a decent overall package doesn’t compete with employers for the mid seniority and specialist roles –in other words good project managers, technicians and so on. It is very common to see reasonably competent people leave MOD and go to the private sector for a 20-30% payrise, not because they want to leave the CS, but because the pay and prospects is simply not enough anymore.
While it is very easy to knock the civil service for failing to deliver, you can only work with the people and resources that you have to hand. People will walk for better money and the chance of development or career progression. If you are a mid-seniority C2 or C1 in somewhere like Abbey Wood (middle management grades) then your chances of progressing up and through the system, or rising up the payspine to earn a salary which reflects your skills are slim. The only option is to leave and go to the private sector or become a consultant.
There is no easy way to fix this issue. No one ever joins Government to get rich, but equally plenty seem to be leaving to earn a living wage outside. Relocation of departments is one option – sending people to different parts of the country where the cost of living is lower and where a salary goes further. But if you look at the case of Bristol, where the cost of living is rapidly approaching London standards but without the equivalent London package, its very hard to keep a reasonable lifestyle ans attract good quality talent to join. The DE&S was looking for experienced project managers recently and was offering a starting salary of £36,000. Realistically how many people with the right experience would be willing to take a salary hit to join an organisation which still faces a very uncertain future.
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Humphrey wants to be clear – he is emphatically not suggesting that the civil service deserves vast pay rises. Frankly, for the more junior parts of the Civil Service, the payscale is very reasonable and roughly in line with the private sector. There is also a generous leave package available and reasonable employment conditions. But, as the economy gradually improves and the private jobs market increases, the battle for talent will intensify. As jobs open up, it will be ever harder to encourage more experienced people to join an organisation where the salary scales simply do not offer credible return needed.
The danger is that the Civil Service gets excellent new entrants, but as they gain experience they will inevitably look outside. Much like many of the best Army officers leave in their late 30s, its likely that many of the best civil servants do the same, simply because they know the package on offer doesn't make it credible to stay.
When you consider that many civil servants can no longer afford to change locations as relocation expenses are not routinely paid any more, the real worry is of a civil service which over time becomes localised, with very little change of roles and experience for most staff, and led by a London centre where staff there are reluctant to leave the city, knowing they could never return. Humphrey would love to work out of London, but knows that the cost of doing so in terms of selling up and moving on would then price him out of ever returning to the London housing market.
Is it all doom and gloom? Probably not – the Faststream continues to generate far more applicants than are ever appointed, and most are of a very high quality indeed. There are always the idealists who will stay in the system for the long term, or those who do work which cannot be replicated outside of Government and for whom no salary can replace the challenging nature of what they do. Humphrey continues to believe that there is a good employment offer for many civil servants who enjoy not unreasonable salaries, and a reasonable set of conditions. But, he does worry that skills will be lost which are commercially transferable, and that over time this could present a real problem.
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The issue is one of whether Government is willing to risk all that most people that do stay on do so for the challenge, the opportunity and the nature of the work rather than fiscal and material reward. While it is easy to quibble over small things like performance related bonuses, it does add up to the question of what do you want your civil service to be, and what level of excellence do you want to attract into it at all levels? Exercise too much constraint on pay and the really good people that you either want to keep, or that you want to recruit in at more senior levels will simply not come.
There is no right answer to this age old problem, but it is a real issue. How do we ensure the Civil Service we have attracts the right talent, at the right levels and costs the right amount of money that the taxpayer is willing to bear? Answers to No11 Downing Street please!