Thursday, October 25, 2007

Examining the Feasibility of Performance Related Pay (PRP) in Government

The studies made by Sixth Central Pay Commission.

Pay and allowances in the Government are linked to service-incremental salary scales and promotions under different service rules. Promotions have been used as a tool to provide incentive especially at senior management levels. Pay increases are based on annual increments and the salaries depend more on length of service and grades rather than the performance of an individual employee.

The aim of the study is to examine the feasibility of working out a model whereby a base salary is attached to each post based on the conventional criterion of skills and responsibility; simultaneously, a second component is introduced that is payable as a percentage of the salary on the basis of productivity and the performance of the employees, either individually or as a group.

Terms of reference: The study should examine the correct basis of pay increases and their relation, if any, to performance and productivity of the employees; and examine possibilities of evolving a direct correlation between PRP and delivery of services to citizens/organization/other departments, as the case may be.
The study should evolve measurable, quantifiable criteria for judging performance and productivity of different grades of employees in various government organizations* depending on the nature of their work and the relationship with their users/clients.

The study should, inter alia, examine international best practices in this regard.

The study should develop a model suited to Indian conditions which is transparent, measurable, fosters accountability and is linked to deliverables.

The study should devise means by which PRP can be introduced in the Government. Specifically it should consider the following:

Should PRP be applied to all jobs and all sectors, or higher managerial positions /percentage of jobs or sectors to begin with.

Should PRP be individual based or group based.

Should specific percentages be prescribed for restricting number of posts to which PRP is given.

Team Leader Contact Details:
Prof. Biju Varkkey
Indian Institute of Management Vastrapur, Ahmedabad, 380015
Tel. 079-26324874

The conceptual frame work includes the following:
Identification of metrics for five measures of performance viz.
(i) Competency/ skill
(ii) Effort /activity
(iii) Result/ output/ value added measures
(iv) Efficiency/ productivity, and
(v) Quality/ customer satisfaction.

Suggesting Modified Pay structure having flexibility to implement PRP viz. Pay structure having fixed and variable components with variable component linked to performance measures.

Suggest enabling conditions for PRP.

The Ministries/ cluster of Ministries selected are:
Cluster I
Ministry of Health & Family Welfare (D/o Health & Family Welfare)
Ministry of Urban Development (D/o UD & A)

Cluster II
Ministry of Corporate Affairs
Ministry of Finance (D/o Revenue, Central Board of Direct Taxes and Central Board of Excise and Customs)

Cluster III
Ministry of Science & Technology (D/o Science & Technology)
Ministry of Communication & Information Technology (D/O Telecommunications-Posts)

Ministry of Defence (D/O Defence and Ordnance Factories)

Ministry of Home Affairs (D/O Home Affairs)

Ministry of Railways