Transcript ALL INDIA FEDERATION OF CENTRAL EXCISE EXECUTIVE …

COORDINATING COMMITTEE
OF FEDERATIONS/ ASSOCIATIONS
IN THE DEPARTMENT OF REVENUE
Manishinath Bhavan, A-2/95, Rajouri Garden, New Delhi 110027
Presents
A Concept Paper on
Feasibility of Performance Related Pay
(PRP) in the Revenue Department
Before
The Study Group on Performance
Related Pay appointed by the Sixth CPC
“An officer who
accomplishes a task as
ordered or better shall be
honoured with promotion
and rewards”
[Verse 2.9.9] – Kautilya Arthashastra
Background:
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Pay was, is and always will be related to
performance of individuals or the team.
From the time of Kautilya to present day
Management Gurus, this is one aspect that
remains almost static and unique.
However, the present genre of ‘Performance
Related Pay’ (PRP) are encouraged by the
business theories of Frederick Winslow Taylor
(1856-1915).
And it relates to the move by the Private Sector
companies in the 1970s to introduce Performance
Related Pay in a much focused manner.
•It was soon followed in the 80s by the
Public Sectors in the OECD countries.
•Governments of Canada, Denmark,
Netherlands, New Zealand, Spain, Sweden,
the United Kingdom and the United States
were first to introduce PRP in one form or
another.
•A second round of PRP initiatives was
launched in the 1990s by the respective
Governments of Australia, Finland, Ireland
and Italy.
Contd….
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Most recently counties such as Germany,
Korea, and Switzerland as well as some of the
East European countries like the Czech
Republic, Hungary, Poland and Slovak
Republic has begun to put PRP mechanisms in
place.
In 2004 France has also started experimenting
with PRP for top level bureaucrats in 6 pilot
ministries.
Presently, more than 2/3rd of OECD countries
have introduced PRP for at least part of their
Civil Services.
Contd..
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However, the application of PRP varies widely
both in aptitude and magnitude.
Denmark, Finland, Korea, New Zealand,
Switzerland and the United Kingdom have an
extended and formalised PRP Policy
However, in Finland top Managers are excluded.
Elsewhere in Canada, Ireland, Italy and Norway,
PRP is applied only at Management level.
Ireland, Norway and France have restricted PRP
applications to only a few Pilot ministries.
Contd…..
 In
most countries PRP is paid in the
form of negotiated Group/
Individual Bonuses or Merit
Increments within a Centralised
Budget;
 Denmark has more advanced system
of localised decision making within a
Budget grant.
 And Spain pays Productivity Bonus.
Terms of reference set by the Sixth CPC:
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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:
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Should PRP be applied to all jobs and all sectors, or higher
managerial positions /percentage of jobs or sectors to begin with.
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Should PRP be individual based or group based.
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Should specific percentages be prescribed for restricting number of
posts to which PRP is given.
Performance Related Pay in
Governments
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Governments are encouraged to
introduce Performance Related Pay
broadly for following reasons:
The main and open argument is
that it can foster individual
motivation, by recognizing effort
and achievement and rewarding it
in a concrete way.
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But there are other economic and political reasons also.
These are;
To attract more dynamic and risk-taking people from
the private sector.
Concerns about the wage bill.
Governments see PRP as a way of containing salary
costs by reducing automatic progression through salary
levels, or on the contrary as a way of lifting an overall
salary ceiling, with non-pensionable financial rewards.
To compensate for the loss of security entailed in
introducing fixed-term contracts.
To refute any idea that civil service employees are
unaccountable and overpaid, by showing that their
level of performance is monitored.
To weaken Trade Union influence in bargaining as
representative of staff.
Recognising Efforts:
Outline of the
'expectancy' framework (Marsden; 2004)
Performance appraisal is the heart of
PRP system.
The main PRP steps are:
1. Setting objectives
2. Appraisal results
3. Linking achievements to pay.
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The OECD (2005) Book says:
“The performance appraisal process is at the heart
of the whole system. It is recommended that
performance appraisal be based on goal setting
rather than on standard criteria for a job.
Performance rating should not be too detailed and
should avoid rigidity. The objectives set for an
individual’s performance appraisal should act as a
basis for ongoing dialogue throughout the year
between the manager and the employee. Detailed
feedback on the appraisal undertaken at the end of
the year should be provided. Transparency in the
whole process is the key factor in ensuring its
success, which ultimately relies more on an
effective measurement of performance than on the
distribution of payment.”
- Performance-related Pay Policies for Government Employees – © OECD 2005
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All Governments have faced the basic problem of setting
quantifiable objectives for the individuals and often even for
the Departments.
It is found to be very difficult to gauge the results of a
Government action in most of the fields, especially which are
purely administrative.
The New Zealand Government had to revert back to old
system after a jumbled experiment to introduce PRP in the
Police Department.
The work environment is affected with deteriorating interemployee relationship.
In absence of point-to-point quantification of objectives, the
fairness of the Appraisal system solely depends on the
neutrality of the appraising officer.
Empirical evidences from Great Britain (Marsden; 2004) shows
that over the years employees perceive that PRP is just a tool to
boost favouritism.
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Over or under-reporting distort the linkage
between performance and pay:
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Due to budget constraints when there exists a
quota (declared or not) on good assessment, a
high incentive amount causes jealousy/
divisiveness among employees,
Also brews unwillingness to cooperate with
the administration.
On the other hand, the intention to motivate
employees suffers if the incentive amounts
are too low.
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Government Initiatives in India
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For the Central Government departments,
there already exists a detailed set of
instruction on Performance Appraisal.
However, to improve upon that several
empowered committees have worked.
Surinder Nath (2003) and PC Hota (2004)
Committees are recent majors among such
Committees.
Even presently, the 2nd Administrative
Reform Commission is working on the
subject.
Performance Appraisal - Present Provisions.
[BROCHURE ON PREPARATION & MAINTENANCE OF CONFIDENTIAL REPORTS]
Surinder Nath Committee (2003) [and Hota Committee
(2004)] Reports on Performance Appraisal:
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At the beginning of a year, each officer, in consultation with his reporting
officer/ reviewing officer to prepare a Work Plan for the year setting the key
tasks and the specific deliverables in quantitative/qualitative terms.
The officer’s performance would be subjected to a mid-year review with
reference to the Work Plan and his performance report for the year would
be written by the Reporting/ Reviewing officer in terms of his achievement
as per the Work Plan.
Introduction of numerical grading (1-10 scale) for assessment of attributes
and achievements of an officer.
Association of Union Public Service Commission in empanelment of
officers of the All India Service and the Central Services under the Central
Staffing Scheme/promotions to high-level posts in different services.
Increasing domain knowledge of officers of the All-India Service & the
Central Services and linkage of upgradation of domain knowledge of an
officer with his promotional opportunities.
The introduction of a system of Referral Board to consider representation
against mala fide remarks in Annual Performance Report by the Reporting
and Reviewing Officer/Accepting Authority.
The Hota Committee supported all suggestions of Surinder Nath
Committee except the suggestion for deletion of the Accepting Authority
who used to record his remarks as the final Authority after the Reporting
and Reviewing Officers had recorded their remarks.
Performance Related Pay –
The Problem Areas:
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The proposal for performance-based pay
can be taken only as a type of grading.
The performers and non-performers fall
into different grades during the period of
assessment.
In other words it is an extension of the
ACR system to transform grading into
money.
That brings us to how the ACR system
presently works.
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Good grades in ACR are acquired by hard work and integrity in some
of the cases.
Exemplary grades are mostly obtained by virtue of proximity to higher
officials who write/ review the ACR.
Impact is not completely negative since, as long as the ACR of an
employee (other than Group ‘A’) does not contain adverse remarks, his
promotional prospects are not adversely affected (prompted by various
judicial diktats amended as a result of widespread discriminatory
practices to reward favourites through promotion by superceding).
Adverse remarks have to be communicated to the individual concerned
and given an opportunity to give his side, after which alone the merit
of the remark will be adjudged.
In the case of Group “A’ Officers, the grades awarded decide their
promotions.
Hence, flattery and nepotism has been the bane of the ACR system.
As a result, the Government that could boast of a silver frame in the
form of bureaucracy has presently been reduced to a bunch of palbearing community.
Those few elements who dare the system will be either sidelined,
forced to quit or victimized and thrown out.
The real problem afflicting governance starts from this point.
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In a corruption prone department, more corrupt official
alone can manage to get into the good books of more Godfathers.
Others remain in the sidelines as long as they do not pose
any serious threat to this cozy arrangement.
In the light of the above experiment with ACRs, the
performance-related pay for individuals is only bound to
increase the servitude and slavish tendency among the entire
government organization.
If the performance assessment could be done in respect of
the departments as a whole, the concerned departments
should be allowed to decide their own policy to achieve the
targets.
Otherwise, if policy is framed elsewhere, without any
relevance to the ground realities, assessment cannot have
any objective meaning.
If an organization is to make profit, it should be allowed to
formulate its own tariffs and methods.
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This apart, in case of the enforcement organizations, if
public opinion is taken as a yardstick, it could most
probably lead to a situation that proper enforcement
may not be relished and those who are beneficiaries of a
discriminatory or kid-gloved treatment alone may have
something nice to say about the department.
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Last but not the least, if the measures of
punishing those who do not perform as
envisaged today by the rules in force cannot be
put to proper use, there is absolutely no
guarantee that the proposed measures of
encouraging those who actually perform will
also reach the right persons and achieve the
desired objectives.
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Hence, primarily it has to be studied as to how
objectivity can be increased in Governance.
Existing relationship between Performance
and Pay in the Central Government:
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The necessity to assess the performance of every
person, every group and every department in
the Government Sector is always important to
ensure that the functions of each are according
to the desired objective and achieve the desired
results.
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Based on such assessments, to reprimand those
who do not deliver has been the approved
practice in Government service until now.
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Similarly, the practices of rewarding good
performances are exemplified through payment of:
Production Linked Bonuses (Railways – Group
based)
Rewards (Revenue Department – Individual based).
Honourarium (General and localised)
Even increment hikes are given to employees for
superior performances (Sportsmen – individual
based) in their field.
These payments are subject to Budget availability
and limited to a Ceiling amount.
Bonus, Reward and Merit Increment are the common
PRP methods followed in the Governments
internationally in favour of performance, while
reprimands follow non-performance.
Proposal:
“The design of PRP is a trade-off between
various options which have to take into account
the background culture of each organisation/
country. There is no “best” solution. When
designing new schemes, management should
consider what will prove acceptable to large
numbers of the staff in its organisations.
Management should seriously consider team/
unit PRP systems for employees, which can be
introduced in a less disruptive way and appear
to be able to produce more positive results
than strictly individualised PRP.”
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Performance-related Pay Policies for Government Employees – © OECD 2005
1.
Performance Related Team Incentive may be
limited to team performance only.
2.
Such incentive should be derived through
detailed and transparent negotiations with the
Staff-side.
3.
Bonus may be extended to all Government
Departments.
We further propose;
 Recognition of each Government
Department as a ‘Team’; with each ‘team’
being given a specific work area and
performance targets would be set for the
‘team’.
 Decision of the team would be taken
through group discussions instead of file
movements.
 Where a team is in work, within the
smaller teams (section/ offices) as well as
the larger teams (office/ department),
hierarchical set-up might be done away
with.
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We feel such flexibility in the organization and
its setup will also enable to break the famous
‘Red Tape’ syndromes in Government offices.
The proposed system calls for proper pay and
allowances with perks to each employee, but
the necessity to bolster their personal esteem
by giving various names and hierarchical
positions will cease.
Hence, fundamentally for having a team like
working atmosphere in the Government,
decent allowances and increments should be
ensured first.
Revenue mobilization linked
incentive scheme.
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As one of the prime vigilance organisations in
the country, Revenue Department, in every
sphere of work demands disciplined team
efforts.
Be it Taxpayer facilitation, Scrutiny/ Audit,
Investigation/ Assessment or Vigilance/
Intelligence, every formations require high
level of consorted efforts.
Individualism has no place in garnering
revenue.
 The
revenue and other physical
targets are fixed arbitrarily
without any consultation with the
employees organisations.
 Other Ministries issue policy
directives which impede the
process of achieving the Targets.
 Realisation
of targets are often
assumed to be achieved due to
growth of the economy.
 Any additional increase in the
rate of growth in the revenue
mobilization should be credited
to the additional efforts on part of
the tax officials.
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At present there is no scheme to pay them any
incentive to recognize their achievement of
stiff targets.
 It
is proposed that an incentive scheme
based on team performances may be
evolved after consultation and
agreement with the respective
employees Associations.
Thank You