Feature

Vocational workers or shirkers?

What’s all the fuss about performance-related pay? Edmund Heery explains the issues behind the headlines

The introduction of performance related pay (PRP) for professional workers is a central plank of government policy for the public services. Such schemes, which typically tie annual salary awards to a managerial appraisal of individual performance in the job, are already in place for a substantial number of public service professionals and nurses, doctors, and professions allied to medicine face the prospect of their imposition in the near future.

Two primary and rather contradictory rationales exist for the extension of PRP to public service professionals. The first originates in the thinking of the new right and a belief that public sector workers under-perform because they are insufficiently exposed to market and managerial disciplines. The appropriate response to shirking, on this view, is a ‘return to contract’. Managers must specify work standards and objectives more exactly and offer financial incentives for compliance with these new contractual terms.

The second rationale can be found in the recommendations of management consultants. PRP, according to this perspective, can help generate a ‘performance culture’. By recognising and rewarding ‘excellence’, so the argument runs, managers can influence the expectations that employees have about their work and foster a new norm of high commitment and effort. PRP can be used to reinforce positive work attitudes and behaviour and encourage employees to work ‘beyond contract’.

Both rationales ignore the fact that public service professionals often bring a vocational commitment to their work which acts as a source of motivation regardless of market discipline, management control or recognition. Many public service professionals already work well beyond contract and there is a mismatch between the a priori assumptions of both arguments for PRP and the realities of professional work in today’s public services.

Given this mismatch what are the likely effects of the imposition of PRP on public sector professionals? Surveys of employees covered by schemes in local government and the civil service provide clues. One reassuring finding is that PRP does not often have a marked impact on people’s attitudes or work performance. Partly this is due to the design of PRP schemes and the fact that they typically rest on very weak measures of employee performance. Partly, though, it reflects the resilience of professional commitment within public services and the fact that such commitment is neither generated by managers nor easily manipulated through management techniques.

Other results are less reassuring. PRP invariably generates employee grievances and complaints of unfairness, and there is evidence that a minority of employees are demotivated through the negative feedback they receive on their performance. More generally there is a danger that the controlling, contractual theme in PRP will erode existing sources of commitment, as public service professionals absorb the message that they are not to be trusted and reciprocate with a more calculative and contractual orientation to their employment.

Findings from a recent survey of trade union reactions to PRP provide some indications as to how professional workers and their organisations can respond.¹ Very few unions have taken industrial action over PRP and successful attempts to block its introduction are uncommon.

The dominant union response has been to try and regulate PRP by negotiating more ‘objective’ forms of performance appraisal, ensuring management discretion is bounded by agreed rules, reducing the financial risks to members, and installing procedures for appeals, monitoring and review. Most unions with members covered by PRP report considerable success in this direction.

Where unions are excluded there are steps which can be taken to retrieve the situation. A common practice among unions with members on PRP is to commission a survey of members’ attitudes to the scheme and use this to campaign for changes. Several unions and professional organisations have also produced good quality pamphlets on PRP to shape their members’ views and counter management proposals.

Another tactic has been to use the opportunities — albeit limited — afforded by the law. Unions have used their right to collective bargaining information to obtain details of the cost and distribution of performance payments from employers, and there is growing interest in using sex and race discrimination law both on behalf of individuals and to open up schemes to union scrutiny. Recent developments in equal pay law are particularly useful because they require average differences in male and female performance earnings to be ‘objectively justified’ by a factor other than that of sex. They indicate that schemes be open, rest on formulaic links between performance and reward, and be subject to monitoring. The law is effectively pushing the management of PRP in the direction the unions want.

A final response to PRP has been to formulate counter-proposals. The Association of University Teachers, for example, has recently put forward proposals intended to reinforce professional commitment as an alternative to the ‘managerialism’, including PRP, advocated by university employers. The risk is that the union’s independence from management may be compromised. But its advantage is that it moves beyond a purely defensive response and seeks to shape the management agenda.

PRP is likely to spread further across public services despite the fact that it brings few positive benefits and will generate significant discontent. Professional workers and their organisations can respond in three ways. They can block PRP where they have the strength to do so, they can seek to regulate it where they do not, and they can formulate alternative proposals for improving services which build upon existing professional commitment, rather than denying it exists.