I nternational C ivil S ervice C ommission

1. International Civil Service Commission OPM Strategic Compensation Conference: United Nations Pay Reform 27-28 August 2002, Washington, D.C.

2. Role of ICSC/current pay and benefits package/practices of others. 1 Structure of Presentation Part I: Overview to set the stage Part II. Proposals for change: • The road ahead

3. 2 UNITED NATIONSCOMMON SYSTEM Overview

4. 3 UN and its Affiliated Bodies THE UNITED NATIONS COMMON SYSTEM United Nations Children’s Fund United Nations Relief and Works Agency World Food Programme United Nations Development Programme United Nations High Commissioner for Refugees Other Organizations International Atomic Energy Agency The World Bank Group International Monetary Fund World Trade Organization

5. 4 THE UNITED NATIONS COMMON SYSTEM Specialized Agencies International Labour Organization International Civil Aviation Organization Universal Postal Union World Meteorological Organization World Intellectual Property Organization United Nations Industrial Development Organization Food and Agriculture Organization World Health Organization International Telecommunications Union International Maritime Organization International Fund for Agricultural Development United Nations Educational, Scientific and Cultural Organization

6. 5 THE COMMON SYSTEM The UN and its Affiliated Bodies All organizations participate in the work of the Commission and follow the common system of salaries, allowances, benefits and other conditions of employment. All, except UPU, are members of the UN Joint Staff Pension Fund. UNICEF •UNDP •UNRWAUNHCR • WFP Specialized Agencies ILO • FAO • UNESCO • ICAO • WHO UPU • ITU • WMO • IMO • WIPO IFAD • UNIDO IAEA

7. 6 UN COMMON SYSTEMSTAFFWORLDWIDE PROFESSIONALS GENERAL SERVICE TOTAL 18,000 36,000 54,000

8. 7 COMPOSITION OFUN STAFFSYSTEM-WIDE PROFESSIONALS 18,0OO 33% GENERAL SERVICE 36,OOO 67% 54,OOO TOTAL

9. 8 New York UN • UNDP • UNICEF UN SYSTEM:HEADQUARTERS VS. FIELD All Staff 44% 56% Field Offices 43% Technical Assistance 13% Geneva ILO • WHO • ITU • WMO WIPO • UPU* Paris UNESCO Rome FAO • IFAD • WFP London IMO Vienna UNIDO • IAEA Montreal ICAO *UPU is located in Berne

10. 9 PRE ICSC Preparatory Commission of the United Nations (1945) International Civil Service Advisory Board (1949-1974) Advisory group of experts on administrative, personnel and budgetary questions (1946) Historical Perspective Special committee for the review of the United Nations Salary System (1971-1972) Committee of experts on salary, allowances and leave systems ...Flemming Committee (1949) Salary Review Committee(1956)

11. 10 The General Assembly of the United Nations establishes... INTERNATIONAL CIVIL SERVICE COMMISSION an International Civil Service Commission... for the regulation and coordination of the conditions of service ofTHE UNITED NATIONS COMMON SYSTEM — GA Resolution 3357 (XXIX) of 18 December 1974

12. Consists of fifteen members appointed by the General Assembly in their personal capacity as individuals of recognized competence with substantial experience of executive responsibility in Public Administration. Selected with due regard for equitable geographical distribution. Two of the members are designated Chairmanand Vice-Chairman and serve on a full-time basis. 11 INTERNATIONAL CIVIL SERVICE COMMISSION Composition& Appointment

13. 12 Makes recommendations to the General Assembly on: Functions&Powers INTERNATIONAL CIVIL SERVICE COMMISSION • Broad principles to determine conditions of service • Dependency allowances and language incentive for professional and above staff, education grant, home leave, repatriation grant and termination indemnity • Scales of salaries for professional staff • Staff assessment

14. 13 Functions&Powers INTERNATIONAL CIVIL SERVICE COMMISSION 2 Conducts General Service salary surveys at Headquarters locations 1Establishes: • Methodologies by which the principles for determining conditions of service should be applied • Daily Subsistence Allowance rates • Mobility and Hardship Allowance • Hazard pay • Job Classification standards • Post Adjustment classifications

15. 14 Functions&Powers INTERNATIONAL CIVIL SERVICE COMMISSION Makes recommendations to the organizations on: Contractual arrangements Performance management General Service salary scales at headquarters Standards of conduct Human Resources policies Staff training policy Gender balance/Work-Life issues

16. 15 INTERNATIONAL CIVIL SERVICE COMMISSION How Does the Commission ? Function

17. 16 Decisions by ICSC Issues under the ICSC mandate The Commission • Recommendations • To the General Assembly • To All Governing Bodies • To Executive Heads ACC Staff Bodies UN Joint Staff Pension Board

18. 17 IMPLEMENTATIONof DECISIONSof THE GENERAL ASSEMBLY orTHE COMMISSION THE GENERAL ASSEMBLY ICSC ADMINISTRATION ICSC SECRETARIAT STAFF

19. 18 Article 101 (3) ...paramount consideration... necessity of securing the highest standards of efficiency, competence and integrity...

20. 19 UNDERPINNINGS of REMUNERATION SYSTEMS for theBROAD CATEGORIES GENERAL SERVICE and other locally recruited categories PROFESSIONAL and higher categories The FLEMMING PRINCIPLE The NOBLEMAIRE PRINCIPLE

21. 20 GENERAL SERVICE ...best prevailing local conditions of employment. The FLEMMING PRINCIPLE conditions of service should be among the best without being the very best.

22. 21 MEANS TO ACHIEVE THE GOAL of BEST PREVAILING CONDITIONS... Periodic surveys of employers in the locality, including: Salaries Allowances Fringe Benefits

23. 22 RESPONSIBILITY FOR CONDUCT OF PERIODIC SURVEYS Headquarters/ICSC Non-Headquarters/ Organizations Locations: Locations: New York Geneva All Other Locations/ Primarily UNDP Rome Vienna London Paris Montreal

24. 23 PROFESSIONAL and higher categories ...no difference in salary on grounds of nationality... The NOBLEMAIRE PRINCIPLE conditions of service of the international staff must be such as to attract citizens of the country with the highest pay.

25. Key conclusions of various renditions of Noblemaire Principle Attract qualified staff from all labor markets Selected Quotations 1921: “It would be most unfortunate if the scale of salaries were fixed at a rate which made it impossible to obtain first-class talent from those countries where the ordinary rate of remuneration is above the general average.” (League of Nations, Noblemaire committee) 1972: “there is no ready alternative to the present practice of establishing the salaries for staff in the professional and higher categories by reference to the highest national salaries” (SpecialCommittee) 24 The Noblemaire Principle

26. 25 Since the inception of the United Nations, the United States civil service has been used as the comparator in the application of THE NOBLEMAIRE PRINCIPLE.

27. In 1995, as part of a periodic study Of the highest paid comparator, 26 Germany was determined to be better paid in the application of THE NOBLEMAIRE PRINCIPLE.

28. 2 27 120 100 80 60 40 20 0 1 CONCEPT of the MARGIN the more limited prospect of promotion to the highest post in an international secretariat relatively better position of national services to guarantee stability and security of employment 3 the fact that a large proportion of any international staff is required to incur additional expenses and to make certain sacrifices by living away from their own countries. Average U.S. Remuneration Average U.N. Remuneration

29. 28 COMPARISON of AVERAGE NET REMUNERATION ofUNITED NATIONS OFFICIALS in NEW YORK and UNITED STATES OFFICIALS in WASHINGTON D.C. by EQUIVALENT GRADESMargin for Calendar Year 2002 United Nations/ United States Ratio (without/with COL adjustment) NET REMUNERATION United Nations United States Weights for calculation of overall ratio Grade$ $ P-1 56 007 40 548 132.5 120.0 0.2 P-2 69 661 52 676 134.4 114.9 5.6 P-3 84 935 64 178 132.8 115.0 21.8 P-4 100 559 80 038 128.1 109.2 32.0 P-5 116 275 93 715 124.6 107.8 26.8 D-1 126 578 108 619 119.7 101.2 9.9 D-2 136 043 113 453 119.8 104.2 3.7 Weighted average before adjustment for New York / Washington cost-of-living differential New York/Washington cost-of-living ratio Weighted average ratio adjusted for cost-of-living difference 125.8 115.1 109.3

30. 29 THE PROFESSIONAL SALARY SYSTEM A Three Tier System Establishment of salaries at the base of the system, New York in accordance with the Noblemaire Principle. 1 3 Maintenance of purchasing power parity between New York and all other duty stations. Establishment of salaries at other duty stations using the concept of equalization of purchasing power. 2

31. Is at the same time a minimum (floor salary). Established by reference to base salary at equivalent levels in Washington, D.C. (i.e. base of comparator). Adjusted annually on no-loss/no-gain basis by consolidating post adjustment into base salary. 30 PAY PACKAGE of UN PROFESSIONAL STAFF Base salary Post adjustment • Is designed to equalize the purchasing power of remuneration across duty stations. • The base is New York (which also has a cost-of-living element).

32. 31 PAY PACKAGEof UN PROFESSIONAL STAFF GROSS Staff Assessment NET Base SalaryNET (D/S Rate) Post adjustment(COL differential)(D/S rate) ALLOWANCES BENEFITS Social Security Benefits + + + • CIRCUMSTANCE • SOME ELEMENTS CONTAIN HOUSING Housing costs over amount in PA Rental subsidy Dependency allowances Dependent children or secondary dependents Assignment grant (one month’s salary) Mobility and hardship allowance Assignment / rotation Home leave, 2 yrs, except hardship locations – one year Serving outside home country Education grant / education grant travel (subject to specific eligibility criteria)

33. Linkage to US federal civil service salaries at the base of the system. Assumption that US federal civil service salary levels will result in recruitment/retention of staff from all sectors of US labour market and therefore also from world-wide labour markets. Recruitment/retention from US federal civil service and labour markets with pay levels below those of the US federal civil service. 32 Punchline for UN Professional staff Salary setting based on:

34. Regular highest paid studies: Germany and Switzerland in 1994/95. World Bank and OECD included for reference purposes in 1994/95. US expatriate non-diplomatic staff included for reference purposes in some cases. 33 Punchline for UN Professional staff Only exceptions to measurement of US federal civil service “market”:

35. Revised job classification system Senior Management Service Broad banding Reward for contribution Bonuses 34 Proposals for change

36. 35 First things first …a little bit about the how we got to this point

37. Framework for Human Resources Management in 2000 Priority: Pay and Benefits System 36 BACKGROUND

38. HRM FRAMEWORK 37 Core elements of the human resources management framework are those that bind together the United Nations family of organizations to avoid any competition in the employment of staff that may result from fundamental differences in the compensation package. CORE ELEMENTS NON-CORE ELEMENTS Non-core elementsrelate to problems to be resolved by each individual organization and are not subject to common prescription across the United Nations system, given the significant differences in organizations, mandates, size, etc..

39. HRM FRAMEWORK JOB DESIGN COMPENSATION AND BENEFITS EMPLOYMENT Recruitment, placement and retention Contractual arrangements Staff well-being CAREER MANAGEMENT Staff development and training Mobility Performance management GOOD GOVERNANCE Management style Role of staff representatives Administration of justice HR INFORMATION MANAGEMENT ETHICS/ STANDARDS OF CONDUCTS 38 NON-CORE CORE NON-CORE CORE NON-CORE NON-CORE CORE NON-CORE NON-CORE NON-CORE CORE CORE CORE

40. 3 Focus Groups and Steering Committee Nature of Work (Vienna, Dec 2000) Management Capacity (New York, Jan 2001) Rewarding Contribution (Geneva, Feb 2001) Working Groups Vienna, Dec 2001 Paris, February 2002 ICSC sessions in April and July 2002 General Assembly in Fall 2002 39 BACKGROUND

41. 40 REALIGNING JOB EVALUATION TO SUPPORT ORGANIZATIONAL PERFORMANCE

42. System is 25 years old Reflects HR priorities from a previous era Centralized process management Focus on precision over speed Promote system-wide uniformity in post management Strengthen capacity to make external comparisons Classification managed as a “stand-alone” process, absence of linkages with recruitment, performance management and career development 41 Assessing the Current StandardsUnderstanding the Context

43. On substance Out of step with new work environments Poor tool for assessing technical jobs Too hierarchical in orientation Impedes deployment of staff Does not support or link to performance mgmt or competency development On form Labor-intensive Slow Not transparent Administratively cumbersome Requires expertise to manage Subject to manipulation Too costly to maintain 42 Assessing the Current StandardsThe Need to Modernize

44. Retain capacity to evaluate jobs across occupations and organizations Capture the texture of new work environments: Less emphasis on hierarchy More value on innovation More value on partnership building Support a holistic approach in HR Management integrating performance and competency objectives Speed, Speed, Speed Simple, Responsive, Decentralized operation 43 Designing the New SystemThe Challenge

45. The New Master Standard Macro, not micro Streamlined and updated Grade Level Descriptors Simplified for operational use Career Development Streams Grading patterns to facilitate post deployment Staff Growth and Development Yardsticks Salary movement reflecting both retrospective achievement and prospective competency development 44 Designing the New SystemThe Proposal – A Holistic Approach

46. The Grade Level Descriptors Primary Evaluation Tool Illustrate the Composite Level of Responsibility Crisp Summaries of Grade Features by Factor Broadly Accessible to Managers and Staff Simple, Value-driven Statements Imagery more than definitions 45 From Idea to Model – Building the System

47. 46 Primary Working Characteristic Contribution Nature of Work Team Role Enabling Environment Role Partnerships Impact Radius Results

48. 47 Desired Client Perception Quality Nature of Work Trait Enabling Environment Synergy Partnerships Deliverable Results

49. 48 Broad Banding: What is it? How does it work? What might it look like in the UN common system?

50. It means different things to different people. Banding is: Reduced number of salary grades Widened salary ranges It represents a dramatic change in salary management. 49 What is Broad Banding?