VII Astana Economic Forum „ Civil Service Personnel Management: current issues and prospects “

1. VII Astana Economic Forum„Civil Service Personnel Management: current issues and prospects“ „Performance Appraisal of Civil Servants – Problems, Methods and Developments“ Prof. Dr. Dieter Wagner Potsdam Center of Policy Management (PCPM) University of Potsdam, Germany May 22, 2014 Astana, Kazakhstan

2. HR Management Activities CULTURAL/GEOGRAPHIC Organization LEGAL ENVIRONMENTAL Mission • HR Planning • HR Planning • HR Information • and Assessment • Systems • Equal Employment • Opportunity • Compliance • Diversity • Labor Relations • HR Policies • HR Rights and Privacy • Union/Mgmt. Relations • Staffing • Job Analysis • Recruitment • Selection HR Activities GLOBAL SOCIAL • Health, Safety and Security • Health & Wellness • Safety & Security • HR Development • Training • Career Planning • Performance Mgmt. • Compensation and • Benefits • Administration • Incentives • Benefits Operations Culture POLITICAL ECONOMIC Size TECHNOLOGICAL External Environment InternalEnvironment Prof. Dr. Dieter Wagner - Potsdam Center of Policy Management (PCPM)

3. Traditional Principles of a Professional Civil Service: The German Example • lifetime occupation and an “office-appropriate” salary • Loyalty • political neutrality and moderation • dedication to public service • no right to strike • subjection to special disciplinary regulations Prof. Dr. Dieter Wagner - Potsdam Center of Policy Management (PCPM)

4. Civil service systems A. Focus at career development: • Career system: each civil servant starts at the bottom of a career level after competitive entry exams and continuously “climbs up” the career ladder • Position system: civil servants are recruited to work in a specific job position; career development is less or not relevant B. Employment status: • Statutory employment: recruitment based on legal act • Contractual employment Prof. Dr. Dieter Wagner - Potsdam Center of Policy Management (PCPM)

5. Career vs position systemand employment variants In various countries: employment of “civil servants” with specific privileges (e.g. pension, life-long tenure and specific duties (e.g. neutrality, loyalty, no right to strike) and of “public employees” (similar to private sector conditions) Position-based systems Services and other production functions Public Employees Civil servants Traditional core functions in government Career-based systems (Knut Rexed, 2007) Contractual Statutory Prof. Dr. Dieter Wagner - Potsdam Center of Policy Management (PCPM)

6. Personnelselection General principle: aligning qualification requirements of positions with competences of candidates Requirement profile (job specifications) Competence profile of candidates Prof. Dr. Dieter Wagner - Potsdam Center of Policy Management (PCPM)

7. existing, but not required capabilities required, but not existing capabilities Job Requirements, Skills, and Qualification Profiles Type Skill Profile Qualification Profile Job Requirement Profile Extent Prof. Dr. Dieter Wagner - Potsdam Center of Policy Management (PCPM)

8. Position classification Position classifications are formal job descriptions that organize all jobs in a civil service system into classes on the basis of duties and responsibilities, for the purposes of delineating authority, establishing chains of command, and providing equitable salary scales. (www.csub.edu) e.g. Germany: 4 “classes” with each 5 grades: • Administrative class • Executive class • Clerical class • Subclerical class Prof. Dr. Dieter Wagner - Potsdam Center of Policy Management (PCPM)

9. Job Performance and Selection Criteria • Predictors of Selection Criteria • Experience • Past performance • Physical skills • Education • Interests • Salary requirements • Certificates/ degrees • Test scores • Personality measures • Work references • Tenure on previous jobs • Previous jobs held • Drug test • Police record • Selection Criteria for Employees Meeting Performance Elements • Ability • Motivation • Intelligence • Conscientiousness • Appropriate risk for employer • Appropriate permanence • Elements of Job Performance • Quantity of work • Quality of work • Compatibility with others • Presence at work • Length of service • Flexibility Prof. Dr. Dieter Wagner - Potsdam Center of Policy Management (PCPM)

10. Evaluating for HR Development Outperforms job requirements Able to take over next-hierarchy-level-task in the short term Promotable Candidate Perfect match of job requirements Promotion to next-hierarchy-level likely in the long term Potential Candidate Minimum match of job requirements Promotion rather unlikely Under- Performer Key-Performer No match of job requirements Prof. Dr. Dieter Wagner - Potsdam Center of Policy Management (PCPM)

11. Role of performance in public sector HRM • Performance assessment in PA is traditionally not very important in terms of a comprehensive analysis of performance, conduct, personal development, professional capabilities and soft skills. • There are no clear guidelines for: • How is individual performance defined? • What is good or exceptional performance? • What happens if performance is very good or bad? • Little willingness to accept that there are sustantial differences in individual (and group) performance and that incentives must be created to support „high performers“ • remarkeable reluctance to measure individual performance and to let these measures make a difference for pay, career etc. Prof. Dr. Dieter Wagner - Potsdam Center of Policy Management (PCPM)

12. Role of performance in public sector HRM • Lacking knowledge about appropriate incentives • discussion concentrates on monetary rewards but money is not a key driver for motivation and performance in PA • Instead, individuals want to be appreciated for their work, supported in their personal development, have interesting and demanding jobs, aspire responsibility and discretion • Immaterial incentives are not yet sufficiently integrated in the general rewards systems: job profile, self-efficacy, responsibilities, workplace environment, training, career perspectives etc. Prof. Dr. Dieter Wagner - Potsdam Center of Policy Management (PCPM)

13. ability willingness transparency of performance (targets, inputs,costs, outputs, outcomes) performancemotivation(performance-relatedincentives) performanceorientation qualification performance-related rewards andsanctions Main conditions of performance orientation of public servants Prof. Dr. Dieter Wagner - Potsdam Center of Policy Management (PCPM)

14. Schematic Structuring of HR Appraisal HR Appraisal Performance Appraisal Personality Appraisal Hybrid Systems Potential Appraisal Development Appraisal Performance Appraisal Hybrid Systems Prof. Dr. Dieter Wagner - Potsdam Center of Policy Management (PCPM)

15. Performance Appraisal Problems Problems Neglecting “Daily Business” Concentration on the Appraisal of Special Tasks Abstract & Unrealistic Goals/ Objectives Orientation on Outperformers Inaccurate Scaling of Performance Standards Prof. Dr. Dieter Wagner - Potsdam Center of Policy Management (PCPM)

16. Experiences with performance appraisals(in the OECD world): (at least) yearly performance appraisal • closely linked with performance agreement • assessing individual achievement of agreed targets • feedback about necessary adjustments and improvements • consequences for training and/or task adjustments • experienced countries: U.S.A., U.K., Australia, Belgium, Canada, Denmark, the Netherlands, Norway, Spain, Sweden and Switzerland (partly only for senior staff or only voluntarily) some typical deficits: • measurement problems • allocating fair judgements to individuals (tendency of leniency) • Lack of “punishing” low performers Prof. Dr. Dieter Wagner - Potsdam Center of Policy Management (PCPM)

17. Performance Appraisal Cycle Information to other organizational systems • Establish a common understandingbetween the evaluator and evaluatee regarding work expectations; the work to be accomplished and how that work is to be evaluated. • Ongoing assessmentof performance and the progress against work expectation • Exchange regular feedbacks of information to clarify and modify the goals and expectations, to correct unacceptable performance before it was too late, and to reward superior performance with proper praise and recognition. Defining performance Feedback about performance Measuring and evaluating performance Source: Mohrman A. et al., 1989: 109 Prof. Dr. Dieter Wagner - Potsdam Center of Policy Management (PCPM)

18. Performance Appraisal Methods • Performance-oriented • Traits • Skills • Behaviour-oriented • Predetermined descriptionsof behavior • Behaviorally anchoredrating scales (BARS) Measuring Performance • Management by Objective (MbO) • Work planning and review • Result-Oriented • Ranking • Paired comparison • Comparison-Oriented Src.: Adapted from Dessler G.2003:243-252 & Mohrman A. et al., 1989: 48-54 possible performanceappraisal instruments: • Interviews • Written tests • On-job observations • (peer) feedback surveys • Assessment form • manuals • checklists • guidelines • performance contracts • … Prof. Dr. Dieter Wagner - Potsdam Center of Policy Management (PCPM)

19. Integration of PA with other HRM Systems totalcompensation market base pay jobevaluation pay action performanceappraisal strategystructure job design humanresourcesstaffingplan selectionprocess trainingprograms Source: Mohrman A. et al., 1989: 209 Prof. Dr. Dieter Wagner - Potsdam Center of Policy Management (PCPM)

20. Reward Systems – General overview from business perspective Rewards Non-Financial Financial • Environment/Job • Recognition • Autonomy • Opportunities • Networks • Challenge • Career security • Benefits • Insurances • Pension • Services • Variable • Bonuses • Incentives • Stocks • Piece-Rate-Pay • Base Pay • Wages • Salaries direct indirect Prof. Dr. Dieter Wagner - Potsdam Center of Policy Management (PCPM)

21. Rewards Non-Financial Financial • Environment/Job • Recognition • Autonomy • Opportunities • Networks • Challenge • Career security • Benefits • Insurances • Pension • Services • Variable • Bonuses • Incentives • Stocks • Piece-Rate-Pay • Base Pay • Wages • Salaries direct indirect

22. Public sector compensation systems • Merit system: Salaries based on seniority / merit • Performance Pay: Salaries include pay elements for extraordinary individual performance • other compensation elements: • social factors: family, age, etc; • allowances: for positions in remote areas or with risky tasks • health insurance and pension payments Prof. Dr. Dieter Wagner - Potsdam Center of Policy Management (PCPM)

23. Case Study: Great Britain • Basic Salary • Three performance “tranches” • Based on relative contribution • Position in pay range and tranche marking determine award • Bonuses • In year to recognize performance as it happens • End year to reward exceptional achievements or outcomes delivered over whole year • Informal notice • Staff appraisal Cabinet Office • Basic Salary • Target salary at the market median with premium rates for top performers • Link progression into performance and development system • Agreed distribution • Bonuses • Incentives for top/high performers Department for Work and Pensions Prof. Dr. Dieter Wagner - Potsdam Center of Policy Management (PCPM)

24. Experiences with performance-related pay (PRP): • majority of OECD countries introduced PRP • sometimes extended PRP schemes for (senior) management staff • evidence: limited impact of PRP on motivation and performance (“pacifier” function, modest position in reward’s rankings) • some negative side effects of PRP: • unfair measurement practices • intransparent regulations • unattractive/small bonuses • restriction to a small proportion of high-performers = majority of dissatisfied “loosers” • bonus distribution according to “equal share” principle • withholding of previously paid bonuses • neglecting of team performance Prof. Dr. Dieter Wagner - Potsdam Center of Policy Management (PCPM)

25. Contingency Pay Rationale: Motivation to achieve higher levels of performance or depth of their competences or skills Message that certain values or aspects of performance are important. ( quality, customer service, leadership and team working) Equity people should be paid in relation to their performances 5 Golden Rules: 1 Clear about the target + clear target definition 2 Must influence people behaviour 3 Rewards may be meaningful enough 4 The bonus formula may be easy to understand 5 Reward should be done as quickly as possible Prof. Dr. Dieter Wagner - Potsdam Center of Policy Management (PCPM)

26. Thank you very much for your attention. Prof. Dr. Dieter Wagner - Potsdam Center of Policy Management (PCPM)