Performance pay doesn’t work in the APS, according to a former secretary


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A former secretary has called for the end of performance pay in the Australian Public Service.

Allan Hawke served as Chief of Staff to Prime Minister Paul Keating, and spent seven years as Secretary across the Department of Veterans’ Affairs, the Department of Transport and Regional Services, and the Department of Defence.

While performance pay is used for a variety of reasons, including to reward outstanding performers and to motivate employees, Hawke is “absolutely certain” that the system does not work in the APS.

He has written in Mandarin Premium about the reasoning behind performance pay and its failure in the APS, following a push in the private sector to scrap formal performance reviews.

While performance-based pay was the “order of the day” during his time as secretary, Hawke has argued that the system clashes with public service culture, ignores how the public service actually works, destroys morale and teamwork, and gives senior leaders an excuse to avoid real leadership.

According to Hawke, the complexity successes and failures are often shared in the APS. Because of this, performance pay doesn’t work. It centres on judgment rather than feedback, and when judgement is the focus, “most individuals or groups will game the system and work towards optimising their take”, to the detriment of everyone else.

“Performance pay can lead to patronage, subordinate sycophancy, playing and paying favourites, oiling the squeaky wheel, toadyism and other inappropriate practices. Imagine the consequences of ministers being involved in the process and decisions below secretary level,” he wrote in Mandarin Premium.

“I think the vast majority of APS staff would not see performance pay as being in their self-interest. The rewards (even for secretaries) are relatively small, the ranking system rankles because many good performers not given the top rating think they have been short-changed, and the system is not regarded as fair.”

During Hawke’s time, it was decided that secretaries would be eligible for an annual 10% bonus of total remuneration for superior performance, or 15% for outstanding performance. Every 12 months, each secretary wrote a self-assessment on criteria such as meeting objectives, leadership, and adherence to the APS Code of Conduct.

But this system could be perceived as causing politicisation of the APS, Hawke said, with the harmful inference that the level of performance pay was related to whether a secretary had or had not satisfied their minister’s partisan political demands.

“I argued without success to do away with performance pay and fold it into base salaries, although that did subsequently occur for secretaries when Prime Minister Rudd came to office,” he said.

“The discussion on goals, priorities, and the nature of the minister/secretary relationship is a very positive step, as is the annual self-assessment report from the secretary and associated interaction with the portfolio minister. Interestingly, cabinet ministers were wary that their performance and judgments were also being assessed and reported to the prime minister by the PM&C secretary, and may have tailored their comments accordingly.”

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