Performance pay penalties for lacklustre bosses

By David Donaldson

Friday May 5, 2017

Western Australian Premier Mark McGowan is continuing his overhaul of the state public service, declaring the salaries of department and agency heads will be linked to key performance indicators under a plan to make public service chief executive pay more like that in the private sector.

The government has also released further details about the $500,000 service priority review, which will look at the structure of the WA public sector and consider whether the government should undertake agency mergers in addition to those announced last week that will cut the number of departments from 41 to 25.

But rather than bosses left in place after amalgamations receiving a boost when things are going well, they could see their pay docked by up to 20% when the KPIs are not being met.

McGowan said this could mean, for example, that director-general of the Department of Education Sharyn O’Neill’s final salary might be linked to literacy and numeracy standards, or police commissioner Karl O’Callaghan may need to ensure use of the drug ice does not rise, reports The Australian.

The KPIs are yet to be developed.

“With the implementation of whole-of-government KPIs, we will ensure our government is outcomes driven and consistently held to account,” said McGowan.

But pay linked to KPIs will not work, argues Opposition Leader Mike Nahan.

“Performance-based pay has been tried and tested in the state before, it didn’t work for simple reasons,” he said.

“One is the minister sets policy, not the bureaucrat. You cannot hold public servants accountable for the decisions of ministers.

“Second, the KPIs were not an accurate measure of wages. In our system of government … the buck stops with the minister, you can’t contract it out and that is what Mark McGowan is trying to do.”

Service priority review

The state government is pressing ahead with further structural changes across government as part of the promised service priority review.

The wide-ranging review, a key election commitment, will examine the functions, operations and culture of the WA public sector. It will take a deeper look into the structure of government and identify potential opportunities for further agency mergers.

Former New Zealand state services commissioner Iain Rennie will chair the review, supported by former Indigenous Land Corporation chief executive officer Michael Dillon and former UWA senior deputy vice-chancellor Professor Margaret Seares.

The panel will be able to invite submissions and consult with stakeholders during the review. The final report is expected to be delivered within five months and will be published following government consideration.

According to the terms of reference, the panel is to review, report on and make recommendations with specific reference to:

  1. Achieving cultural change within the public sector (eg promoting risk based decision making, promoting innovation and radical efficiency, improving accountability, and identifying incentives and disincentives to improved performance);
  2. Promoting a culture of collaboration in the achievement of outcomes for the community;
  3. Promoting public service innovation that delivers transformative public policy and service delivery that is different, better and lower cost;
  4. Identifying opportunities to further consolidate public sector entities into departments or other entities aligned with the government’s strategic imperatives (or other means to better align and co-ordinate roles and responsibilities across public sector entities);
  5. Identifying opportunities to deliver government services, programs, projects and other initiatives more efficiently or effectively, including through a whole-of-government digital strategy, or to no longer be delivered;
  6. Developing and implementing whole of sector key performance indicators to ensure more effective delivery of services to the community and support for economic activity and job creation;
  7. Attracting and retaining a skilled public sector workforce with the capacity to meet emerging economic, social, environmental and technological challenges;
  8. Achieving greater economies and efficiencies in WA’s public sector administration, including opportunities to reduce bureaucracy and red tape within government, improve workforce management processes and facilitate workforce renewal in a fair and transparent manner.

The review will be supported by a secretariat within the Department of the Premier and Cabinet, working under the direction of the review panel.

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