Performance-linked incentives

The Seventh Pay Commission has recommended performance-linked pay incentives for all central government employees, but has suggested that each department be given flexibility to work out its own matrix.

The pay panel has suggested that incentive could be in the form of a “non-additive cash component“ of current pay, paid at the end of the fiscal year and should not be linked to savings. Performance-linked pay has been proposed by previous pay commissions as well as the Administrative Reforms Commission but has not been talked about, leave alone implemented.

The seventh pay panel has suggested that performance bonus, now paid to junior government staffers, should be linked to the results framework documents, which sets annual targets for departments, and also calls for reworking the annual performance appraisal system for employees.

Performance-related pay incentives (PRP)

Performance-related pay (PRP) is widely used in the private sector and is used to reward better performers in the system. The absence of any incentives in the gov ernment along with time-bound pro motions, irrespective of performance, is seen as a major dampener in the current system.incentives

But the government has chosen to ignore the earlier rec ommendations as they were seen as not just cumbersome to implement but would have annoyed a majority of em annoyed a majority of em ployees, a major vote bank in cities such as the National Capital.The Seventh Pay Commission has sought to address the first concern. “Any attempt to implement PRP in a governmental framework has to be preceded by proper understanding of the system, adequate planning and capacity building at various levels.

“The commission feels that given the enormous size of the government and the diversity in the basic structures, sizes and patterns observed across ministriesdepartmentsdivisions, it would be erroneous to recommend a one-size-fits-all model for PRP,“ it said.

The panel has said that proper training and capacity building are pre-requisites before launching PRP.