MAKE A DIFFERENCE Performance-Related Pay of Government Employees in Denmark OECD Expert Meeting Paris, October 7, 2003.

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Presentation transcript:

MAKE A DIFFERENCE Performance-Related Pay of Government Employees in Denmark OECD Expert Meeting Paris, October 7, 2003

MAKE A DIFFERENCE Background Design of the new pay system Implementation Difficulties Agenda

MAKE A DIFFERENCE 1.Background - the Danish State The Counties (14) The Municipalities (254) The State (1) Typical functions:Central administration Defence Police Universities Typical functions:Hospitals High schools Typical functions:Primary schools. Care of children, elderly and disabled persons

MAKE A DIFFERENCE 1.Background - milestones Collective Agreement ’97 Collective Agreement ’02 Collective Agreement ’05 New permanent pay system Academic employed Experiments with the new pay system Office workers IT-workers Etc. Academic employed Office workers Agricultural workers State tradesman Etc.

MAKE A DIFFERENCE 1.Background - result contract for managers Ministry of Taxation Director Contract Contract between The department of the Ministry of Taxation and The Central Customs and Tax Administration 1’st of January - 31’st of December 2000 Ministry of Taxation Result contract Focus on: The objectives for the institution in the period Concrete goals for the institution e.g.. number of controls, quality, HRM-activities, etc. Director contract 1. The result of the institution (min. 50%) 2. Strategy and development (min. 10%) 3. Internal management and HRM (min. 10%)

MAKE A DIFFERENCE 1.Background - the objectives recruitment and retention strengthen link –pay setting and objectives and strategies –pay and personnel policy reflect responsibility and authority, qualification and performance reasonable and fair

MAKE A DIFFERENCE 2.Design of the new pay system - Differences between the systems The old pay system Centralised Based on objective elements Long payruns Few possibilities for allowance The new pay system Decentralised Mainly based on subjective elements Short payruns (In principle) no limits for allowance

MAKE A DIFFERENCE 2.Design of the new pay system - delegation The Ministry of Finance Danish State Employer's Authority The departement e.g. Ministry of Culture The State Institution The different management levels - direct leader of the employees

MAKE A DIFFERENCE 2.Design of the new pay system - change in pay runs New payrun Old payrun Salary Years Saving Cost

MAKE A DIFFERENCE 2.Design of the new pay system - The old pay system Pay level II Pay level VI Clark – DKK Clark – DKK

MAKE A DIFFERENCE 2.Design of the new pay system - The old pay system Wage bracketSteps Location (geographically) StepIIIIIIVVVI Annual pay

MAKE A DIFFERENCE 2.Design of the new pay system - the elements Basic pay - basic pay system - interval pay system - minimum basic pay system Superstructure centrally/decentrally/locally agreed allowance Performance- related pay 80% 20%

MAKE A DIFFERENCE 2.Design of the new pay system - linking institutional policies and salary Annual Performance Interview Goals for the institution Personnel Policy Salary Policy Goals and assignments for the employee Competence- development Salary The institution The employee

MAKE A DIFFERENCE 3.Implementation - communication Dynamic guide Folders Education of personnel from HR-units Conferences Special information to the top managers Information on the internet Courses for managers Courses on development a local salary policy General information to the press Local meetings/workshop etc. Vej

MAKE A DIFFERENCE 3.Implementation - assessment Number of employees on the new pay system Numbers of new agreement based on the new pay system Different surveys

MAKE A DIFFERENCE 3.Implementation - Motivation survey Salary has an effect on motivation and effort. The most motivating salary elements: Pay in connection with education and development of qualifications Transparent criteria for pay 54% of the employees find that individual salary based on qualification and work effort has a positive influence on motivation

MAKE A DIFFERENCE 3.Implementation - Survey – Negative effects

MAKE A DIFFERENCE 3.Implementation - Survey – Positive effects

MAKE A DIFFERENCE 4.Difficulties - seen from the central level Lack of delegation Lack of knowledge with the line manager Not enough courage to make discrimination

MAKE A DIFFERENCE 4.Difficulties - the institutional level Unclear salary policy No clear link between goals, personnel policy and salary policy not enough information

MAKE A DIFFERENCE 4.Difficulties - seen from union representatives’ side Not enough money in the new pay system Resistance against the new pay system among some members Maybe to much focus on pay

MAKE A DIFFERENCE 4.Difficulties - prospects From a traditional pay system to a total reward system based on individual needs ”The new salary systems are a good tool in this context, but recognition and rewards should be interpreted and should be adapted to individual needs.” The Danish State’s personnel and management policy, June 2003