The Pros and Cons of Career- and Position- based Systems Rabat 24 – 25 May 2007 GOOD GOVERNANCE FOR DEVELOPMENT IN ARAB COUNTRIES INITIATIVE Knut Rexed Former Director General Swedish Agency for Public Management

The OECD context  Different political and administrative models.  No common system for public employment, but a spectrum of different models and systems.  No common evolutionary trend due to the strong path dependency … but possibly a growing shared awareness of the issues involved.

Career-based system Position-based systems StatutoryContractual The OECD context

”Contractual” means unlimited but revocable employment contracts. Term contracts are normally only used for temporary labour needs. Outsourcing and use of private service providers also provide flexibility The OECD context

Typical characteristics of Career-based Systems  Employees are guaranteed employment, but not a specific position.  Entry into the system is through a separate competitive process.  Mobility within the system is through a different process, which can be less stringent and less transparent.  There are formal rules for the system, and a centralized management.

 Competitive recruitment to each position.  No right of transfer to another position.  Selections may be based on position- specific competence assessments.  Recruitment decisions may be decentralized. Typical characteristics of Position-based Systems

 The traditional norm is a statutory career- based system.  An elaborate set of different specialized careers.  France is presently seeking ways to increase the flexibility of its career systems.  A number of specialists are recruited to positions outside the career systems. A first archetype: France

 A traditional dual system with parallel career- based and position-based systems.  The career-based system is governed by statutes, while the position-based system is governed by contracts.  The model has been challenged, but there have so far been no major changes. A second archetype: Germany

A third archetype: Sweden  The traditional norm is a position-based system.  Statutory governance has been replaced by contracts. Recruitment and promotion decisions have been delegated to the agencies.  Formal career-based systems exist in the armed forces, and the police, judiciary and foreign services.  Informal career-based systems exist in certain large government agencies.

The advantages of Career-based Systems  The foundation of fealty systems (as opposed to employment systems).  Encourages professionalization.  Promotes a common culture and common core values.  Better protection for due processes and a proper application of the laws.

The drawbacks of Career-based Systems  Produces generalists rather than specialists.  Tends to be static and inflexible.  Tends to promote risk avoidance rather than performance.  May be resilient to political governance.

The advantages of Position-based Systems  Enables decentralisation.  Easier to adapt recruitment to specific competence need in different activities.  Easier to differentiate pay and other employment conditions after the market situation.  Easier to achieve a strong performance- orientation.

The drawbacks of Position-based systems  Higher transaction costs.  Does not promote a common culture or common core values.  More vulnerable for sub-optimization.  More vulnerable for patronage.  More vulnerable for political interference.

The issues of Change Management  Revising an existing fealty structure is sensitive and can be difficult.  A position based system has to be used for adaptation to local needs in order to motivate its higher transaction costs.  The introduction of a position-based system should therefore be linked to investments in managerial competences.  A total change of the entire system is much more difficult than a piece-mal change.

The issues of Change Management The optimal structure may be an appropriate dual structure. Position-based systems Career-based systems StatutoryContractual Traditional core functions Services and other production functions