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Majority of public sector employees have reservations about performance-related pay, reveals CIPD

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The CIPD's annual 'Employee attitudes to pay' survey reveals that just one in three public sector workers think their salary should reflect their individual performance, compared to more than half of private sector workers.

The survey showed that in the private sector 54% of employees believe that their salary should reflect their own performance, 36% think inflation and 32% their experience. In the public sector, workers feel their pay should reflect inflation, 36% individual performance and 33% their experience.

The survey of more than 3,000 employees also found that how individuals would like to get paid  influences how they think other workers should get paid.

Private sector workers feel strongly that those in the public sector should be paid according to individual (55%), organisational (33%) and team performance (26%). Public sector workers agreed that private sector workers should be paid based on how well they should perform, but are more reluctant to see their own pay linked to individual performance (36%), that of their team (11%) or that of their organisation (5%).

The survey showed that three in ten public sector workers (30%) believe that pay levels should be decided via a trade union negotiated pay deal. This is the highest it has been since 2010 and is possibly a reaction to the recent pay restraint in that sector.

The survey also found that employees who get a pay cut but received an explanation were more satisfied than those who got a pay freeze but no explanation.

Charles Cotton, rewards adviser at the CIPD, said: "Establishing a closer link between pay and performance in the public sector is a key element to improving service delivery and value for taxpayers.

"What's more, unless the public sector starts linking pay to performance or better engages with those in the private sector about why their taxes should reward public sector workers differently, public sector employers could find it hard to legitimise pay decisions in the eyes of the private sector.

"However, linking pay to performance does not come without its management challenges. It's encouraging to see that there is some appetite in the public sector for performance-related pay, with one in three workers agreeing that their salary should reflect their performance, but if performance-related pay is introduced, public sector managers will undoubtedly find it challenging to retain levels of motivation and engagement amongst those who think other factors should determine their pay."

Cotton added: "Public sector employers would need to be prepared to invest in explaining why it thinks such reforms are needed and communicate the changes in the wider context of changes in the public sector 'employment deal'. On the other hand, with younger employees more likely than older generations to expect to see their pay reflect their individual achievements, the public sector could face issues recruiting staff in the future if it does not start linking pay to performance."

Anne Gibson, past president at the Public Sector People Managers Association (PPMA), said: "Different attitudes between employees in the public and private sectors have been shaped by historic differences in approach between the sectors, including the existence of national pay review bodies for groups such as teachers, police and fire-fighters.

"Many public sector organisations are re-thinking their approach to pay and reward, recognising that the reward systems of the past are no longer fit for purpose. Now more than ever they need employees who are motivated to do the best they can, are committed to public service and are resilient enough to thrive through the continuous cycles of change.

"Pay, reward and recognition are not the only factors in a necessary 'new deal' for public sector workers, but they have an important part to play. Reward systems need to build on the commitment public sector workers have to the job they do in order to drive up performance and productivity, and therefore make them affordable."