JOB DESIGN AND PERFORMANCE

TOOLKIT

A collaborated between Mercer, the Public Service People Managers Association

and The Local Government Association.
CONTENTS

INTRODUCTION 1

SIMPLIFYING JOB DESIGN 2

LINKING PAY TO PERFORMANCE 6

FINAL THOUGHTS 13

CONTACTS 14

SUPPORTING ANNEXES 15
INTRODUCTION

Mercer has collaborated with the Public Service People Managers

Association and The Local Government Association to develop a toolkit
designed to give local authorities guidance on how to address two key
aspects of strategic HR management which they may be considering:
• Simplified job design; and
• Linking pay to performance.
Addressing these issues has the capacity to improve services and to
create efficiencies. The successful implementation of changes will enable
local authorities to develop better approaches to creating a motivated
and engaged workforce and carrying out the right activities to enable the
efficient and effective delivery of services. They will help councils to adapt
to on-going changes more effectively and give them a basis on which
they can develop their talent for the future.

Decisions about job design and the most appropriate approach to pay
are best made within individual councils, taking into account a number of
relevant factors. There is not a single best approach and this guide is
intended simply to assist councils in making judgments and decisions
that are right for them.

1
1
SIMPLIFYING JOB DESIGN

Many local authorities have a large number of Detailed job design may have been necessary to
separately defined jobs and this may lead to support the job evaluation processes needed so
inefficiencies. that local authorities could put in place fair and
transparent pay systems as part of single status.
The reasons for this are: However, the systems that emerged from single
• Job design is complex and inflexible, so it is status were designed to minimise equal pay risks
often difficult to make changes where these and do not always support the need for more
are needed to deliver services more efficient and flexible ways of working.
effectively.
Traditional local government job descriptions have
• Substantial resources are required to carry been based on detailed lists of activities rather
out job evaluations under the processes that than on the people skills that are required to
have been adopted. deliver outcomes. In times of financial austerity
• A relatively minor change to a job can lead to and the transformation of public services, this
consideration as to whether the job should be guidance will support local authorities in taking a
re-graded, resulting in pay drift and additional fresh approach to job design.
cost. Cataloguing can allow for much clearer
processes to establish any need for re-grading
quickly and easily.
• Complex job design leads to inefficient
workforce planning and talent management
processes. Insufficient focus on the skills of
individuals and too much emphasis on job
content make it difficult to manage resources
flexibly.
• Job descriptions are sometimes changed to
secure the desired pay outcomes. Although
job enhancement is a perfectly respectable
process to improve services and workforce
development there is considerable case law
warning against spurious exercises.
• Over-complex job design makes the process
of implementing change more difficult. This is
because there is often a perceived need to
redesign jobs in detail and it is often difficult
to identify where common skills exist within a
local authority.

2
ESTABLISH YOUR OBJECTIVES AND PRINCIPLES
The objective should be to design an approach to address each of the previously mentioned issues.
This can be achieved through a simplified job design process based on the following guiding principles:

• A single job catalogue should be created to • It should be explained to staff and unions that
cover all jobs across the local authority. Jobs the cataloguing process in itself is not a
should be matched to those in the catalogue re-grading exercise or a change in individual
and no new job description can be created responsibilities. It is aimed at streamlining
unless it is formally decided that an addition processes for all concerned during the
to the job catalogue is needed. inevitable organisational change exercises
• Within the job catalogue, jobs should be which councils and their staff are increasingly
grouped together into job families so experiencing.
common career paths and skill sets can be
identified. Levels should be defined to enable
performance management and competency
expectations to be linked to these.
• Each job description should be written as a
simplified role profile. Detailed activities to be
carried out should be documented through
the performance management process rather
than forming part of the job description.
• Each role profile should also document the
behaviours that are expected of the role, and
these should be consistent across each level.
• Pay and grading implications should be kept
separate from the implementation of the
approach to simplified job design, ensuring
that job design is not influenced by pay
considerations.

3
3
WHAT APPROACH SHOULD YOU TAKE?
Each local authority will wish to adopt it’s own approach to job simplification, depending on its priorities,
culture and employee relations environment. The engagement of line managers, Trade Union partners
and employees during that process is essential.

Below we set out a suggested process for the implementation of a job simplification process.

1
It is first necessary to create a business case setting why the change needs to be made.
There are direct financial benefits to be obtained from the creation of a standard job
catalogue which may include reduced time and cost spent on job evaluations, more
Business efficient resourcing models, and increased capacity to change and reconfigure services.
case The job catalogue can also support other changes such as better performance management,
development of competencies and clarity on career paths. The interaction between the job
catalogue and these processes will be an important part of the business case going forward.
The business case needs to be signed off at the highest level and to have senior sponsorship.

2
Development To ensure consistency the job catalogue is best developed through a central process and
of the job core team.
catalogue Details on job content can be obtained through interview or use of questionnaires but
controls need to be in place to ensure consistency.

3
Engagement Line managers need to be engaged on the content on the draft catalogue, as do Trade
with managers Union colleagues. Engagement should focus on the business case for the change and with
Trade Union colleagues it needs be made clear that the use of the job catalogue does not
& Trade Unions represent a formal change to terms and conditions.

4
Engagement This should be carried out by line managers with the necessary level of technical support.
with employees

5
Implementation may be preceded by testing and piloting of the catalogue in some key
Implementation areas.

6
Following implementation the job catalogue should be reviewed to identify any areas in
Review which improvements are needed and to assess the extent to which the objectives established
for the job catalogue have been achieved.

Each stage of the process should be subject to rigorous quality assurance and governance processes.
These should ensure that the job catalogue fairly reflects the range of jobs across the Council to manage
the subsequent risk of Equal Pay claims.

4
EXAMPLES OF GOOD PRACTICE

BUCKINGHAMSHIRE
COUNTY COUNCIL

The County Council moved from over 1,000 detailed job descriptions towards
having just 150 role profiles. All jobs are placed into one of ten job families, and
these were linked to the Council’s competency framework and performance
management processes.

NHS
AGENDA FOR CHANGE

The NHS Agenda for Change system uses job profiles for matching JDs of
commonly-occurring jobs to, organised in job families. Each profile is a fully-
evaluated summary of several real jobs and NHS organisations access the profiles
and other information online and use this to match their jobs to. Any unusual
roles for which there is no profile have to be fully evaluated using a job analysis
questionnaire. This enables a consistent approach to job evaluation for around
1.2 million employees.

5
5
 LINKING PAY TO
PERFORMANCE
The use of performance-related pay is controversial in local
government, and this is an issue that often divides opinion
sharply. The question as to whether performance-related pay
works is dependent on:
• The objectives established for performance-related pay,
which should directly influence the design of any
arrangement.
• The nature of the workforce, recognising that
performance-related pay is better suited to some jobs
than to others.
• The capability within the organisation to assess
individual performance, in terms of both the quality of
line management and supporting systems and
processes.
• In recent years many public sector organisations have
adapted their pay progression arrangements to link
these more closely with performance. The Local
Government Association has published research on the
current approaches which shows that 32% of councils
have made changes to their systems. Headline messages
from the research are in Annex A along with a link to the
recommendations based on the research. The
recommendations are designed to show the simple
moves that any council could quickly implement before
assessing the need for more complex changes.
The movement towards linking increments more closely with
performance is an important first step on the journey towards
linking pay with contribution. The following sections deal
with some of the fundamental principles relating to
performance-related pay and provide some examples as to
how it may operate in local government.

6
ESTABLISH YOUR OBJECTIVES AND PRINCIPLES
The first step in the design of any approach to linking pay with performance is to establish a clear view of
what needs to be achieved. Often there is confusion as to what the objectives of systems of performance-
related pay should be and this makes it difficult to assess the effectiveness of such arrangements.

Sometimes the stated objective is excessively ambitious and there is a hierarchy of possible objectives as
illustrated below:

POSSIBLE OBJECTIVES ARE TO:

EASY
1. Reflect market practice and recruit and retain talent.

2. Align reward with organisational performance and communicate priorities.

3. Reward employees fairly, based on their individual contribution.

4. Create an incentive for improved performance. DIFFICULT!

Many systems of performance-related pay in both Traditional ways of addressing this issue, such as
the public and private sectors are purportedly through promotion prospects, by increasing the
designed to achieve all of the objectives listed pay of longer serving employees, or by using job
above, not recognising that the more ambitious evaluation systems to give additional
and difficult objectives may not be achievable. responsibilities often create artificial job design
Legitimate and successful systems of and may add to cost. Changes in the nature of the
performance-related pay can be established to local government workforce also make these
achieve less ambitious objectives, so it is traditional approaches difficult to manage.
important that objectives are clear during the
design stage. Some jobs are better suited to the use of
performance-related pay than others, and
In local government, performance-related pay is alternative approaches may be adopted for
unlikely to operate effectively if the primary different segments of the workforce within the
objective is the 4th objective (see above), same local authority. If the main objective is to
therefore the focus should be on the 2nd and 3rd create a fairer pay system, performance-related
objectives. pay is more important for complex jobs where the
capability and discretion of individuals has the
The 3rd objective, which is to reward employees most significant impact on outcomes.
fairly, is of increasing importance. As local
government jobs become more complex and
flexible, pay systems that fail to recognise the
different contributions that individuals make may
be regarded as inherently unfair.

7
The diagram illustrates how the nature of the local government workforce is changing and the need to
shift the emphasis towards assessment of individual capability and contribution when making pay
decisions.

High job
complexity/flexible

Local
government
jobs circa
Local 2018
government
jobs circa
2014
Pay determined by Pay determined by
job size individual capability

Local
government
jobs circa
2005

Low job
complexity/flexible

It is important to emphasise that job evaluation should be retained as a baseline for determining pay. The
change required is to move away from the reliance solely on job evaluation towards a greater emphasis on
individual capability, measuring through a fair and transparent process.

8
WHAT APPROACH SHOULD YOU TAKE?
The design of performance-related pay requires careful consideration, especially in times of austerity.
Crucial decisions need to be made:

• Should performance-related pay be additional The precise design of any system of performance-
to existing pay (which will be costly) or should related pay depends on the objectives that are to
an element of existing pay be restructured be achieved. On the following pages we set out
(so that employees place an element of pay at two possible approaches that may be considered,
risk)? aimed at achieving the 2nd and the 3rd of the four
• Should performance-related pay be objectives set out on page 7.
consolidated into base salary or should it be
paid separately as a non-consolidated The first of these potentially relates to all
payment which has to be earned back each employees within the Council, and the second is
year? appropriate to more complex jobs and especially
to senior manager roles.

OBJECTIVE 2 - ALIGNING REWARD TO ORGANISATIONAL PERFORMANCE & COMMUNICATE PRIORITIES

The example below shows how an all-employee “gainsharing” plan might operate in local government.

1 2 3
On an annual basis the plan During the year there Payment made based
is set up to pay a target should be ongoing on an assessment of
amount of up to £500 at the communication of achievement of
end of the performance performance against Council-wide targets
year, subject to the objectives to support the following the end of the
achievement of a set of clear creation of a year, as agreed by a
measurable Council-wide performance culture. Remuneration
performance targets. Committee (or
equivalent).
These targets and the
payment that would result
from different levels of
achievement would be Payment could also be
communicated to subject to a minimum
standard of individual
employees and other
performance being
stakeholders at the outset
achieved.
of the year.

Start of performance End of

period for a year performance period

March April March June

The amount of money that is paid on an individual basis does not need to be substantial, because the
primary purpose of the arrangement is to make the connection between reward and the organisation’s
objectives and outcomes. It’s purpose is also to use the payment as a tool to communicate issues relating
to the performance of the organisation, and how individual employees are able to contribute to that
performance. The key aspect of the design is that the local authority should have a clear set of stable
objectives that can be readily communicated to employees.

9
9
OBJECTIVE 3 - REWARD EMPLOYEES FAIRLY, BASED ON THEIR INDIVIDUAL CONTRIBUTION

Here we show an illustration

70
of a system of performance-
related pay that recognises High performing - Paid to exceptional performers, not
consolidated into base salary
individual contribution. Non-consolidated
The system provides for a 65
developing range as Base Salary £’000
individuals move up to a High performing - Additional salary paid to consistently
strong performers
Rate for the Job, with some Consolidated
additional base salary for 60 The Rate for the Job paid for the
expected standard of performance
consistently strong
performance and then Developing Individuals who are still developing into
some additional non- Range their role will be paid in this range
consolidated pay for
exceptional performers:
55
Minimum
Salary
50

The non-consolidated payment may be made on a monthly basis to negate the controversy that may be
attached to the payment of an annual bonus.

Linking pay to individual capability is essential for more complex jobs in which individuals can have
significantly different levels of performance. Such individuals can make different levels of contribution in
jobs that are evaluated as being of similar size. Failure to recognise these different levels of contribution
have two clear consequences:

1. Where performance has no impact on the 2. If the pay system does not enable additional
level of pay, performance could decline so pay to be provided to strong performers the
that all individuals revert to a standardised local authority may find that it is difficult to
and potentially mediocre level. retain its top performers.
Whilst it may be difficult to make the case that Other methods to increase pay, such as the
performance-related pay creates an incentive, use of promotion prospects or increasing the
the absence of performance-related pay can level of responsibilities, may be used
create a disincentive, and a high performance successfully to retain high performng
culture is difficult to sustain unless individuals in the short term, but these may
performance is connected with pay systems not be practical long-term solutions in many
and talent management. circumstances.

10
HOW CAN YOU MANAGE PERFORMANCE?

Having in place the capability to manage individual performance is essential in linking performance with
pay. Whilst most organisations have some scope for making improvements to their performance
management processes, a high degree of confidence in the performance management system must be in
place prior to the implementation of any formal link to pay. For example, any new performance
management process should usually have a full year of operation so it is well understood and established
before any formal link to pay is made.

Performance management and appraisal systems should not be designed and implemented for the
primary purpose of linking pay with performance. The performance management system and, more
importantly, the conversations that need to take place as part of the system, are processes that should be
in place regardless of the link to pay. Nevertheless one of the advantages of linking pay with performance
is that such conversations are more likely to take place and issues relating to individual performance may
be addressed sooner than they otherwise would be.

The diagram below illustrates the importance of the performance conversation in ensuring that
performance stays aligned to with changing business expectations:

Strong individual
performance
Performance conversation
= performance upturn
Business performance
Performance

expectations

Poor individual
performance

No performance conversation
= poor performance

Time

11
 EXAMPLES OF GOOD PRACTICE

HERTFORDSHIRE
COUNTY COUNCIL

In 2013 the Council introduced a system under which increments are linked to
performance. Employees do not receive an increment if performance does not
meet expectations and those who exceed expectations may receive non-
consolidated payments. Those at the top of the pay scale who are rated as
exceptional performers may receive a higher level of non-consolidated payment.

ww

BUCKINGHAMSHIRE
COUNTY COUNCIL

In 2012 the Council introduced a new Contribution-Based Pay system. All

increases in pay are linked to performance and on where the employee is
currently placed in the pay bands. Strong performers who are at or towards the
top of the pay range for each grade receive non-consolidated payments and fixed
pay points are no longer used.

12
FINAL THOUGHTS

The potential advantages in linking pay with performance are clear, but some
fundamental questions need to be resolved before embarking on the design of such a
system. These are:
• Does the local authority have the processes in place to enable performance
decisions to be made?
• Do managers have the skills and confidence to make fair, justifiable and
sometimes difficult decisions about people’s pay?
• What governance processes are in place to enable correct pay decisions to be
made, and what is the capability to make those decisions?
It is important that pay decisions are made through a proper governance process and
decisions are properly documented so that evidence is in place. Elected Members and
others who are accountable for decisions must be able to explain and defend them,
and evidence as to the decisions made will be necessary to manage the risks relating to
Equal Pay.

13
13
 CONTACTS

For further information on any of the issues raised in this toolkit please contact:

Daniel Hibbert
Principal
Mercer
Tower Place
London, EC3R 5BU

020 7178 5520

[Link]@[Link]

Jackie Hinchliffe
PPMA Pay and Reward lead
Head of HR, OD & Transformation
Thurrock Council
Civic Offices, New Road
Grays, Essex RM17 6SL

01375 652016
jhinchliffe@[Link]

Jon Sutcliffe
LGA Workforce Strategy and Consultancy Team
Local Government Association
Local Government House
Smith Square
London, SW1P 3HZ

020 7187 7320

[Link]@[Link]

14
PPMA/LGA/MERCER
COLLABORATION
SUPPORTING ANNEXES

15
 ANNEX A
LGA RESEARCH ON PAY PROGRESSION
SYSTEMS
Regular LGA surveys show that the use of assessment-based pay systems remains relatively uncommon in
local government. 68% of 161 respondents to the 2012/13 Workforce Survey said that their council used
“time served (i.e. annual incremental progression)” for the majority of staff. This was followed by
“performance/contribution related progression”.

RESPONSE SHIRE DISTRICT SINGLE/UPPER TIER ENGLAND

Time served (i.e. annual

70 67 68
incremental progression) (%)

Performance/contribution
22 24 23
related progression (%)

Spot salaries (i.e. no

4 6 5
incremental progression) (%)

Other (%) 4 2 3

Don't know (%) 0 1 1

An additional survey gathered more detail about the introduction of assessment-based systems. The
responses suggest that councils are adopting a fairly cautious approach; all the systems used involve
assessments and consequences for the individual against common criteria. Performance-related Pay
(PRP) involves the simplest assessments against objectives. Competence-based pay (which assesses
acquisition of key skills, competencies and sometimes behaviours) and contribution-related pay which in
essence combines performance and competence assessment but is the most complicated to administer
are less common.

Some have spot salary systems which involve no potential for anything beyond a basic pay increase until
the spot levels are reviewed. This may involve some cost increases in the first year when staff can be
offered higher salaries as an incentive to agree the new system. Some have actually moved back to
automatic incremental systems, presumably because the systems have not delivered expected results and
are complex to administer. This illustrates the longstanding advice that assessment-based progression
systems cannot really be used to drive cultural change but instead are best used to sustain and develop
changes that have already been made through stronger performance management etc.

Further details on this research and recommendations arising from it can be found on:
[Link]
content/56/10180/3702152/ARTICLE#Documentation.

16
ANNEX B
FURTHER READING

PUBLICATION PUBLISHED BY

Linking Pay to Performance in the Public Sector Mercer 2013

Abandoning pay-for-performance myths in favour of evidence Mercer 2013

Global Performance Management Survey Report Mercer 2013

Please click the publication title to view a PDF copy.

The LGA has a range of advice available, much of it developed jointly with the trade unions, which sets out
how change processes and any consequent job evaluation can be carried out more quickly without
increasing equal pay risks; click here to view.

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Singapore

South Africa

South Korea

Spain
Sweden

Switzerland

Taiwan

Thailand

Turkey

United Arab Emirates

United Kingdom

United States

Venezuela

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