Contract of objectives and performance bonuses
Contract of objectives and performance bonus within administration
Findings: The remuneration system used within the Public Service system is characterised by (i) the uniformity and low levels of index-related salaries, which generally depend on the levels of training and on the post itself, regardless of the sector, (ii) the existence of bonuses and allowances that are granted on a “means” basis rather than on results (iii) automatic promotion on the grounds of seniority, which allows the civil servant to rise through the grades every two years without any obligation with regard to the quality or efficiency of his or her work (iv) promotions where work performance depends on an appraisal system that is not correlated with objectives or operational results.
Objective: The bonus is designed to offer a financial incentive to the work force as a whole, dependant on the success and results of their department. It is also intended to strengthen the authority of the department manager, who, once the objective is reached and the global amount of the bonus is determined, will be responsible for attributing the share of the bonus to each team member, based on his or her evaluation of their individual contribution and performance.
Underlying principal: an “objectives-results” based measurement
- which is assessed specifically on the basis of results achieved in an activity;
- which therefore is analytical, but analytical of an activity, and not of the aptitudes or behaviour of the people concerned;
- which presupposes a precise, shared definition of the objectives, and of the indicators/criteria for measuring the extent to which these have been met;
- which encourages an understanding of the differences (between objectives and results) and should lead to appropriate corrective measures;
- which has an impact on the way in which the practices and behaviour of the teams evolve, given that the beneficiaries of a performance based bonus will be inclined to look for new ways in which to deal with situations in which blockages typically occur, or of intervening in the case of dysfunctions from which they normally “suffer”;
- which contributes to the emulation of the teams once the results are widely known;
- which requires the heads of the different Departments to have a better knowledge and control of the work of their teams.
So far this measurement has been used twice (in Africa) within the transport and public works sector, each time successfully. However, once certain adjustments are made, the guiding principal and the functionalities can be adapted to other sectors, particularly the social sectors (education, health), and to agriculture, etc.
The tool runs in Excel and the methodological guide includes:
- the model for calculating and managing the bonus;
- an example of a contract of objectives (production objections and management conditions) and its two negotiation pillars (definition of performance indicators and thresholds for triggering bonuses and penalties). The contract of objectives to be drawn up and negotiated for each section is similar to that used in the model;
- outline/diagram of the process applied to the model, summarising the general mechanism for determining the performance bonus, along with the instruction manual.