ADASA WISHES A HAPPY AND PEACEFUL RETIRED LIFE TO SRI K SAIRAM, UDC, DDK, HYDERABAD

Wednesday, February 23, 2011

PERFORMANCE-BASED INCENTIVE

Employees of 62 central government departments could start earning a performance-based incentive, over and above their existing salaries, from as early as the next financial year. The incentive will be based on the department's scorecard in meeting yearly targets committed by their respective secretaries and ministers as part of the results-framework documents (RFD) system. The committee of secretaries looking into performance-based incentive for government employees is said to have already zeroed in on a formula that offers a secretary-level officer an incentive up to 40% of the basic salary, provided his department has met 100% RFD targets.

A scorecard of 70% and less in meeting RFD targets would however attract zero incentive. However, no penalty will be imposed on the non-performing officers. The secretaries' panel, headed by the Cabinet secretary, has already completed three crucial meetings and is looking to finalise its recommendations in time to enable performance-linked salaries in the coming financial year. The corporatisation of government departments by linking babudom's salaries with their performance was recommended by successive Pay Commissions over the last 22 years. Starting with the Fourth Pay Commission, performance-linked incentive has been a recommendation of the Fifth and Sixth pay panel reports as well. However, in the absence of any credible benchmark for measuring a government officer's performance, the performance-based incentive proposal never got off the ground.

With the 2010-11 RFD scorecards for 62 departments set to be finalised by May and brought into the public domain by June 2011 - incidentally, though the RFD scorecards for the three months of 2010 were never published, they are very much available - the committee of secretaries on performance-linked incentive is said to have worked out a formula to calculate the incentive for a secretary as well as the officials lower down. For a secretary-level officer, the incentive is proposed to be 15% of cost savings (budgeted expenditure minus actual expenditure) by the department multiplied by its composite score less 70, divided by 30.

The incentive will be higher with each passing year. In other words, secretary of a department that meets 100% RFD targets for a year would get 20% performance-based incentive in the first three years, 30% in the next three years and 40% between the sixth and ninth year. A 70% scorecard would however attract no incentive. For a joint secretary, the incentive will be sum of 30% of departmental composite score and 70% of divisional composite score. Since the incentive will be paid from cost savings of the department resulting from improved performance, there will be no extra burden on the exchequer. The government, incidentally, is not in favour of penalising the non-performing officers.

The reasoning being that not getting any incentive, or absence of recognition, would be punishment enough for the under-performers. With the committee of secretaries also planning to lay down the condition that performance-linked incentive will accrue to only those departments that have submitted RFDs for two consecutive years, the key five departments of PMO , home, finance, defence, external affairs who are still not covered by the RFD system will not qualify for the incentive.

Source: Economic Times


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