PUBLIC SECTOR PAY
Mercer urges reform of top pay in public sector
The public sector needs a more coherent and transparent structure to decide executive pay in order to attract the best staff and provide value for money, claims Mercer.
Mercer has recommended that an independent review body advises on the reward principles and provides guidance to national and local government for the different parts of the public sector.
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Remuneration committees
Mercer believes that executive reward decisions, including both policy and application to individuals, should be made through remuneration committees. These committees should include independent members and report to Ministers, authority members or the boards for each organisation.
“Executive reward statements should also be published in annual reports similar to those made by public companies. This will encourage transparency and address public concerns about affordability,” said Chris Johnson, Mercer’s head of human capital in the UK.
Piecemeal approach
According to Johnson, who was Director of the Cabinet Office with responsibility for employee relations and reward across the Civil Service from 2005 to 2008, executive reward in the public sector is currently set and monitored through different mechanisms such as pay review bodies, remuneration committees, management process and political decisions. “There is little coherence and no consistency or transparency,” he said.
“This piecemeal approach needs to change if the sector is to avoid the impression of ‘fat cat’ pay, attract the best people and convince the public that they are delivering value for money. The current reward system structure doesn’t produce the right results and has a negative impact on leadership, professional expertise, the effectiveness of senior management and the performance of public organisations.”
A final word
“The cost of employing public sector talent is low compared with the private sector, but the public sector requires a more coherent talent strategy consistent with that employed in the private sector. Public sector organisations must also have access to leading practices and experiences from other high-performing sectors of the economy. This means recruiting from other parts of the public and private sectors.” - Chris Johnson, Mercer’s head of human capital in the UK.
Want to know more?
Mercer is a “leading global provider of consulting, outsourcing and investment services”. Mercer’s 18,000 employees are based in more than 40 countries. To find out more visit: www.mercer.com.