Promises vs performance: pay devolution to Next Steps executive agencies in the British civil service
| Pages | 25-47 |
| Date | 01 June 1996 |
| Published date | 01 June 1996 |
| DOI | https://doi.org/10.1108/01425459610116456 |
| Author | Suzanne Gagnon |
| Subject Matter | HR & organizational behaviour |
Pay devolution
to Next Steps
25
Promises vs performance:
pay devolution to Next Steps
executive agencies in the
British civil service
Suzanne Gagnon
Grant MacEwan College, Edmonton, Alberta, Canada
The fundamental restructuring of Britain’s central government, involving the
creation of Next Steps agencies to carry out the executive and service-delivery
functions of government, is bringing significant change to many aspects of civil
service industrial relations. Civil service pay, traditionally negotiated nationally
by the Treasury and civil service trade unions, is one key area where the
Government is seeking major reform.
This article argues that the Conservative administration’s programme to
replace pay determination under the long-standing Whitley arrangements with
an agency-based system has been neither as rapid nor as coherent as the
Government intended. The Government’s objectives or “promises” for civil
service pay arrangements were only partially met in the first major round of
pay delegation to Next Steps agencies. This is clear given the results of a
detailed survey of agencies and a series of interviews with senior agency
human resources officials. When evaluated in light of current pay literature and
human resource theory, the results provide an indication of the future shape of
civil service pay arrangements as the government completes the process of pay
delegation in 1996.
Next Steps and a new approach to pay
Following the release in 1988 of “Improving Management in Government: The
Next Steps”, written by the Efficiency Unit of the Cabinet Office, the
Government began a series of fundamental organizational changes to the civil
service. The report recommended that central departments be restricted to the
policy functions of government; executive and service-delivery functions could
be more efficiently carried out by discrete agencies. Thus the Government
began to disaggregate the large departments to create a wide range of executive
agencies, each managed by a chief executive officer and governed by a
framework agreement.
Employee Relations, Vol. 18 No.3,
1996, pp. 25-47. © MCBUniversity
Press, 0142-5455
The author would like to thank Dr Ian Kessler, of Templeton College, Oxford, for his assistance
and guidance. Any remaining errors are her own. This paper originates from a thesis originally
written for the Master of Science in Management Studies (Industrial Relations), Oxford
University. It received the Philip Nind Prize of the Foundation for Management Education for
the best Master's paper in the area of Human Relations. The full thesis is available at the library
of Templeton College, Oxford.
Employee
Relations
18,3
26
Many management responsibilities were subsequently delegated to the
newly-established agencies. Pay was one area where the Next Steps authors said
the freedom of individual managers to manage resources effectively had been
“severely circumscribed” by centralized rules and regulations. The advantages
of the all-embracing, national pay structure, with uniformity of g rading across
departments were breaking down, they argued, calling for agency “freedom to
recruit, pay, grade and structure in the most effective way”.
In 1991, a second major public sector reform initiative made reference to the
issue of civil service pay. Complementing Next Steps, the Citizen’s Charter(1991)
aimed to improve the efficiency of public services by providing for more
contracting-out, competition and privatization. It extended the use of
“performance management” through publishing standards and performance
targets for all public services. And it called for all future civil service pay
increases to be based more exclusively on the performance of individual
government employees.
The Government’s pay objectives
In July 1991, the Chancellor set out the Government’s pay reform programme in
greater detail. He announced the Government’s intentions in a five-part plan:
(1) Enable responsibility for pay bargaining to be delegated to Next Steps
agencies to allow them flexibility to set their own pay arrangements
according to their particular business needs; “The Government now
wants to introduce more flexible (pay) regimes … that meet the
objectives of departments and agencies”, the statement said. National
pay agreements “do not provide a framework that is fully capable of
meeting the needs of the 1990s”, it said, and the application of uniform
terms and conditions to such a diverse group of organizations is no
longer appropriate.
(2) Tighten the link between pay and performance for all civil servants;
while such a link had been part of the national pay agre ements of the late
1980s, the Chancellor’s statement made it clear that individual
performance would be accorded more weight than in the past, with pay
increases to be based primarily on individual performance.
(3) Achieve greater “value for money” from the paybill through tying pay
increases to efficiency improvements.
(4) Pursue pay arrangements perceived by employees as fair and based on
the continuation of informed collective bargaining.
(5) By implication and supported in subsequent government
pronouncements dealing specifically with civil service pay, pursue
organizational change and reform of civil service culture through the use
of pay as a strategic managerial tool. For example, pay is referred to as
“an important element in the drive to improve quality and efficiency”
with “an important part to play in raising the quality and improving the
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