I feel really uncomfortable about the idea of public sector bosses getting performance pay.  

Not that the Government is going to care too much about that, because it’s confirmed that, from the middle of next year, that’s what’s going to be happening.  

It’s unclear to me at this stage whether it’s going to mean the heads of all our government departments are going to have some of their salaries earmarked in a category which is known in the HR game as “at-risk”. Which means some of your pay you’re not guaranteed to get unless you meet certain performance measures.  

The big-hitting chief executives in the private sector have these “at-risk” clauses. People like the head of ANZ, Antonia Watson, who fronted up to a parliamentary select committee yesterday and was asked how much she gets paid. And she told them it’s around $2 million a year.  

I’m more than happy for her and all her other private sector chief executive colleagues to be getting bonuses and extra pay for doing what’s required of them and doing it well, but I’m certainly not happy for the people in charge of social welfare, education, health —all of the essential public services— getting bonuses.  

And the reason for that is that public services can’t be pigeonholed like private operations can.  

If a private business is losing money on something, they can pull the pin. Easy. You can’t be so knee jerk when you’re running a public service.  

Because, generally, when a private business is losing money on something it’s because there’s less or no demand for what they provide. So you stop doing it.  

If you’re running the social welfare department, though, or health, you lose money hand over fist, but you can’t do much about it because —despite the fact you're chewing through the money— demand is always going to be through the roof.  

It’s the complete opposite of what happens in the private sector.  

The Government’s bringing back performance pay for public sector bosses after the former government got rid of it back in 2018.  

Chris Hipkins was the State Services Minister back then, and he got rid of the performance pay and bonuses because he wanted to put a bit of a handbrake on the pay pockets for the heads of government departments, which seemed to just be going up and up and up at the time.  

And I remember before then, you had politicians saying that performance pay was needed to make sure the public sector could attract the best people to run all the government departments.  

What they meant, of course, was that they needed to compete with the private sector and so they had to offer the same kinds of sweeteners.  

But I think we can agree that that hasn't necessarily been the best thing, and that someone who is a brilliant private sector chief executive doesn't necessarily make a brilliant public sector chief executive. And vice versa.  

Where I see problems with performance pay in the public sector is it will create tension and division. In fact, it will be worse than that. It will mean we see less genuine leadership in our government departments and more government puppets running the show.  

I’m not saying that a government department or agency should be run independently from the wants and expectations of the government of the day, it would be naïve to even suggest that.  

But if you’ve got the head of a government department being told that they’ll get a bonus if they do this or do that, or achieve this or achieve that, then their sole focus is going to be on pleasing the Minister.  

They’re not going to advocate on behalf of the people who work for them, they're not going to rock the boat. They’re not going to be the type of leader that I think we need in the public sector.  

They’ll be even more “yes people” types than they are at the moment because they’ll know that, if they aren’t, the bonus won’t be coming. 

I feel really uncomfortable about the idea of public sector bosses getting performance pay. &nbsp;
Not that the Government is going to care too much about that, because it’s confirmed that, from the middle of next year, that’s what’s going to be happening. &nbsp;
It’s unclear to me at this stage whether it’s going to mean the heads of all our government departments are going to have some of their salaries earmarked in a category which is known in the HR game as “at-risk”. Which means some of your pay you’re not guaranteed to get unless you meet certain performance measures. &nbsp;
The big-hitting chief executives in the private sector have these “at-risk” clauses. People like the head of ANZ, Antonia Watson, who fronted up to a parliamentary select committee yesterday and was asked how much she gets paid. And she told them it’s around $2 million a year. &nbsp;
I’m more than happy for her and all her other private sector chief executive colleagues to be getting bonuses and extra pay for doing what’s required of them and doing it well, but I’m certainly not happy for the people in charge of social welfare, education, health —all of the essential public services— getting bonuses. &nbsp;
And the reason for that is that public services can’t be pigeonholed like private operations can. &nbsp;
If a private business is losing money on something, they can pull the pin. Easy. You can’t be so knee jerk when you’re running a public service. &nbsp;
Because, generally, when a private business is losing money on something it’s because there’s less or no demand for what they provide. So you stop doing it. &nbsp;
If you’re running the social welfare department, though, or health, you lose money hand over fist, but you can’t do much about it because —despite the fact you're chewing through the money— demand is always going to be through the roof. &nbsp;
It’s the complete opposite of what happens in the private sector. &nbsp;
The Government’s bringing back performance pay for public sector bosses after the former government got rid of it back in 2018. &nbsp;
Chris Hipkins was the State Services Minister back then, and he got rid of the performance pay and bonuses because he wanted to put a bit of a handbrake on the pay pockets for the heads of government departments, which seemed to just be going up and up and up at the time. &nbsp;
And I remember before then, you had politicians saying that performance pay was needed to make sure the public sector could attract the best people to run all the government departments. &nbsp;
What they meant, of course, was that they needed to compete with the private sector and so they had to offer the same kinds of sweeteners. &nbsp;
But I think we can agree that that hasn't necessarily been the best thing, and that someone who is a brilliant private sector chief executive doesn't necessarily make a brilliant public sector chief executive. And vice versa. &nbsp;
Where I see problems with performance pay in the public sector is it will create tension and division. In fact, it will be worse than that. It will mean we see less genuine leadership in our government departments and more government puppets running the show. &nbsp;
I’m not saying that a government department or agency should be run independently from the wants and expectations of the government of the day, it would be naïve to even suggest that. &nbsp;
But if you’ve got the head of a government department being told that they’ll get a bonus if they do this or do that, or achieve this or achieve that, then their sole focus is going to be on pleasing the Minister. &nbsp;
They’re not going to advocate on behalf of the people who work for them, they're not going to rock the boat. They’re not going to be the type of leader that I think we need in the public sector. &nbsp;
They’ll be even more “yes people” types than they are at the moment because they’ll know that, if they aren’t, the bonus won’t be coming.&nbsp;

Every weekday join the new voice of local issues on Canterbury Mornings with John MacDonald, 9am-12pm weekdays.

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Newstalk ZB Canterbury Mornings 9am-12pm with John MacDonald on 100.1FM and iHeartRadio.

Every weekday join the new voice of local issues on Canterbury Mornings with John MacDonald, 9am-12pm weekdays. It’s all about the conversation with John, as he gets right into the things that get our community talking. If it’s news you’re after, backing John is the combined power of the Newstalk ZB and New Zealand Herald news teams. Meaning when it comes to covering breaking news – you will not beat local radio. With two decades experience in communications based in Christchurch, John also has a deep understanding of and connections to the Christchurch and Canterbury commercial sector. Newstalk ZB Canterbury Mornings 9am-12pm with John MacDonald on 100.1FM and iHeartRadio.

Every weekday join the new voice of local issues on Canterbury Mornings with John MacDonald, 9am-12pm weekdays.

It’s all about the conversation with John, as he gets right into the things that get our community talking.

Canterbury Mornings with John MacDonald

John MacDonald: Performance pay's no bonus for the public sector

https://api.omny.fm/orgs/7784f840-c291-422a-924b-ad9000bbad71/clips/fc881556-4e7f-42bc-9752-b21300007645/transcript

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