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Draft Report on a Promotion System

DRAFT NOT FOR CIRCULATION

May 2014

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Contents Page
1. Context: HRM report 3
2. Performance appraisal 5
3. Promotion 9
4. Key links between PFM, appraisal and
performance 13

Annex A: Promotion system toolkit

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1. Context: HRM report
The work to design the performance appraisal and promotion systems has been
delivered in the context of the World Bank and NSGI HRM report. This report seeks
to bring together the work on the HR sub-systems (performance appraisal and
promotion) to set this work in the context of the overall HRM report and to establish
the linkages between the sub-systems. Accordingly the relevant observations and
recommendations of that report are rehearsed below.

1.1 Constitution and Legislation


The Cypriot public service is bound by a rigid, anachronistic system of laws
and regulations that hinder effective personnel and performance
management.

1.2 Patronage seriously compromises the integrity of the Cyprus


HRM system
Current HRM practices do not facilitate the application of a meritocratic
principle.

Performance plays little to no role in promotion decisions.

Concerns about rusfeti have also led to the centralization of HRM authority.

In short, promotions decisions are driven by either of two factors, rusfeti or


seniority, without any clear relationship to merit or performance.

The first step to limiting reform and enhancing managerial discretion is to


ensure that no major personnel action can be controlled by any single agent.

The recommendations presented herein represent a move towards


introducing more flexibility into the HRM system.

1.3 A Package of Mutually Reinforcing Reforms


The HRM reforms will cascade from and be complementary to the
development of a Public Finance Management (PFM) system which aims to
improve business and financial planning.

Organisational reforms to the public service must decentralise responsibility


for human resource management while ensuring adequate oversight.

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Responsibility for human resource management should be devolved to line
ministries and agencies.

The PSC should assume an oversight role.

The architecture of a grievance redress system has to be put in place.

1.4 Creating incentives for improved performance


The annual personnel performance appraisal process needs to be
strengthened to ensure that merit and performance are the key determinants
of promotions and salary growth.

Changes to the salary structure and its dynamics will reinforce efforts to
decentralise responsibility for HRM functions.

1.5 An Enabling Environment for Reform


Technical solutions must be complemented by a change in organisational
culture.

Addressing the challenges identified in this report will require an integrated


reform effort to bring about effective change.

To implement these reforms, the Government will need a change


management strategy and to communicate clearly and frequently to the public
servants and the public.

The annual personnel performance appraisal process needs to be


strengthened to ensure that merit and performance are the key determinants
of promotions and salary growth.

Changes to the salary structure and its dynamics will reinforce efforts to
decentralize responsibility for HRM functions.

Restructure the combined salary scales;

Limit the value of automatic annual increments in base pay or, better still,
eliminate automatic annual increments and introduce performance-related
bonuses for staff that perform well or consolidate annual increments.

The HRM system should encourage staff mobility across the public
administration so that staff can be redeployed to meet changing business
needs and provide staff with richer more rewarding work experience.

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2. Performance appraisal
The following recommendations are made by the NSGI in respect of performance
appraisal. A comprehensive toolkit was submitted for the Government of Cyprus to
consider in February 2014.

2.1 Policy design principles


a. The principal aim of performance appraisal is to drive individual
contribution to meet organisational goals through cascade of objectives.
In short, the PFM reform will not work without an effective performance
appraisal system

b. Individual objectives will be made up of the what (job objectives) and the
how (competencies) with an 80/20 weighting

c. Measurement of performance in job, in year (it is not about promotability


see separate system)

d. Encourage continuous feedback with formal feedback at mid-year


(focusing on development) and end-year (focused on performance)

e. Specific training on performance appraisal to be built into CAPA/PWC


modules

f. Differentiation of performance will be achieved through guided


distribution at Ministry/Department level

g. Standard Setting (objectives) and Moderation (ratings) by managers


collectively at Ministry/Department level

h. The performance appraisal system covers all staff, including


interchangeable and casuals

i. Carrots and Sticks the intention is to build in links to pay and


consequences for poor performance made explicit but this will need to be
phased in over time

j. 360o Feedback for Permanent Secretaries to be implemented alongside


PFM targets

k. Spans of management responsibilities need to be appropriate for


performance appraisal to be meaningful and possible (this should be
addressed as part of the sectoral reviews)

l. Performance will be managed in line with the Public Service Law and the
Guide of Conduct and Ethics for Public Servants.

2.2 Scope of policy

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This policy applies to all permanent and fixed term (casual) employees including
interchangeable staff, who have successfully completed their probation period.

The policy will first be implemented on a pilot basis and for these purposes the policy
will apply to:

i. all staff (including Permanent Secretaries),


ii. in the 3 Ministries (Health, Education and Agriculture) and the Municipality
of Nicosia in 2015 to ensure alignment with the piloting of the PFM
system.
iii. The pilot will commence in 2015.

NB: Following the evaluation of the pilot all other Ministries and SOEs will be in
scope from 2016

2.3 Policy summary


a) Performance appraisal is the key factor in driving up individual and
organisational performance and providing greater value for money to
deliver high quality public services. It is separate from the promotion
process.

b) The performance appraisal process is inextricably linked to the Public


Finance Management (PFM) initiative to introduce business objective
setting and financial planning processes into the organisation. PA
should provide a line of sight from the description of what the
individual is expected to contribute towards the delivery of the business
objectives.

c) This performance appraisal policy provides a framework for managing


performance throughout the year, laying the foundations of expected
standards of performance and facilitating employee engagement,
development and a focus on the highest possible performance.

d) Performance is evaluated against both the What (delivery of


objectives derived from the strategic and business planning processes
set out in the PFM reform) and the How (demonstration of behaviours,
competencies and ethics) with a weighting biased towards the delivery
of business objectives: what (80%) and how (20%).

e) Objectives must be set at the beginning of the performance


management year consistency must be ensured through a standard
setting process overseen by groups of managers at the start of the
year. Performance should be reviewed at regular performance
discussions (between the manager and the individual) throughout the
year.

f) Performance appraisal includes an end-of-year process called


moderation. It is during this process that groups of managers will

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check and validate the distribution of performance ratings across the
normal bell curve. It is suggested that the ratings should fall within a
guided distribution:

Outstanding 10 25% of employees


Good 60 82% of employees
Must Improve 8 15% of employees

g) There will always be exceptions to this. For example sometimes


special teams are made up of exceptional people in order to achieve
exceptionally challenging issues. One may not be surprised then to see
those teams score outstanding markings within the guided distribution.
Overall, however, one would not expect to see a Ministrys distribution
to be weighted towards the outstanding on the bell curve if the Ministry
fails to deliver all the objectives set for it.

NB: it is important to emphasise that performance objectives will be relative to the


demands of the post. The more junior staff will be assigned 'easier to achieve'
objectives than those more senior to them. It is also important to say that the
measurement of performance i.e. the nature of the evidence base required to
demonstrate successful performance will become more demanding by grade. For
example a messenger delivering post may simply be assessed on his or her
punctuality and reliability of service, whereas a Permanent Secretary will be held
accountable for strategic matters such as: the delivery of their Ministry's objectives,
within budget and with positive feedback from the public to whom their teams are
providing services.

2.4 The return on investment

We have listened carefully to concerns that have been expressed to us about the
likely level of effort or additional administrative burden that our recommendations
for performance appraisal will involve, particularly for more senior managers. In
response we make the following points:

The Fiscal Responsibility and Budget Law (enabling the PFM reform) requires
Ministries and departments to prepare strategic and business plans containing
organisational objectives, performance measures and targets and to cascade
those objectives down the organization at least to unit level. Moreover,
managers at unit level and above will be held accountable for their
achievement against those objectives and targets. Managers therefore need
a systemic framework with which to translate those organisational
performance objectives into individual performance objectives for their staff to
ensure that the work of their staff is aligned to the overall objectives of the unit
and upwards to the organisation. In short, the PRM reform will not work
without a robust performance measurement and appraisal system.

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More broadly and fundamentally the reason managers have subordinates is
that the managers responsibilities are too onerous to be delivered by the
manager alone. A performance management and appraisal system provides
a framework by which responsibilities can be effectively delegated and
monitored and performance can be measured more objectively and, if
appropriate, rewarded. A performance management system therefore
supports good management as well as providing benefits to subordinates in
terms of increased fulfillment in knowing that their work contributes towards
the organisations aims and objectives (and maybe pecuniary rewards and
prospects of promotion). In short, time spent on effective performance
management is not an additional bureaucratic burden it is fundamental to
good management.

As noted above greater complexity in objective setting and measurement may


be required at higher levels of the organisation. The opposite applies at lower
levels particularly in regard to defining and measuring the what
(organisational objectives). As in the example of the messenger it is perfectly
acceptable that perhaps only two objectives would be adequate to define and
measure the work of the messenger thus making the task of performance
appraisal more straightforward and less time-consuming at the lower and
more populous tiers of the organisation. However, we would not recommend
any less attention being paid to defining and measuring the how
(behaviours) particularly because it is typically at the lower tiers of a public
service organisation that there is most contact with customers/citizens. In
short, the effort put into performance appraisal should be proportionate to the
importance of the role.

We have been told that some managers manage hundreds of people. Clearly
it would not be feasible for one manager to conduct proper performance
appraisals on one hundred direct reports in a year (plus a mid-year progress
check). But neither is it feasible for one manager to manage one hundred
subordinates effectively. Management development theory refers to this as
span of control. What constitutes an optimal span of control depends on
many factors and is an issue to be dealt with in organisational design. The
sectoral studies of Ministries should help to address this issue.

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3. Promotion system

3.1 Policy design principles


The three key principles of the promotion system are: open and fair competition and
promotion on merit.

Open

In principle, we recommend that anyone should be able to apply for promotion


if they can demonstrate that they meet the selection criteria.

We recognise that there is a promotion freeze in place. In order for the Cyprus
Government to demonstrate itself as a good employer and to continue to
motivate existing employees, we recommend that promotion posts are
opened up to the wider public service in the first two years following the lift of
the freeze.

After the first two years of the reintroduction of promotion system, we


recommend that promotion posts are opened up to the general populus
targeting the widest target market possible.

We recommend a fundamental review of the Schemes of Service with the aim


of:

i. Removing the barriers to open competition such as the need to have


demonstrated X number of years in the preceding post within the
hierarchy.

ii. Reducing the number of separate Schemes of Service to create job


families (groupings of similar jobs such as analysts, economists,
statisticians, social researchers). This will create more mobility across a
wider range of posts.

Fair

The selection of candidates shall be evidence based, having applied


appropriate assessment methods e.g. a presentation followed by a
competency based interview.

We recommend that job descriptions are prepared each time a vacancy is


approved. The job descriptions shall follow the template outlined in the toolkit
at Annex B. A sample job description is attached in the toolkit at Annex B.

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The JD will include the specific duties required of the post holder. It is these
duties from which the objectives will be derived and which applicants will be
evaluated against. This job description also provides the HR function with the
information it needs to design the most appropriate assessment methods to
be designed into the selection process.

The promotion post should be advertised via channels that will be accessible
to all suitable candidates, not just those in the subordinate post within the silo.

Merit

The most capable person with the right skills and knowledge for the post shall
be appointed.

To ensure fair competition and the selection of the most meritorious candidate
we recommend that the assessment methodology is robust and that the
evidence is triangulated across a range of sources such as:

- qualifications (relevant to post)


- experience (including that obtained in other sectors)
- appraisal markings (for the last two years to test consistency of
performance)
- Competency based interview and
- possibly supported by other assessment methods such as those outlined
in the table below.

Test Good for assessing

Competency based interview All

Psychometric (personality) Problem solving, influencing, strategy

Cognitive test (verbal/numerical) Policy skills, financial acumen

Discussion group Influencing, problem solving,


communications, assertion, team work
Role-play Influencing, problem solving,
communications, assertiveness
Presentation Strategic thinking and communication skills

3.2 Scope of policy

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The entry level posts and the senior posts are filled by open recruitment
procedures and we agree with this approach.

The promotion posts are 11 (+ 2 increments and 13) where different jobs are
being competed for are the focus of this proposal.

We do not consider the so called 'promotion posts' where people compete for
higher pay grades but are essentially doing the same job (e.g. A8-10) to be
real promotions, these are 'pay grade posts'. These proposals do not apply to
these posts. It is too time consuming and costly a system to apply to these
posts. We would recommend that pay scales are compressed and only real
promotions made available.

3.3 Policy summary


The current promotion system is career based, restricting promotion to those
within that silo. The alternative, a completely open market system, is position
based. We recommend that as the Civil Service includes the delivery arms
(teachers, doctors etc) the Cyprus government move some way towards the
position based system for those more generalist posts where transferable
skills and experience would be valuable.

Promotion decisions shall be open (phased as described in 3.1), fair and


selection shall be based on merit.

Promoting the right person with the right skills, qualifications and relevant
experience into the right job will contribute to the overall ambition of driving up
the performance of the whole organisation. It is in all senior managers'
interests (those being held accountable through the PFM system) to have the
strongest team possible to achieve their objectives to deliver high quality
public services.

Promotion of the most meritorious of candidates will motivate the entire


workforce.

The proposition is that promotion decisions at 11 (plus 2 increments) and 13


shall be taken within the Ministries and Departments with support from senior
colleagues outside the team and an HR expert. The detail of this will be
clearer once the review of the Public Service Commission is complete.

3.4 Implementation considerations

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It is very important to recognise that any introduction of these new processes
must be accompanied by a strong communications strategy led by both
Ministers and Permanent Secretaries, to demonstrate there is an
organisational willingness to change.

It is also acknowledged that there will need to be an investment in the


development of those implementing the system involving guidance and
training. This will be particularly important for those carrying out assessments
- HR experts and line managers.

The Public Service Commission currently plays a critical role in the promotion
system. Decisions about the future role and functioning of the PSC are
integral to our recommendations but the PSC is unaware of the whole
PFM/HRM reform and the functional review of the PSC is not scheduled until
the third phase of the reform programme. Therefore the scope for any
fundamental change (e.g. devolution of promotion decisions to line
management) will need to wait until the PSC review has reported. The current
operating model of the PSC is not compatible with the underpinning principles
of the PFM reform. In particular, the delegation of responsibility and
accountability of the achievement of results to line managers is not compatible
with a system in which so many HRM decisions are centralised and ultimately
dependent on the PSC.

One possible line of inquiry to pursue is whether the PSC could take on the
role of a first tier arbitration function to assess grievances against promotion
decisions.

Despite the need to wait for the results of the PSC review the Government of
Cyprus can still proceed with, for example, the development of job
descriptions, review of the Schemes of Service and the development of more
robust assessment methods.

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4. Key links between PFM, appraisal and
promotion

The HRM system is inextricably linked to the PFM system.

The appraisal system enables Permanent Secretaries - and other senior staff
cascading down to Director level - to assign objectives to all staff. This will
provide a line of sight to what each individual is expected to contribute to the
overall goals of the Ministry or Department.

The objectives set then enable people to be given responsibility and for
managers to hold individuals accountable for the delivery of those objectives.
This is where the appraisal system enables the organisation to monitor
individuals' performance. Individuals become clear, through the appraisal
system what is expected of them and they can challenge themselves to
achieve those objectives and take pride in their contribution to the delivery of
public services.

Development and stretch should be built into the objectives each year to see
a continuous drive to increase the performance of the Ministries and
Departments.

Training and development to enable people to achieve their objectives is


critical.

Training for managers to carry out the performance appraisal and promotion
well is also critical.

Employees should be given the appropriate training and development to


enable them to achieve their objectives. Those who strive to achieve beyond
what is expected of them are those likely to be given the top performance
markings.

If differentiation of employees performance is achieved then the performance


markings will become a relevant piece of evidence at the promotion panel.

We do not have an evidence base as to how much weighting should be given


to the marking. The appraisal mark is presented as an indicator of past
performance in the current role and an indicator of consistency of
performance. The key to promotion decisions is the evidence base provided
as to how the employee can demonstrate the requirements of the job being
competed for.

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