New remuneration policy in the public sector: will pay for the result, not the process

Not for the process, but for the result

When comparing the public and private sectors in terms of remuneration, it can be observed that the private sector currently measures remuneration in terms of clear, value-creating indicators, such as the achieved work results. It is quite different currently in the public sector, according to E. Leontjeva, the reward here is paid for the process and for being at the workplace. And it is flawed.

“This is not only the biggest reproach, but also the biggest goal of transformation – to change the situation so that people in the public service achieve goals and results that are necessary, necessary and truly create value for society, and they are rewarded for achieving those goals. And not for the process, as it is now”, says E. Leontyeva.

Skirmantas Lisauskas / 15min photo/Elena Leontjeva

The need to optimize

The representative of the Free Market Institute emphasizes the importance of optimizing activities and performing appropriate functions, which is often missed in the public sector: “In business, we operate under conditions of limited resources. Such limited resources put pressure on a person and force him to optimize his activities. These changes are intended to ensure that the functions are also performed optimally in the public sector.”

However, according to E. Leontjeva, performance optimization is not enough – it all depends on what the functions are – are they necessary at all? Because the worst thing that can happen is optimally performed functions that are unnecessary for the state and citizens.

The reward is market share

“Currently, the salary in the public sector is based on a fixed amount of 181 euros. Over the past three years, it has changed by about 10 euros. The amount depends on the decisions of the politicians. Factors depending on the position of the employee contribute to this amount, which are multiplied and indicate what remuneration will be received”, V. Vasiliauskas says about the current system in the public sector.

The interviewer is convinced that this method is outdated. In the reorganization, it is proposed to link the base with the average salary in Lithuania. And recalculate it at least every 3 years. This would help the public sector to become more competitive, as this base would not be fixed but would change with the labor market and changing average wages.

Seniority is no longer so important

Another outdated salary component in the public sector remuneration policy is length of service. V. Vasiliauskas believes that this creates an uneven situation between new arrivals and people who are already working: “It does not motivate new employees, because they have nothing to offer, but it is also not an impetus for people who have been working longer to achieve better results, because it is enough for them to keep their jobs.” After the transformation, seniority would be eliminated as a component of the civil service package and salary.”

The aforementioned component would be replaced by performance bonuses. The prime minister’s adviser says that work results can be calculated as in the business sector, where various methodologies are applied.

Greater independence of institutions

The reorganization proposes to give the manager more decision-making power. This would enable the manager to distribute the payroll, give the opportunity to decide how many employees the institution needs at that moment and how the manager could redistribute certain functions.

However, not only the manager could contribute to the changes. Today, civil servants are obliged to propose improvements if they see that services are being delivered inefficiently. Unfortunately, it doesn’t work in practice. E. Leontjeva says that it is necessary to find ways to constantly check whether the service is needed, whether the employee performs it in the best, cheapest way, or whether there is no need to do otherwise, so the employees themselves must contribute to this. Only then will it be possible to ensure the provision of necessary services in each institution.

“It is necessary to start “cleaning” the legal grounds, because people do everything according to the script and are afraid of responsibility. This problem remains, for the time being there is usually a fear of making decisions, as a result of which everything is postponed, although it could be done faster and smarter. The worst examples are when the Special Investigation Service comes and checks the workers who issued the construction documents sooner, suspecting that there are already signs of corruption,” says E. Leontjeva.

The mission is not impossible

“We certainly have good examples of relying on the experience of the private sector. The State Tax Inspectorate, the institutions subordinate to the Ministry of Environment come to mind – they have actually moved a lot forward. The mission is not impossible”, says V. Vasiliauskas.

Skirmantas Lisauskas / 15min photo./Vitas Vasiliauskas

Skirmantas Lisauskas / 15min photo./Vitas Vasiliauskas

V. Vasiliauskas believes that it is important to draw inspiration from other countries: “I do not believe in a closed national solution when we strive to become a global country where we are connected to each other. Regarding the pay system, we propose that the three authorities should have very similar systems. This model is already applied in Estonia – the top managers of the three authorities receive equal salaries, and the share of remuneration for lower positions is determined accordingly.”

According to the Prime Minister’s advisor, it is important not to miss the opportunity and implement changes, this will allow us to see a positive result. “I will never agree with the saying that now is not the time for change. There is always time for change, you just need to take it and do it,” V. Vasiliauskas concludes the interview.

The information was prepared in cooperation with the Ministry of the Interior of the Republic of Lithuania, which implements the project “Ministry of the Interior of the Republic of Lithuania – Information about the action program” financed by the state funds of the European Union and the Republic of Lithuania.

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