Performance pay for chief executives ended

Performance pay for public service chief executives has been ended, State Services Minister Chris Hipkins announced today.

Until now public service chief executive remuneration packages have included the potential to receive a discretionary payment of up to 15% for exceptional performance, Chris Hipkins said.

“The decision to remove performance pay, in addition to dialling back pay settings, including the appointment and re-appointment of chief executives at lower points in the remuneration range, will put the brakes on the growth rate of chief executive pay.

“These moves will reduce the total potential forecast expenditure on chief executive remuneration by up to $4 million by 2021/2022.

“We want a Public Service with an international reputation for excellence that is motivated by a spirit of service to the community.”

Chris Hipkins acknowledged the State Service Commissioner and the chief executives for entering into this agreement, and commended the Commissioner for his leadership. The Government is committed to addressing pay levels across the public service, Chris Hipkins said.

“Part of this is paying women equally and addressing pay levels for public servants at the bottom and top end. We have a plan to close the gender pay gap, we have introduced a living wage for all low-paid public servants and now we’re removing performance pay for chief executives.”

The State Services Commissioner’s actions have resulted in a flattening of the rate of growth of pay levels at the top end, although the full effect is yet to be realised,” Chris Hipkins said.

“International research shows that individualised performance pay is not an effective incentive for higher performance for complex roles such as these.

“The Government also believes that performance pay is counter-productive to achieving the collaborative team-based approach and collective leadership that is critical to achieving better outcomes for New Zealanders.”

All chief executives of core public service agencies, whose remuneration is set by the State Services Commissioner, agree with and understand the rationale behind the new approach. They have all signed new individual employment agreements.

The Public Service Chief Executive Remuneration Cabinet paper is here.


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