Civil staff pay and grading

Report: 4
Date: 19 April 2001
By: Commissioner

Summary

This paper reports developments on civil staff pay and grading issues since the paper considered by the HR Committee on 16 November 2000 and seeks authority to proceed with specific recommendations relating to location allowance and job evaluation. Further developments will be reported to the Committee in due course.

A. Recommendations

The Committee is invited to approve the following recommendations:

1. that location allowance zones be reduced from three to two;
2. that the boundaries be realigned to be co-terminus with local authority boundaries, with zone 1 (inner) comprising the 11 London boroughs noted in paragraph 9;
3. that the location allowance rates be increased to £2,556 (zone 1) and £1,359 (zone 2);
4. that a comprehensive job evaluation exercise be undertaken to establish a revised pay and grading structure;
5. that other recommendations by Hay be noted;
6. that the Committee be kept informed of developments on a regular basis.

B. Supporting information

1. At its meeting on 16 November 2000, the HR Committee considered a comprehensive paper (Civil staff pay and grading (exempt item)) setting out the position in relation to civil staff and making proposals for courses of action. The financial implications of the proposed courses of action were such that no work towards implementation could be undertaken until such time as additional funding had been secured.

2. The Committee will be aware that an additional £22 million was included in the MPA budget specifically for improvement to civil staff for 2001/02.

3. The earlier paper referred to the appointment of consultants to assist the MPS in the development of a reward structure. Shortly after the Committee's meeting on 16 November 2000, Hay Management Consultants Ltd were appointed, after competitive tender and evaluation, to carry out this work.

Hay recommendations

4. Hay's findings were presented to MPS Management Board on 28 March 2001. In summary, Hay found the following:

• Pay is low. The average maximum salary (including location allowance) is below the market median for all grades except the lowest and smallest rated jobs;
• Location allowance rates are substantially below the market rate, particularly in central London and in comparison with London local authorities;
• Many jobs appear to be undergraded, particularly at higher levels;
• Many jobs with perceptibly different Hay evaluations are within the same grade and, therefore, underpaid;
• The grading structure is clumsy and inflexible;
• Benefits, especially pensions and annual leave, are better than the market.

5. Hay recommended some short term and longer term measures to deal with the concerns.

Short term

• Raise location allowances to local authority levels and reduce from three to two zones, following local authority (and, therefore, MPS Operational Command Unit) boundaries.
• Commit to a speedy but thorough job evaluation exercise.
• Possibly provide some "on account" payments to the groups of staff found to be underpaid or undergraded.

Longer term

• Adopt a job based pay and career progression structure to replace current grades, especially at grades 10, 11 and 12.
• Provide for more pay discrimination according to job weight.
• Move the pay levels much closer to the market medians.
• Absorb existing market related allowances.
• Examine the efficacy of the present performance related pay system at least below grade 9.
• Adopt local authority style incremental progression.
• Revamp performance rewards for grade 9 and above.

6. At its meeting on 28 March 2001, Management Board accepted in principle the first two of the short term recommendations noted above. It did not support the third on the following grounds.

• Hay's exercise was a desktop evaluation of only 60 jobs and there were many others that might turn out to be in the same categories. It would be divisive to apply a pay uplift based on a restricted sample of jobs.
• Many of the jobs identified as being underpaid or undergraded are already subject to an uplift by way of market related allowances approved before Hay's recommendations were known.

7. The longer term recommendations were noted. It was Management Board's view that these would either be taken into account as part of the thorough job evaluation exercise or follow on from that exercise.

8. More details of Hay's findings and recommendations are set out in the copy slides attached as Appendix 1 to this paper.

Location allowance

9. In the light of the Hay recommendations, it is proposed that location allowances should be restructured into two zones (zone 1 and zone 2) with zone 1 comprising the following London boroughs:

• Westminster
• Kensington and Chelsea
• Hammersmith and Fulham
• Wandsworth
• Lambeth
• Southwark
• Lewisham
• Tower Hamlets
• Hackney
• Islington
• Camden

10. It is also proposed that the rates for the two new zones should be at current local authority rates of £2,556 (zone 1) and £1,359 (zone 2), the changes to take effect from 1 April 2001. Any future increases would be subject to negotiation with the trade unions as part of the annual pay negotiations.

11. This will provide the following immediate benefits.

• Almost all current inner zone staff will move from £1,784 to £2,556, an increase of £772.
• A few current intermediate zone staff will move from £911 to £2,556, an increase of £1,645.
• Most current intermediate zone staff will move from £911 to £1,359, an increase of £448.
• All current outer zone staff will move from £592 to £1,359, an increase of £764.

12. The cost, based on achieving full budgeted workforce target of 12,070 (2000/01 figure) will be around £9.7 million, including ERNIC. Details are set out in the spreadsheet attached at Appendix 2.

Job evaluation

13. To give effect to Hay's recommendation, it is intended to proceed as follows:

• a team of 15 – 20 members of staff (including some trade union representatives) will be trained by Hay to carry out comprehensive analyses of around 250 jobs throughout the MPS;
• the analyses will be evaluated by a panel (to be trained by Hay) in order to decide which jobs are highly weighted within their grade and which are undergraded;
• revised and robust pay and grading structures will then be developed which will be better able to take account of market fluctuations;
• except in exceptional circumstances approved by Management Board, no further MRAs will be put in place so as to avoid the pay and grading work being skewed by additional MRAs.

14. The evaluation exercise is planned to be undertaken in the next few months with implementation of the outcome targeted for Autumn 2001.

Costs

15. The MPS Director of Resources has agreed that the additional consultancy work from Hay to support this exercise should come from the total £22 million available for civil staff pay in 2001/02.

16. The cost of the outcome of the job evaluation exercise is not yet known. It will depend on the results of the analysis and evaluation of jobs and the consequential impact on any revised pay and grading structure. As noted above, however, a total of £22 million was agreed for improvements to civil staff pay for 2001/02. The Committee will be aware that the Commissioner's bid was for an additional £30 million to secure the improvements considered necessary to ensure that civil staff caught up with the market in London.

Longer term recommendations

17. Many of the longer term recommendations will flow through from the work on job evaluation. Those recommendations relating to performance related pay are not being pursued immediately. For this year, staff have an expectation, based on appraisals which are due for completion by the end of May 2001, that higher box markings will provide higher pay awards. Any changes, which might come from a re-examination of the efficacy of the present performance, related pay system would be subject to negotiation with the trade unions.

C. Financial implications

There are no financial implications over and above the additional funds already voted to the MPS civil staff budget, other than the additional costs arising from the review itself.

D. Background papers

• Report to Human Resources Committee – Civil staff pay and grading (exempt item) – 16 November 2000

D. Contact details

The author of this report is Ian Wardrop, Personnel Department.

For information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

Appendices

Available from the MPA.

• Appendix 1: MPS civil staff reward feedback (March 2001)
• Appendix 2: Location allowance options

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