The GMB is Britain's fourth largest trade union and represents employees in the public sector and across the whole range of UK private industry. The GMB has both staff and industrial members employed in the Environment Agency.

  The GMB welcomes the opportunity to comment on the workings of the Environment Agency. However, we believe that the other recognised trade unions have made broad submissions covering this. Our submission therefore is more specific and related to the Performance Related Pay (PRP) system used by the Environment Agency and the effects this has on staff. This document is based on members' experience of the Pay System that applies to the Staff Group. The views of relevant Trade Union members were sought in early 1999 and the responses form this submission.

  GMB and its members have the following concerns about the existing system of PRP:

—  Unfair;

—  Leads to low morale;

—  Discourages flexibility and directly inhibits the effectiveness of the Agency;

—  It is a scheme increasingly discredited in the business world and leads to a "fear" culture;

—  Lacks transparency.

SUMMARY OF FINDINGS

—  Performance assessment system is so rigid that even some "good" performers have to take turns to have low markings to enable the distribution curve to fit, leading to unfairness;

—  Restructuring has effectively down graded some areas of work and job value, leading to low morale among staff;

—  Far too much management time is used in "making the PRP system work", undertaking assessments only to find they have to be redone to fit a profile, showing a poor management organisation;

—  Staff becoming more concerned about getting their line manager's approval (to get a good assessment) than concentrating on effective delivery of Environmental Protection and Enhancement—the Agency's purpose;

—  Statistical bias can enter the system as there is little transparency.

1.  BACKGROUND

  Since Vesting Day (1 April 1996), the Agency Pay System is Performance Related Pay (PRP), this existed in a broadly similar form in an Agency predecessor—the National Rivers Authority. Most of the GMB Staff members came from other predecessor bodies—Local Authorities—who kept their existing Pay arrangements for the 1996-97 pay year and joined the PRP scheme in the 1997-98 pay year. They therefore have two years' experience of the Agency Pay System and can judge it directly with alternative pay reward systems.

  The scheme is based on four categories of performance (called box markings); for simplicity they are1-exceptional, 2-good, 3-adequate and 4-poor. The distribution ratio (total 100) is 10:60:25:5. At each pay review, the salary increase is linked to the employee's assessed box marking (for each of the last two years, the box four rises have been nought per cent, an effective salary cut).

  The DETR is the sponsoring department of the Environment Agency (MAFF and the Welsh Office also have input), and pay negotiations have been fully delegated to the Agency. While Agency staff are not fully "Civil Servants", the Civil Service Management Code (CSMC) requires Departments and Agencies with such delegation to evaluate pay and grading systems three years after they have been introduced, unless alternative arrangements have been agreed. The consequent guidance given by the Cabinet Office to Departments and Agencies on this evaluation require the following issues to be reported:

—  Costs/benefits;

—  Business case deviations;

—  Cross boundary working;

—  Reward systems and performance pay link;

—  Structural changes, job evaluation and grading;

—  Performance management, box marking systems and distribution;

—  Equal value, discrimination issues;

—  Human resources issues—impact on morale, staff development, mobility;

—  Relationships with Trade Unions;

—  Way forward, lessons uncertainities and risks.

  Although the Agency could be seen as at "arms length" from CSMC requirements, nevertheless it is a Government sponsored body. Good Management and Personnel practice suggests that such a Civil Service Code would be directly relevant to the Agency.

  For convenience the comments based on Trade Union representatives' consultation with staff members have been grouped under the review criteria sub headings and GMB recommendations after each group.

2.  COSTS/BENEFITS

  It is felt that while benefits have been argued and demonstrated, the costs involved have not been fully recognised.

  The appraisal interviewing of individuals is a recognised and costed time element, each level of Line Management however needs to find resources to devote time and administrative input to attempt to make fair assessements. This is then hindered by subsequently having to fit a rigid distribution curve.

  Furthermore, there are the costs of consultants to establish new job evaluation and new pay systems, and the consequent hidden costs inherent where Staff morale becomes affected. This has been substantiated by reports from some groups where staff are all performing well, that turns have to be taken to have a low score.

  GMB recommends that—as far too much line management time is occupied with the assessment of performance, this is time that could considerably be better spent on training and supporting staff in delivering the very purposes of the Agency.

3.  BUSINESS CASE DEVIATIONS

  Trade Unions have not been shown the business case supporting PRP and are unable to comment if there were deviations, additions or omissions from it.

  GMB recommends that—there be a dramatic improvement in providing the TU side with information—such as this business case—the general lack of transparency leads Trade Unions to mistrust management and suspect either hidden agendas or no actual business case at all.

4.  CROSS BOUNDARY WORKING

  The Government wants to see "seamless" levels of service across the civil and public sectors, with delegation and PRP.

  GMB recommends that—as it will prove increasingly difficult to see those doing similar jobs receiving similar pay rates, a fairer pay system (across the board) in line with most other Civil Service Departments is adopted.

5.  REWARD SYSTEMS AND PERFORMANCE PAY LINK

  The system at present is based on personal performance only, while most staff members are not opposed to a link to performance, the currently applied system takes little account of competencies and team based systems. The CSMC guidance emphasises options such as these and it is understood that Ministers have also intimated this.

  Restructuring took place in 1997 under the "Next Steps" project, this effectively compartmentalised the work of many (and particularly technical) staff. As job widths have narrowed, no account is made of individuals' wider competencies and capabilities—many of these formerly used tasks are not now in their job descriptions—leading to low esteem and morale where staff feel their "added value" is not rewarded.

  GMB recommends that—as the current reward system does not work, is divisive and for some very demoralising, there needs to be a pay system based on a basic increase for all staff to protect living standards. One which allows progression through the grade to reach the rate for the job in an achievable period of time.

6.  STRUCTURAL CHANGES, JOB EVALUATION AND GRADING

  The structure at present is largely based on the 1997 "Next Steps" restructuring and re-organisation proposals, these reduced the number of grades and as a result suppressed opportunities for promotional progression. The aim of "Next Steps" was to integrate various specialist teams—who had previously seen tasks through comprehensively—by greatly narrowing their areas of work. The result is a general diminution of effectiveness as now only individual parts of Agency tasks are undertaken. Staff view this as management manipulation to lower job value and hence grade worth. Staff continue to leave the Agency because of limited job scope and lack of career progression opportunities.

  The small increase for those who are promoted (4-8 per cent) reduces the incentive for staff to apply for promotion as many will lose preserved terms and conditions not compensated by the increase. Further, in a new job, the likely PRP rating in the first year is almost certain to be low.

  As PRP is the only method of progressing through the grade, many staff do not see how they can progress to either a specific level or the top of the grade in a fixed amount of time.

  The DETR has itself introduced a scheme of shorter pay-bands with guarantees that over 93 per cent of the pay-band maxima would be reached within seven to eight years (Executive Officers and below as at 1998). A scheme such as that would go some way to overcome the perceived shortcomings of the current system even with performance provisos.

  GMB recommends that—as the Environment Protection Department nationally is being examined for possible further restructuring due to new duties delegated to the Agency, a move towards de-compartmentalising work would develop consistency and ensure staff have ownership of the whole of the tasks that need to be undertaken. If this may mean undoing some of the integration made at Next Steps. However, this would be seen as an opportunity for improvement by the employees.

  GMB recommends that—the DETR pay-band progression scheme would go some way to overcome the perceived shortcomings of the current system and should be adopted.

7.  PERFORMANCE MANAGEMENT, BOX MARKING SYSTEMS AND DISTRIBUTION

  While the concept of performance management where it succeeds in gaining better performance, training and development is welcomed. However, the attachment of box markings that must conform to a statistical distribution has resulted in suspicion, lower morale and disenchantment especially where staff did not understand how their mark was assessed.

  Staff mistrust the system, it has to fit a rigid profile and of having to gain line management approval. The consequence is that much spontaneity and innovation are suppressed, eventually resulting in a "fear culture" where staff ultimately concentrate on avoiding a low box marking.

  Four categories of box marking are further divided in category one into four more units. More management time is taken to distribute these additional markings, yet little information is supplied to Trade Unions about how the scoring and distribution are made.

  GMB recommends that—The Agency's customers (the general public) would be better and more effectively served by staff not being hidebound by a system that focuses inwardly.

  GMB recommends that—The Agency's management would be better utilised concentrating on the Agency's outward responsibilities than undertaking exhaustive and non-productive staff assessements under the current scheme.

8.  EQUAL VALUE, DISCRIMINATION ISSUES

  It is to be hoped that the issue of Equal Value is being addressed by a Sub Group of the NNG. The sub group was set up at the request of the represented Trade Unions at national level particularly to address issues resulting from harmonising terms and conditions in 1997-98.

  The aim of the group is to establish systems where equal pay for equal work can be seen to exist by having "Salary Entry Zones", where staff enter the salary band within a zone relating to a range of expected experience. One management aim is to dispel the external view of the Agency as being a "low pay employer". The Zones however are all below the "median pay" (the rate for a competent employee) for the job, therefore it is very unlikely that anyone of average competence would be attracted to the Agency as that would result in lower pay. The "low pay employer" view would therefore be confirmed to them. Further discussions are currently taking place with Trade Unions.

  While the Trade Unions agreed at the 9 September 1999 NNG meeting to this year's Pay offer, it was with provisos that statistics relating to breakdown of gender, ethnic origin, age etc (in accordance with the Equal Opportunities Commission's Code of Practice) be shared with the TU side. To date this has not happened.

  Monitoring of Equal Opportunities relating to pay and personnel systems has been recommended by the Cabinet Office under the umbrella title of "Equality Proofing" since 1998. This recommends that this should be a condition of pay delegation to all Civil Service Departments and Agencies. The PRP system as operated by the DETR found that in 1998, there were noticeable differences in appraisal markings between males and females and between racial groups.

  The Trade Unions want the Agency to fulfil its promise to monitor the pay system under what can be termed an "equality audit". Statistical data from the PRP appraisals should be broken down in the following categories:

—  gender;

—  performance mark;

—  grade and pay band/span;

—  ethnic group;

—  disability;

—  working pattern (eg full or part time);

—  length of service and age;

—  location and organisation function.

  This data should then be tested using the 4/5th's rule as explained in the Civil Service Equal Opportunities Monitoring Guide. The Trade Unions require this data to ensure that the system does not discriminate and to obtain a commitment from management to carry out audits regularly.

  There is still concern over the divisions within Box one ratings, no information has been provided to substantiate the apportioning of sub-percentages.

  GMB recommends that—As statistical bias may enter the system without any form of monitoring, the Agency takes urgent steps to show no evidence of bias and to provide such information to Trade Unions.

9.  HUMAN RESOURCES ISSUES—IMPACTS ON MORALE, STAFF DEVELOPMENT, MOBILITY

  If there were a career grade type structure, management would have a valuable development and training incentive. As things stand, individuals are sometimes reluctant in identifying training needs as this can be perceived as a weakness that could be penalised by a poor PRP rating.

  The static distribution curve, year on year for PRP ratings undermines staff morale (some staff report that the scheme is so inflexible that they take "turns" to have a poor score), inevitably leading to what has been described among staff as a "fear culture".

  GMB recommends that—as the credibility of the existing pay system is thereby undermined, a close look is taken at the effects of PRP on staff morale.

10.  RELATIONSHIPS WITH TRADE UNIONS

  Each year after consultation with their members the Trade Unions submit a pay claim at the National Negotiating Group (NNG) for an "across the board" type increase for all groups of employees, this reflects the membership input. Unfortunately this has always been rejected by the management on the grounds that the DETR and Treasury requirements are that PRP type increase must be offered.

11.  WAY FORWARD, LESSONS, UNCERTAINITIES AND RISKS

  There are general concerns throughout the public sector concerning the value of PRP. The rigid scheme used currently, gaining little respect from staff. The teaching profession has recently deferred the use of PRP for example.

  A Trades Union condition of acceptance of this year's Pay award was a wide-ranging review of the Pay System. Staff would welcome the acknowledgement that PRP is not effective within the Agency.

  If some form of PRP has to remain, it is suggested that future pay agreements will need to have the following:

—  Transparency, openness and simplicity;

—  contain commitments to equality and monitoring as shown in the EOC code of practice;

—  include a system of pay progression with time-scale guarantees to specific levels;

—  time-scale to reach pay maxima through satisfactory performance;

—  low pay and minimum levels monitored;

—  an across the board increase to reflect all employees' contribution to the organisation;

—  remove the need to fit the distribution curve;

—  establish a career grade structure.

  GMB recommends—to be pragmatic, it would propose that while exceptional work could be rewarded by some form of enhancement, the basic pay principle should be an equal percentage across the board as being fair and equitable.

12.  CONCLUSION

  The GMB believes that the existing pay structure after the 1997 "Next Steps" restructuring has resulted in a PRP pay system that is:

—  Unfair.

—  Leads to low morale.

—  Discourages flexibility and directly inhibits the effectiveness of the Agency.

—  It is a scheme increasingly discredited in the business world and leads to a "fear" culture.

—  Lacks transparency.

  Therefore the GMB asks the Select Committee to take into considerations the recommendations in the above document into account during its investigations into the workings of the Environment Agency.

October 1999