Top performing civil servants will for the first time be paid cash bonuses under a new public service reward scheme that may also get some of their counterparts sacked for low productivity.
The bonus policy, borrowed from the practice in the private sector, will see government workers such as teachers, doctors and nurses who meet annual targets set by performance contracting committees receive cash rewards on top of their salaries and allowances.
“The objective of the scheme shall be to reward excellent performance by public officers,” say the newly gazetted performance management regulations published by the Public Service Commission (PSC).
“The Commission shall seek the advice of the Salaries and Remuneration Commission (SRC) where the Commission intends to award cash prizes under the awards scheme.”
Performance appraisals are mostly used in the private sector to make decisions on promotions, salary reviews, bonuses, and dismissals.
The publishing of the Public Service Commission (PSC) Performance Management Regulations 2021 paves the way for formation of an awards scheme targeting employees who exhibit ethical practices and also come up with innovations that lead to improved public service delivery.
Weak performance management has been blamed for low productivity in the civil service and poor delivery of public services.
The regulations require each public body — State department or agency — to set up a performance contracting committee to set targets, monitor and evaluate employee performance.
The committee will be made up of two commissioners appointed by the PSC chairperson, a representative of the line ministry, a person from the Treasury and two other people from selected public bodies.
Poor performers who fail to improve after support programmes such as retraining, redeployment, coaching and counselling risk sacking.
“Impose sanctions on the employee including, warning, deferment of increment, demotion, withholding promotion and non-renewal of contract in accordance with the Act,” say the new regulations.
The SRC has on several occasions raised the alarm on the disconnect between civil servants’ productivity and their remuneration, retention or promotion.
The new regulations come at a time many State-owned entities, including Kenya Airways, Kenya Power and Kenya Railways, have had their services questioned despite their continued reliance on the Exchequer.
The billions of shillings transferred to State corporations are widely seen to be more than the socio-economic benefits accruing to taxpayers.
These transfers limit the amount of resources available for funding other critical areas of the economy such as health and security.
Kenya has about 260 State companies and the Treasury recently estimated that taxpayers may spend about Sh382 billion in keeping afloat operations of 18 of them in the next five years.
The International Monetary Fund has been pushing Kenya to start rolling out changes in these institutions, including cutting duplicated roles and trimming the headcount.
Public sector wage bill in Kenya has been ballooning over time, rising by 45 percent from Sh461.74 billion in 2015 to Sh669.62 billion in 2019 amid public outcry over poor public services.
The number of public sector workers rose by 14.7 percent from 754,200 to 865,200 in the review period, meaning that remuneration grew at a faster pace.
The SRC data shows current proportion of allowances to gross salary ranges from 43 percent to 259 percent across sub-sectors in the public sector, rising the wage bill.
The share of compensation of employees in total national government expenditure has nearly doubled from 14.3 percent in the 2013/2014 financial year to 25 percent in 2017/18, partly due to wage rises from collective bargaining agreements.
The wage bill to gross domestic product (GDP) ratio stood at 8.3 percent in 2019/20 against an average of 7.5 per cent for developing countries.
SRC vice chairperson Dalmas Otieno in November 2019 said some public offices have deliberately allowed duplication of roles and payment of multiple allowances without any focus on productivity.
“Right now we have so many public servants who can’t give you their job description. Playing second fiddle to productivity has to stop,” said Mr Otieno.
Now, every public institution will have to develop service delivery standards, specifying ways of monitoring and evaluating the quality of service.
This will be submitted to PSC for approval.
Cabinet secretaries will ensure that performance contracts for all State departments and State agencies in their ministries are signed by August 15 of every year.
The Cabinet Secretary will also oversee annual staff performance appraisal and nomination of employees to be considered for annual honours and awards.
Employees will be given feedback on their performance at least once every three months followed by the overall score at the end of the year.
The private sector has been running on a similar approach by using employees to create new revenue streams or find new ways of doing the existing businesses at a lower cost.