1 00:00:00,440 --> 00:00:03,560 Speaker 1: Keller duples out. The government is bringing back performance pay 2 00:00:03,600 --> 00:00:06,360 Speaker 1: for public sector bosses. Finance Minister Nicola Willis it's been 3 00:00:06,360 --> 00:00:08,360 Speaker 1: a little cagy on exactly when this will come in, 4 00:00:08,680 --> 00:00:10,680 Speaker 1: but the Public Service Commission is working on it and 5 00:00:10,720 --> 00:00:12,720 Speaker 1: a new system should be in place by the middle 6 00:00:12,760 --> 00:00:15,480 Speaker 1: of next year. The last government labor got rid of 7 00:00:15,480 --> 00:00:17,759 Speaker 1: performance pay in twenty eighteen, saying the chief executives were 8 00:00:17,760 --> 00:00:20,800 Speaker 1: getting paid too much. Jeff Plimmer is an associate professor 9 00:00:20,800 --> 00:00:23,680 Speaker 1: at Victoria Victoria University School of Management and with US. 10 00:00:23,680 --> 00:00:26,239 Speaker 2: Now, Hey, Jeff, hi, how are you. 11 00:00:26,400 --> 00:00:29,320 Speaker 1: I'm well, thank you. You like the idea. 12 00:00:29,960 --> 00:00:32,839 Speaker 2: I think it that's done well, it can work, But 13 00:00:32,920 --> 00:00:35,519 Speaker 2: there's lots of studies that have found performance pay in 14 00:00:35,520 --> 00:00:38,880 Speaker 2: the public sector can be disastrous. So I'd really argue 15 00:00:38,880 --> 00:00:42,400 Speaker 2: against an ideological approach that it's a great idea or 16 00:00:42,440 --> 00:00:45,680 Speaker 2: it's a terrible idea. Do it well, think it through, 17 00:00:45,920 --> 00:00:47,479 Speaker 2: work out how it's going to be gamed or it 18 00:00:47,560 --> 00:00:49,360 Speaker 2: might be gamed, and manage that. 19 00:00:49,800 --> 00:00:51,400 Speaker 1: Okay, So how do you do it so it doesn't 20 00:00:51,400 --> 00:00:51,920 Speaker 1: get gamed? 21 00:00:53,640 --> 00:00:55,560 Speaker 2: I think you need to have really good measures. You 22 00:00:55,640 --> 00:00:58,920 Speaker 2: need to audit them, make sure they're reliable. You need 23 00:00:58,960 --> 00:01:01,840 Speaker 2: to update them occasionally as well. That seems to help 24 00:01:01,880 --> 00:01:06,679 Speaker 2: and reduce in gaming. And you need to design them 25 00:01:06,720 --> 00:01:09,040 Speaker 2: ideally with sort of the industry or the sector of 26 00:01:09,080 --> 00:01:12,160 Speaker 2: the experts in mind, so you think about what's realistic 27 00:01:13,240 --> 00:01:15,920 Speaker 2: and think through how people might react to them. 28 00:01:16,440 --> 00:01:18,760 Speaker 1: Is there evidence that it does actually sharpen the minds 29 00:01:18,760 --> 00:01:20,480 Speaker 1: of the bosses and get them to deliver what they're 30 00:01:20,480 --> 00:01:21,240 Speaker 1: supposed to deliver. 31 00:01:22,440 --> 00:01:26,520 Speaker 2: It does, absolutely. It focuses attention, directs energy and the 32 00:01:26,600 --> 00:01:29,360 Speaker 2: level of effort put into them, and it can also 33 00:01:30,440 --> 00:01:34,840 Speaker 2: cut their level of political interference chief executive and say, sorry, minister, 34 00:01:35,040 --> 00:01:37,319 Speaker 2: I'm not your valet. I actually have to do this 35 00:01:37,440 --> 00:01:40,400 Speaker 2: work to meet my performance targets. So it can have 36 00:01:40,480 --> 00:01:43,160 Speaker 2: quite a few good positive effects, all right. 37 00:01:43,200 --> 00:01:45,760 Speaker 1: The trouble, of course, is, for example, if you do 38 00:01:45,760 --> 00:01:48,480 Speaker 1: it in the medical system and you say one of 39 00:01:48,480 --> 00:01:50,600 Speaker 1: your targets is that you move people through EATY within 40 00:01:50,680 --> 00:01:52,920 Speaker 1: six hours, they start booting them out too quickly and 41 00:01:52,920 --> 00:01:54,840 Speaker 1: they're not ready to be moved on, right, That kind 42 00:01:54,880 --> 00:01:57,640 Speaker 1: of gaming can happen absolutely. 43 00:01:58,000 --> 00:02:01,320 Speaker 2: You make you insist on a certain number of elective surgeries, 44 00:02:01,680 --> 00:02:04,440 Speaker 2: although there is in fast ones, and leave vulnerable people 45 00:02:04,440 --> 00:02:07,720 Speaker 2: with serious complications, untreated kind of risk. 46 00:02:07,800 --> 00:02:11,920 Speaker 1: Your manager, the available options for how to game that 47 00:02:12,080 --> 00:02:15,120 Speaker 1: must be so huge. How can you possibly design a 48 00:02:15,160 --> 00:02:18,000 Speaker 1: system that catches all of it? 49 00:02:18,080 --> 00:02:22,000 Speaker 2: Well, my guess is you'd think about it very carefully 50 00:02:22,000 --> 00:02:25,919 Speaker 2: about the type of operation. So specify them in terms 51 00:02:26,000 --> 00:02:29,119 Speaker 2: of not just elective servance surgery, but these types of surgery. 52 00:02:29,720 --> 00:02:32,200 Speaker 2: You might classify them in terms of difficult in terms 53 00:02:32,200 --> 00:02:35,320 Speaker 2: of difficulty as well. So by breaking them up more 54 00:02:35,360 --> 00:02:40,280 Speaker 2: than us you can manage that that kind of risk. 55 00:02:40,680 --> 00:02:44,239 Speaker 2: But it does get complicated, and so taking a view 56 00:02:44,240 --> 00:02:46,239 Speaker 2: that it works in the private sector sort of work 57 00:02:46,240 --> 00:02:49,800 Speaker 2: in the public sector is a really silly idea. But equally, 58 00:02:50,520 --> 00:02:53,320 Speaker 2: just saying doesn't work here. We're special, we're different, Trust 59 00:02:53,400 --> 00:02:56,760 Speaker 2: us noble public servants. That doesn't really work that well either. 60 00:02:57,160 --> 00:02:58,840 Speaker 1: Jeff, thanks for talking us through it. Really appreciate it. 61 00:02:58,880 --> 00:03:02,519 Speaker 1: Is Jeff Plummer, Professor at Victoria University School of Management. 62 00:03:03,080 --> 00:03:06,280 Speaker 1: For more from Hither Duplessy Allen Drive, listen live to 63 00:03:06,360 --> 00:03:09,400 Speaker 1: news talks. It'd be from four pm weekdays, or follow 64 00:03:09,440 --> 00:03:11,200 Speaker 1: the podcast on iHeartRadio.