Performance management – a blast from the past

Following distribution of the recent bulletins about changes to performance management procedures, a member forwarded us this article. It was written more than 10 years ago for Simply Read, the PCS Liverpool Revenue Branch magazine. We republish it here as proof that the more things change, the more they stay the same.

Enron

NegotiationThere is not much connection, you might think, between the collapsed American energy company and the UK public sector. But you would be wrong. Over the years HMRC management have tried to introduce US management techniques into the HMRC.

An article in the Financial Times (FT) in April 2002 was headlined “Enron revealed to be rotten to the core”. It challenged the “few bad apples” approach. It showed how the management and staff appraisal systems created an institutional dishonesty throughout the company. The company results were fiddled, profits inflated, and debts hidden. So why did no-one “blow the whistle?”

The FT says ” the main factor that discouraged questioning of Enron’s business practices was a ruthless and reckless corporate culture that lavished rewards on those who played the game, whilst persecuting those who raised objections”. On paper of course Enron had “core values”. These were “Respect, Integrity, Communication and Excellence”, words emblazoned on huge banners that hung in the lobby of its Smith Street headquarters in Houston. But as HMRC employees know, it’s not the values that you talk about that matter. It’s what you do in practice. As the FT says about Enron, “the true interest was performance”.

This was enforced by the company Performance Review Committee. This operated a relative assessment procedure. “Nominally, the purpose of the PRC was to grade Enron employees on how they had followed the company’s core values. But employees dreaded the PRC because they believed it was based solely on how much paper profit they had booked for the company that year. At worst, many saw the PRC as the weapon to curb those who challenged the corporate culture. Twice a year, a supervisor would rank his or her employees on a scale from one, the best, to five, the worst. The rankings could determine whether an employee received a large bonus or was asked to leave the company. The FT article describes the resulting “blood sport” in some detail.

HMRC has already introduced relative assessment for its most senior staff. The Department of Employment has started a similar system for all start. A ranking system for HMRC promotions is been discussed. The FT article describes how this system crippled the internal values and culture of Enron.

Long standing HMRC employees will recognize some of these features. Staff resistance and a more honest culture have held off the worst American-style management systems or softened their impact. But HMRC management have tried. Senior managers have encouraged staff to falsify figures, and to adopt working practices that meet targets without really getting the work done. Think how they behave if their personal reward was a bonus of say £100,000, not a few pence a week in performance pay. Think what would happen if the ” worst 10 %” were sacked every year. It would be a nightmare. And all the time management would repeat they were upholding “HMRC Values”.

Corporate values such as honesty and integrity are certainly needed in HMRC. Performance pay undermines those values. It gives staff a personal interest in covering up problems. Relative assessment encourages dishonesty and backstabbing.

Once staff start telling lies about workstate, because they are afraid it will reflect badly on them, then HMRC becomes unmanageable. No one can really know what the true position is. If Senior management adopt a strategy of “spinning” results too present themselves in a good light, that will permeate down the department as it did in Enron. It is the road to ruin.

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