LC Paper No. CB(1) 1515/98-99(03)

Legislative Council Panel on Public Service
Meeting on 21 June 1999

Civil Service Reform- Outcome of Consultation

Introduction

On 8 March 1999, we released the Civil Service Reform Consultation Document. This outlines the overall framework and our initial thinking on reform of various aspects of the civil service management system including entry and exit, pay and conditions, conduct and discipline, performance management, and training and development. The Consultation Document has generated considerable discussion amongst civil servants, staff unions, academics, legislators as well as the public at large. The three-month consultation period on the Document ended on 8 June 1999. As at 12 June 1999, a total of 729 submissions were received. These include 122 submissions from staff councils/associations/unions and 527 submissions from individuals/groups of individuals. Further submissions are expected.

Feedback Received: Entry and Exit
New Entry and Appointment System

2. Proposals relating to entry and exit have attracted the most discussion. At present, virtually all new recruits to the civil service are appointed on permanent and pensionable terms. We proposed in the Consultation Document to introduce greater flexibility in the appointment arrangements. One of the proposals is to appoint all new recruits on agreement terms in the first instance and only those with proven performance and potential will subsequently be appointed on more permanent terms. For new recruits appointed to basic ranks (recruitment ranks which are the normal entry point for new recruits, usually the bottom rank in a grade), one of the ideas is to keep them on agreement terms in the basic ranks, and offer more permanent terms only when they gain promotion into supervisory ranks, i.e. ranks above the basic ranks. New recruits into supervisory ranks, no matter how senior, will also stay on agreement terms until such time they are considered suitable for appointment on permanent terms in terms of performance and potential.

3. From the feedback received, there is general consensus that the existing entry and appointment system needs to be made more flexible but there are different views on how this should be achieved, and how far and how fast changes should be made. There is little objection to the concept of agreement terms per se: but strong concern that wholesale adoption of this for all recruits will adversely affect the quality, stability, continuity, integrity, and accountability of the civil service. There is also concern over the potential difficulty arising from having staff on different terms within the civil service. Those who harbour this view feel that such an arrangement is inherently divisive.

4. Many submissions take the view that keeping all basic rank staff, meaning up to two-third of the civil service on agreement terms is swinging the pendulum too far to the other end. A number of these submissions, however, do not contain fundamental objection to the proposal of wider application of agreement terms. Views differ on the scope and scale for which agreement terms should apply. Some believe that agreement terms should not be applied to all basic ranks in all grades: there are unique circumstances in certain grades, in particular disciplined services grades, which call for special consideration. Some believe that agreement terms should not be applied for the entire duration for which an officer remains in the basic rank: this is perceived to dampen morale and be unfair to those staff who enjoy little prospects of promotion not through their own faults. They suggest that those who have demonstrated good performance should be offered more permanent employment after one or two agreements. In some submissions, there is the view that agreement terms should be applicable to senior positions as well and some suggested that agreement terms should indeed only be applicable to senior positions.

5. A related proposal in the Consultation Document is to fill higher rank posts through a more competitive appointment system: apart from the present promotion system under which only candidates in ranks below in the same grade are considered to fill posts in higher ranks. We proposed that vacancies, where necessary or desirable, could be opened up to competition by serving officers in other grades or outside candidates. This is intended to allow departments to fill their vacancies at higher ranks from a wider pool of candidates and to bring in new talent from outside the Government where necessary.

6. Feedback during the consultation exercise is generally supportive of the proposal of greater openness and competitiveness in the appointment system. But many caution that the promotion prospects of serving staff should be preserved in that promotion and career advancement in the civil service is a major incentive for serving civil servants to perform. They are of the view that serving civil servants should be given due priority for filling positions in supervisory ranks and outside competition should be allowed only when no serving lower rank officers are found suitable for promotion.

New Retirement System

7. We proposed in the Consultation Document that we should consider introducing a Civil Service Provident Fund scheme as a new retirement benefit system in place of the existing pension schemes. In future, permanent terms would mean a promise of a structured career and long-term employment for those who continue to contribute their best. We thus proposed to introduce provident fund terms which could bring the practice in the civil service in line with that in the private sector, and would allow for true portability of retirement benefits.

8. Some who have expressed a view on the new retirement system believe that pensions should be retained. They believe that this is an important pillar to maintain the stability and continuity of the civil service by providing a secured and stable income after retirement from a life-time civil service career. The majority however have no in-principle objection to exploring the idea of a provident fund scheme provided that serving officers would not be forced to switch to such a scheme. They also point out that the scheme needs to be suitably designed to ensure that the civil service retains its attractiveness and that civil servants can continue to enjoy appropriate protection after retirement.

Redundancy Arrangements

9. We proposed in the Consultation Document that procedures for redeployment and redundancy should be streamlined and that voluntary retirement should be allowed to minimise the impact of redundancy. The latter proposal is supported by the majority of those who have expressed a view on this proposal. In a few submissions, there is also suggestion that voluntary retirement should be allowed outside the context of redundancies. A number of submissions commented on the proposal to streamline procedures for redeployment and redundancy. Many of those who have commented see this as a means to facilitate the various privatisation/ corporatisation/contracting out exercises. They object to these exercises and therefore object to the proposal to streamline redundancy procedures as well.

Management-Initiated Retirement

10. We proposed in the Consultation Document that a new exit mechanism should be introduced to allow pensionable civil servants to be directed by management to retire early, in order to cater for human resource management needs. A considerable number of submissions mention this proposal. Many are unclear when and to whom this will apply and ask for further details. There is fear that such an authority would be abused. They also consider that a civil servant faithfully performing his duties in his job should not be removed on grounds of management needs, even if he may be lacking in potential to advance further.

Removal of Sub-standard Performers

11. The Consultation Document also mentions proposal to strengthen and streamline the procedures under current regulations for directing civil servants with persistent sub-standard performance to retire in the public interest. All submissions commenting on this support the proposal.

Pay and Conditions
Review of Starting Salaries

12. Only a few submissions commented on the on-going review of starting salaries. There is general agreement in support of more frequent reviews. A few remarked that civil service salaries should be set at a level above private sector practice to ensure a clean civil service and some suggested that instead of taking snapshots, comparisons with the private sector should be made over a more prolonged period.

Performance Pay

13. We noted in the Consultation Document that the existing system of increments in the civil service pay scale is not closely linked to performance. We therefore suggested to introduce progressively elements of performance-based reward systems into the civil service. This proposal has attracted a lot of comments: more than half of the submissions mention this. There is general agreement on the principle that there should be correlation between performance and pay; however at the same time there is widespread reservation and scepticism on the feasibility and practicability of introducing performance pay in the civil service. Some have pointed out that unlike the private sector where there could be clearly defined performance targets based on business results, there are no easily quantifiable yardsticks by which civil servants' performance could be assessed, and in the absence of such yardsticks, the authority for determining performance pay might be abused. Some also refer to experiences overseas and note that there are few, if any, success stories. The general view is that it is important to establish a fair and equitable performance assessment mechanism before proceeding to introduce performance pay and that this must be handled very carefully.

Fringe Benefits

14. We said in the Consultation Document that we will continue to move towards the direction of "total remuneration" and that we will formulate a new system of providing fringe benefits for new recruits, in line with private sector practice. We also said we would review the various existing allowances to establish whether there is a need to retain them. Those who have commented generally support the move to make the provision of benefits more flexible as well as the move to review the various allowances to bring them in line with present day circumstances.

Conduct and Discipline

15. As with the proposal to streamline procedures to remove sub-standard performers mentioned in paragraph 11 above, the proposal to streamline the existing disciplinary procedures attracted very little comments but all those who commented express support. There is also general support to the proposal to set up an independent standing secretariat to process disciplinary cases for civilian civil servants and to establish a pool of officers with experience in disciplinary matters to serve as potential adjudicating panel members responsible for hearing individual disciplinary cases and determining whether the officer is guilty of misconduct. Some staff unions have suggested that union representatives should be allowed to participate in the disciplinary process.

Performance Management, Training and Development
Performance Management

16. We proposed to strengthen the individual-based performance appraisal system by establishing a system of assessment panels to monitor distribution of grading and handle appeals against performance appraisal and introducing an indicative benchmark for grading distribution (e.g. a certain percentage of appraisees should be outstanding, a certain percentage should be very good, etc). Very few commented on the proposal relating to assessment panels: the views submitted are mixed with some express support while others express concern over the practicability of this approach and the workload this generates. There are more comments relating to the proposal of an indicative benchmark for grading distribution. The majority believe that a rigid system might not be fair nor practicable. Adequate flexibility would need to be built in to ensure that team spirit would not be hampered.

17. There are very few comments on the proposal to promulgate a result-oriented management culture at the organisation level.

Training and Development

18. Proposals relating to training and development again attract very little discussion. Virtually all who commented expressed support to strengthen and step up training and development for civil servants.

Conclusion

19. The results of the consultation on the Civil Service Reform Consultation Document are now being analysed. It is already clear that this issue has generated widespread, informed and positive discussion; not just among civil servants but in the community as a whole.

20. We feel there is genuine support for reform tempered by a real concern that this should be taken forward carefully to protect the best features of our existing system.

21. In the weeks ahead, we will analyse carefully the feedback we have received and begin working together with departmental management and the Staff Sides to develop specific proposals in each area.

Civil Service Bureau
15 June 1999