7th Central Pay Commission gets four more months to submit report

Cabinet also clears differential royalty to States on discovered oil fields

New Delhi, August 25:  

The Seventh Central Pay Commission has been granted a four-month extension to submit its recommendations, after the Union Cabinet approved the decision on Wednesday.

The commission, which reviews pay scales of about 48 lakh Central government employees and 55 lakh pensioners, was constituted on February 28, 2014 by the UPA government and was supposed to submit its recommendations by August 27.

However, the commission had asked for a four-month extension due to the ‘volume of work’ and ‘intensive stakeholder consultations’. As a result of the Cabinet decision, the request stands granted. 

Royalty to States

In a separate decision, the Cabinet Committee on Economic Affairs approved a proposal for differential royalty payment to State governments of 28 discovered oil fields in Arunachal Pradesh, Assam and Gujarat.

The fields were awarded in 1994-95, 2001 and 2004. The differential royalty is the difference between the rates as per provisions in the respective production sharing contracts.

“The payment shall be through budgetary allocation instead of through Oil Industry Development Board (OIDB) fund from the year 2015-16,” an official statement said.

The expected expenditure for 2015-16 has been estimated at ₹56 crore comprising ₹30 crore for Arunachal Pradesh and ₹26 crore for Gujarat. The calculations from the government are based on the assumption of crude oil price being $50 per barrel and one US dollar being equal to ₹60.

The Standing Committee on Petroleum & Natural Gas had also recommended such a move to ensure proper utilisation of OIDB fund. 

Arbitration Bill

The Cabinet also approved amendments to the Arbitration and Conciliation Bill, 2015, by taking into consideration the Law Commission’s recommendations and suggestions from stakeholders.

As per the amendments, the government proposes to ensure neutrality of arbitrators by making it mandatory for the person to disclose any relationship or interest of any kind before being appointed as an arbitrator.

Further, the arbitration tribunal shall make its award within 12 months, although parties may extend such a period by up to six months. Further extension can only be done by the Court, on sufficient cause. 

Other decisions

The Union Cabinet also approved the agreement on legal and judicial cooperation in civil and commercial mattes for the service of summons, judicial documents, commissions, execution of judgements and arbitral awards between India and Afghanistan. Approval was also granted to a similar agreement with Oman.

Further, the Cabinet, on the advice from the National Commission for Backward Classes, agreed to include two castes/communities from Gujarat and Uttarakhand into the Central list of other backward classes. 

(This article was published on August 26, 2015) 

-The Hindu Business line

Why are eyebrows raised when Govt hikes the salaries of its employees?

Story so far: Seems low-cost carriers are doing a great job. The percentage of people who fly has zoomed over the past few years. As some have rightly said, the Government did not anticipate the boom. So, it’s imperative that they be given all the help possible, to survive the bad times. Companies can fly planes, but need ground infrastructure to land them. You can’t be in air always, can you? Like the aviation story, we now have government employees who are hoping to benefit if the Sixth Pay Commission recommendations are implemented. But why is there so much hue and cry from the public over this?

Episode 180

I happened to visit a government office (please don’t ask the name) a few days ago. Let’s say, it was a place where you have to furnish some documents on yearly basis.

The usual scene: Dusty files, and the tick-tick of keyboards of some computers could be heard. We had some illustrious employees working their way through piles of files, possibly a result of other not-so-illustrious co-workers not doing work! Things were happening but may be not at the speed one would expect.

But as we stood in the queue, people, complaining as they were, started talking about the Sixth Pay Commission’s recommendations. Thanks to 24X7 media, all sorts of rumours were reported earlier. Now, after Mr B. N. Srikrishna presented his report, headlines such as “40 per cent pay hike for babus” having been appearing at regular intervals. As my neighbour Shanthi Srinivasan said, “Prices of things are going up and up….and now these government employees will have such huge pay hikes. I am telling you Swati, they do no work. Go and print this, if you can.”

No equality in hikes

A lot of the blame has to be taken in the right spirit. Apart from some secretaries and high-ranking officers, nobody in the lower bureaucracy seems to be ‘very’ happy about the proposed pay hikes. Some who were drawing Rs 40k+, will be drawing Rs 15k more while many who were drawing Rs 5k+, will be drawing another Rs 1-2k, at the maximum. Central government employees account for less than 1 per cent of the country’s population; though it seems larger going by the hype over the Sixth Central Pay Commission (SCPC) report last week.

“Today people are so in tune with terms like taxpayers’ money and what is being done to it. We, government employees, are taxpayers too. The last Pay Commission was 12 years ago. Think about it. Apart from promotions, no major pay hikes in all these years, . Why are eyebrows raised only when Government gives salary hike to employees?” asks Mr Raghu Santhanam, a government employee.

Public perception

Maybe the public perception of employees not working enough. Some even have businesses going while others just have a nice time. But that’s not the point. Do we agree that some government employees are doing their work? “As grudgingly as I have to, they do. Some, but not all. In that sense, a pay hike is okay,” said Seshunandan, a non-government employee and the chairperson of our locality’s resident welfare association.

The inability to segregate the bad apples from the good is harming the government. There are little mechanisms available to the public to gauge the efficiency of government employees. “I agree that not all of them are ‘ideal’ employees, but are they even treated like employees? At a private company, you have so many things…even a career growth plan…what do government employees have? Pension, security, respect…what?” asks another employee.

Not a great workplace

But that brings us to the root cause of all the problems. Is the government a great place to work for? “My sister-in-law is Australian. My elder brother went to Australia and now is settled there after marrying Angela. Before marriage, when my father asked her what she did, you know what she said? I work in the federal government she said proudly. How many Indians would be as proud?” asks Lakshmi Sivaraman.

On the other side, a lot of people are right in saying that one should do one’s work, no matter what. Interferences, not-so-ideal work conditions, de-motivating remarks and constant public scrutiny will and always exist. A lot of the government employees actually work. That’s why may be, things are improving, or showing a bit of promise.

“At the end of the day Swati, the system can be as good as its constituents … in this case the employees. The strikes, irregular office timings and bad attitude do not help. That is why people are reacting to pay hikes in this manner,” comments an HR executive, who hunts ‘heads’ for a living.

Performance is relative and sometimes not even a good measure. If it were so, then Wall Street CEOs, top executives and market makers would not have received their fat bonuses and perks, even as they indulged in wrong bets on real estate and people’s ability to pay back. Now investment banks world over are going through, possibly their worst patch ever, courtesy the SUB PRIME!

“It takes many people do the right thing but only a single individual to do the wrong. Everybody is blamed if things go haywire. At the end of the day, good employees should be rewarded and also encouraged. A pay hike serves both the purposes well,” says V. Babu, a salary and tax expert.

Measure performance

A system that breeds inequality cannot be good. Sure, the bad apples (employees) have to be identified and dealt with, but good ones should be lauded. The Sixth Pay Commission says in its report thus: “A system that primarily lays emphasis on delivery and end results and which continuously rewards performance has been put in place by incorporating features like Performance Related Incentive (PRI) and variable increments in the basic scheme of pay scales.” These are welcome changes. The Pay Commission report can be viewed at http://india.gov.in/govt/report_index.php.

The PRIs would go a long way in culling out who met their set out targets and who didn’t. Pay out of incentives will also help in gauging how many employees were doing their work efficiently.

The government is not a moneymaking machine, driven solely by profit motive. The employees should also be expected to toe the same line. As a society too we need to change. Celebrating salaries of CEOs and wealth of billionaires cannot be a national past-time. Whenever we compare ourselves with others, there is bound to be conflicts and frustrations creep into the smaller guys.

“Government employees have a responsibility. Matured ones will neither shudder away from the ignominy or public wrath nor will they accept that standards of work followed are not up to the mark,” said Professor Dalip Sahai, a former bureaucrat who has now moved into a private company, after retirement.

Just as I write, I see news related to defence personnel demanding more hikes flashing on the TV. Pay hikes cannot substitute real work. They can only encourage it. But again, giving hikes to undeserving candidates rarely serves as an example, does it?

Readers can write back with their views on the recommendations of the Pay Commission. Is there a case for too much, too less or is there no case to give a pay hike at all? Have there been pay cuts or does the system isn’t well prepared enough to recognise shortfalls? Mail answers mentioning names along with addresses to swatilistening@gmail.com.

Responses to Episode-179 on the issue: ‘High flying dreams for ‘aam aadmi’ (Business Line, March 24, 2008).

Since I had the opportunity to travel a bit, I have seen quite a few airports of the world. I totally agree with the Frenchman.... we have a very long way to go. Whether we would be able to reach the global standard itself is a question mark. There are policies, recommendations, etc., but where is the passion to establish world-class airports that is user-friendly?

I happened to transit at Taiwan for an hour. Amazing! It was squeaky clean. They even had a private infant nursing station with all the necessary convenience. If a small country can have a world class airport why cannot India?

Airports are the windows to a country. It is the first impression a foreigner gets when he lands. I could not help but compare when I reached Chennai. Restrooms stink and well everything was below standard. Sometimes I wonder what our policymakers think when they visit other countries. Don’t they ever think that we should have such world-class airports?

Priya Ganesh, Singapore

Full credit goes to low-cost carriers for fulfilling the common man’s dream of flying. These LCCs have revolutionised air travel. It appears that the Government did not anticipate this boom in the aviation industry. That is probably why all airports in the country look like inter-State bus terminals. Over-crowding and congestion have become a regular feature. It is time the Government developed its infrastructure on war footing to tackle the present crisis.

V. Ramasamy, Noida

SwatiListening@gmail.com Blog at: http://Swati-CA.blogspot.com

(This article was published in the Business Line print edition dated March 31, 2008) 

-The Hindu Business Line

All you wanted to know about Seventh Pay Commission

September 7, 2015:  

Government offices are currently buzzing with excitement as employees await the recommendations of the Seventh Pay Commission. While the babus may have reason to smile as they may soon have more money in the pocket, it might not be equally good news for others.

What is it?

A Pay Commission is appointed by the government once every 10 years to look at the pay structure of Union and State government employees and pensioners. Typically, the commission takes 18 months to submit its report. The Seventh Pay Commission was constituted in February 2014 under the chairmanship of Justice Ashok Kumar Mathur to submit its recommendations by August 2015.

Pay commissions study the current pay scales and make recommendations on not just pay increases, but also pay structure. For example, the Sixth Pay Commission recommended that transport allowance, which was a lump-sum amount earlier, be paid along with a Dearness Allowance component. Likewise, the House Rent Allowance calculation was pegged to a percentage of pay. From the Seventh Pay Commission, there are expectations of tweaks to retirement age, performance-linked pay and flexible work hours for women and employees with disabilities, apart from pay hikes. The recommendations are expected to be effective from January 1, 2016. If there are delays, the pay revisions would be done with retrospective effect.

Why is it important?

For three reasons. One, it has an impact on government spending and fiscal deficit. For example, after the Sixth Pay Commission was implemented, the fiscal deficit that year doubled to 6 per cent in 2008-09, partly due to the resulting increases.

Currently, Central government pay and allowances account for 1 per cent of the country’s GDP. This could increase if the pay hikes are significant. Based on the medium-term expenditure framework presented to Parliament, a 16 per cent pay increase is likely from the Seventh Pay Commission. This could add 0.2-0.3 per cent of GDP by way of additional expenditure in 2016-17, estimates DBS.

Two, if the government sticks to its fiscal deficit targets, the higher outgo may entail cuts in other items of spending, including capital expenditure.

Three, pay increases granted by the commission can act as a stimulus to the economy by boosting the consumption leg of GDP. At last count, India employed 48 lakh Central government employees and 55 lakh pensioners and over one crore State and local government employees. The Fourteenth Finance Commission estimates that after the Sixth Pay Commission, pay and allowances to Central government employees more than doubled in a four-year period between 2007-08 and 2011-12.

Why should I care?

If you are a government employee, retiree or a job aspirant, you probably would be watching out eagerly for the report. As an investor, you can consider consumption as a theme to bet on — there is a co-relation between pay commission increases and discretionary spending in urban India. Higher disposable income in the hands of the people could aid automobile and property sales.

The country’s fiscal deficit is a cause for concern as it impacts tax policies. 

The bottomline

Pay attention to the recommendations of this commission. It matters to the economy, to the deficit and to your portfolio.

A weekly column that puts the fun into learning

(This article was published on September 7, 2015) 

 

-The Hindu Business Line

Seventh Pay Commission is no ogre

Its recommendations’ impact need not give us jitters because the rise in government wages will amount to only 0.8 per cent of GDP.

The report of the Seventh Pay Commission (SPC) is set to be released soon. The new pay scales will be applicable to Central government employees with effect from January 2016. Many commentators ask whether we need periodic Pay Commissions that hand out wage increases across the board. They agonise over the havoc that will be wrought on government finances. They want the workforce to be downsized. They would like pay increases to be linked to productivity. These propositions deserve careful scrutiny. The reality is more nuanced.

Critics say we don’t need a Pay Commission every ten years because salaries in government are indexed to inflation. At the lower levels, pay in the government is higher than in the private sector. These criticisms overlook the fact that, at the top-level or what is called the ‘A Grade’, the government competes for the same pool of manpower as the private sector. So do public sector companies and public institutions — banks, public sector enterprises, Indian Institutes of Technology (IITs), Indian Institutes of Management (IIMs) and regulatory bodies — where pay levels are derived from pay in government. 

The annual increment in the Central government is 3 per cent. Adding dearness allowance increases of around 5 per cent, we get an annual revision of 8 per cent. This is not good enough, because pay at the top in the private sector has increased exponentially in the post-liberalisation period. 

Competition for talent

A correct comparison should, of course, be done on the basis of cost to the organisation. We need to add the market value of perquisites to salaries and compare them with packages in the private sector. We cannot and should not aim for parity with the private sector. We may settle for a certain fraction of pay but that fraction must be applied periodically if the public sector is not to lose out in the competition for talent.

True, pay scales at the lower levels of government are higher than those in the private sector. But that is unavoidable given the norm that the ratio of the minimum to maximum pay in government must be within an acceptable band. (The Sixth Pay Commission had set the ratio at 1:12). Higher pay at lower levels of government also reflects shortcomings in the private sector, such as hiring of contract labour and the lack of unionisation. They are not necessarily part of the ‘problem with government’. 

Perhaps the strongest criticism of Pay Commission awards is that they play havoc with government finances. At the aggregate level, these concerns are somewhat exaggerated. Pay Commission awards typically tend to disrupt government finances for a couple of years. Thereafter, their impact is digested by the economy. Thus, pay, allowances and pension in Central government climbed from 1.9 per cent of GDP in 2001-02 to 2.3 per cent in 2009-10, following the award of the Sixth Pay Commission. By 2012-13, however, they had declined to 1.8 per cent of GDP. 

This happened despite the fact that the government chose to make revisions in pay higher than those recommended by the Sixth Pay Commission.

Today, Central government pay and allowances amount to 1 per cent of GDP. State wages amount to another 4 per cent, making for a total of 5 per cent of GDP. The medium-term expenditure framework recently presented to Parliament looks at an increase in pay of 16 per cent for 2016-17 consequent to the Seventh Pay Commission award. That would amount to an increase of 0.8 per cent of GDP. This is a one-off impact. A more correct way to represent it would be to amortise it over, say, five years. Then, the annual impact on wages would be 0.16 per cent of GDP. 

The medium-term fiscal policy statement presented along with the last budget indicates that pensions in 2016-17 would remain at the same level as in 2015-16, namely, 0.7 per cent of GDP. Thus, the cumulative impact of any award is hardly something that should give us insomnia.

There are a couple of riders to this. First, the government is committed to One Rank, One Pension for the armed forces. This would impose an as yet undefined burden on Central government finances. Second, while the aggregate macroeconomic impact may be bearable, the impact on particular States tends to be destabilising. 

The Fourteenth Finance Commission (FFC) estimated that the share of pay and allowances in revenue expenditure of the States varied from 29 per cent to 79 per cent in 2012-13. The corresponding share at the Centre was only 13 per cent. The problem arises because since the time of the Fifth Pay Commission, there has been a trend towards convergence in pay scales. The FFC, therefore, recommended that the Centre should consult the States in drawing up a policy on government wages. 

Downsizing needed?

It is often argued that periodic pay revisions would be alright if only the government could bring itself to downsize its workforce — by at least 10 to 15 per cent. From 2013 to 2016, the Central government workforce (excluding defence forces) is estimated to grow from 33.1 lakh to 35.5 lakh. Of the increase of 2.4 lakh, the police alone would account for an increase of 1.2 lakh or 50 per cent. What is required is not so much downsizing as right-sizing — we need more doctors, engineers and teachers. 

Downsizing of a sort has happened. The Sixth Pay Commission estimated that the share of pay, allowances and pension of the Central government in revenue receipts came down from 38 per cent in 1998-99 to an average of 24 per cent in 2005-07. Based on the budget figures for 2015-16, this share appears to have declined further to 21 per cent. In financial terms, this amounts to a reduction of 17 percentage points over 17 years or an annual downsizing of 1 per cent. It’s a different matter that it is not downsizing through reduction in numbers of personnel. 

It is often said that pay increases in government must be linked to productivity. We are told that this is where government and the private sector differ hugely. However, the notion that private sector pay is always linked to productivity is a myth. In his best-selling book, Capital in the 21st Century, economist Thomas Piketty argues that the explosion in CEO pay in the West has been increasingly divorced from performance. He also argues that the emergence of highly paid “supermanagers” is an important factor driving inequality in the West.

We are seeing a similar phenomenon in the private sector in India. The serious public policy challenge, therefore, is not so much to contain a rise in pay in the public sector as finding ways to rein in pay in the private sector. It is also ironical that people should harp on linking pay to performance in the public sector when high-profile firms in the private sector such as Google and Accenture are turning away from such measurement. 

A better idea would be to conduct periodic management audits of government departments on parameters such as cost effectiveness, timeliness and customer satisfaction. 

Improving service delivery in government is the key issue. Periodic pay revision and higher pay at lower levels of government relative to the private sector could help this cause provided these are accompanied by other initiatives. The macroeconomic impact is nowhere as severe as it is made out to be. 

(T.T. Ram Mohan is professor at IIM, Ahmedabad) 

-The Hindu

Early Retirement for Shoddy Job, Variable Pay to Shock Government Staff

NEW DELHI: Five to six per cent annual pay hike of Central Government employees is likely to be linked to tangible performance criterion. Under-performers are likely to be retired by 55 or 30 years of service, according to the Seventh Pay Commission report to be submitted soon.

The overall hike being recommended by former Justice A K Mathur-headed 7th Pay Commission is around 30 per cent. The Central Government employees are scheduled to get salary hikes on the basis of the recommendations by January 1, 2016. According to sources, the house rent allowance too would see an increase by 20 per cent. But the most significant recommendation is that 5 to 6 per cent of the annual increment would be performance-based. There is also likely to be a provision of retiring underperforming employees by the age of 55 or 30 years of service, whichever is more. “The Commission has spoken to all stake-holders and the recommendations are ready. We are expecting to submit the report any time soon,” sources said.

Set up by the erstwhile UPA government in February 2014, the Seventh Pay Commission was given a four-month extension by the NDA Government. Its term is till December 31. The commission may also raise salary-levels of PSU employees. The Sixth Pay Commission led to a six percentage point increase in dearness allowance for Central government employees from 16 to 22 per cent. The commission’s recommendations are usually accepted by the government with minor adjustments.

-The New Indian Express

Seventh Pay Commission must rationalise India’s obese and unwieldy bureaucracy

 - Raghu Dhayal

The Seventh Pay Panel report should press for the rationalisation of government salaries and making bureaucracy leaner and more efficient.

The four-member Seventh Central Pay Commission, led by former Supreme Court Justice Ashok Kumar Mathur, will soon come up with its recommendations to determine a salary structure for central government employees. As always, the salary structure is supposed to be linked to “the need to attract the most suitable talent to government service, promote efficiency, accountability and responsibility in the work culture, and foster excellence in the public governance system”.

Salaries in government must perforce be benchmarked to the income of the general population as also those of private sector employees. According to a World Bank survey, the average salary of a government employee in the UK during 1995-2000 was £19,000 per year – 1.4 times the average income of British citizens. This ratio was 1.0 in Indonesia, 1.2 in China, 1.4 in the US, 1.5 in South Korea and so on. The average annual income of government employees in India on the other hand was as much as 4.8 times the average income of the Indian citizen.

A disproportionately liberal remuneration package in comparison with the private sector generates an unhealthy clamour for government jobs and distorts the labour market. The bureaucracy also enjoys a plethora of perks such as residential bungalows, cars, a retinue of personal staff and so on, all of which put additional burden on the state exchequer.

An obese and unwieldy bureaucracy is the single most pernicious malady afflicting governance. It clogs the channels of communication, leads to delays, diffusion of responsibility, and spiralling costs. Foreign investors find it harrowing to do business in India on account of what Arun Shourie calls multiple silos in which ministries function, thereby creating a sclerotic system.

Thanks to regular cadre restructures and inter-service competition, the bureaucracy has seen a steady expansion. In 1947 the number of secretariat departments at the Centre was 18. Today, the number of Secretary level officials is over 150. There are as many Additional Secretaries or equivalent, not to speak of a battalion of Joint Secretaries. The authorised IAS cadre strength now exceeds 6,150 – up from 1,230 in 1951.

In the corporate world slimming a workforce by a tenth of its size is standard practice. Why shouldn’t governments do it too if needed? Sweden and Canada have done it and yet managed to retain effective public services. In 1993 then US President Bill Clinton had laid out a blueprint aiming at reducing the federal work force by 2,52,000, designed to bring about a savings of $108 billion over a five-year period.

Recommendations of the Fifth Central Pay Commission (CPC-V) had included a 30% reduction in government jobs over a period of 10 years; reduction of the number of Secretary level posts from 90 to 30; abolishing 3,50,000 vacant posts; pruning the current five to six administrative layers to not more than two; functional multi-tasking and so on. But these recommendations got a quiet burial.

The Indian state today has a lopsided staff structure. Ninety-five per cent of its employees belong to categories ‘C’ and ‘D’. In most states, almost three-fourths of all government employees are parasitical support staff such as peons, chowkidars, drivers and clerks. Nothing has really happened on CPC-VI’s recommendation to phase out Group ‘D’ staff, most of whom are unskilled and sometimes even illiterate.

Government today needs more specialists, fewer generalists. Several senior positions can be better filled by short-term contracts, enabling lateral entry of technocrats, professionals and entrepreneurs to supplement and strengthen a system dominated by the general elite.

Pay panels impose no small burden on the country’s finances. The central fiscal deficit under the impact of CPC-VI jumped from 2.5% in 2007-08 to 6.5% in 2009-10. Post-CPC-V, the annual wage bill of central government employees rose from Rs 21,885 crore in 1996-97 to Rs 43,568 crore in 1999-2000. Likewise, state governments’ expenditure on salaries increased from Rs 51,548 crore to Rs 89,813 crore during the same period, compelling 13 states to seek central help to pay staff salaries.

Again, post CPC-VI, and between 2007-08 and 2013-14, the annual wage bill of central employees more than doubled to Rs 1,15,000 crore. The wage bill of government staff in the states jumped to Rs 2,86,000 crore from Rs 1,36,000 crore. A World Bank study revealed that “employees have effectively captured control over state spending in health and education, and diverted most of it to themselves through salaries, with negative consequences for service delivery”.

While the aam admi – the peasant, the stone breaker, the daily wage earner, the rural landless, the urban slum dweller – toils, these entitled babus take their place in government for granted. No hearts should bleed for privileged government employees battening on their inflation-indexed dearness allowance installments.

Is the Seventh Central Pay Commission listening?

The writer is former Managing Director, Container Corporation of India

-TOI

A new kind of babu

The main task of the next cabinet secretary must be civil service reform.

Manish Sabharwal

We must move away from a mathematically impossible system in which everybody is above-average, tighten empanelment (currently, the pyramid looks like a cylinder because 75 per cent of officers become joint secretaries and 40 per cent reach the level of additional secretary) and put the best people, irrespective of age, in the right positions.

Politics in India has changed forever. Now, it’s the turn of the civil services to change. But can the services heal themselves or will change have to be forced by politicians under siege from exploding expectations? I’d like to make the case that change will be most enduring if it comes from within and the only criterion for choosing the new Union cabinet secretary should be willingness and ability to reform the civil services. This is particularly important because the window between the cabinet secretary’s appointment and the Seventh Pay Commission recommendations in October is critical.

Politics is experiencing an exciting churn — the generational change in the BJP and the impact of its crazy fringe on the Delhi assembly elections, a potential change or regicide in the Congress party, the magnificent resurgence of the AAP after its goofy resignation and now its internal conflicts, looming expiry dates for regional parties that don’t deliver prosperity or plumbing, campaigns innovating at the speed of Moore’s law, and more money for state governments — all have consequences that are impossible to predict. Expectations morphing from garibi hatao to ameeri banao mean that voters care more about jobs, roads and power than about the envy of income inequality. This makes the notion that bureaucrats must protect India from its politicians and create continuity by defending the status quo dated, patronising and inappropriate. And the notion that politicians can fulfil voter expectations without civil service reform is delusional.

The cabinet secretary of India does not have the same trust, access or convening power that the chief of staff of an American president has. Not only is he stationed far away from the prime minister’s office — in Rashtrapati Bhawan, because the viceroy was once head of government — but his ability to impose his will on secretaries who are close to retirement and who report to independent ministers is at best suspect and at worst absent. But the cabinet secretary is the government’s chief people officer even though his power over empanelment, promotion, postings etc has been unimaginatively or uncourageously exercised so far. The government and the next cabinet secretary need to do three things each in order to modernise the civil services.

First, the government must shift the cabinet secretary to the PMO. Second, it must choose the next occupant of the office based purely on his hunger for civil services reform and make sure that his brain is connected to his backbone. Third, it must empower him to work closely with the pay commission till October and then use the rest of his tenure to deliver to us a civil services that can bear outcomes. Policy outcomes are a complex cocktail of people, processes and technology but the meta-variable is the selection and reward/ punishment system for people. The next cabinet secretary must avoid the infinite activity loop that his role has traditionally been and do three things.

First, he must improve performance and career management. Seniority is an objective basis for promotion but often an ineffective one.

We must move away from a mathematically impossible system in which everybody is above-average, tighten empanelment (currently, the pyramid looks like a cylinder because 75 per cent of officers become joint secretaries and 40 per cent reach the level of additional secretary) and put the best people, irrespective of age, in the right positions. Restoring the confidentiality of the process is critical to reinstating its honesty. And establishing objectivity and trust is critical to restoring its effectiveness.

Second, the new cabinet secretary must formalise lateral entry and political appointments. Any effective organisation has to balance specialists with generalists as well as insiders with outsiders. India’s policy problems are not insurmountable but many of them require specialist input that only lateral entry could provide. This could be done by introducing a new point of entry at the joint secretary level; designating 25 per cent of the top jobs as posts that can be filled through direct political appointments which are coterminous with the government’s term (for instance, 4,500 people resign when a new American president takes over, while, in Delhi, only 10 people do); and easing out civil servants who are not shortlisted to move up beyond a point (similar to the lieutenant colonel level cut-off in the army that avoids top-heaviness).

Third, the pay commission must be reimagined as a performance commission. Pay commissions have never received the “accepted-in-totality” honour that finance commissions get because they end up being “compensation commissions” and mostly formulate implementation plans that lack political economy considerations. The Seventh Pay Commission has a chance to make history by initiating a bold rupture with the past, like the 14th Finance Commission had done. The next cabinet secretary must work with the pay commission and the NITI Aayog to synthesise the useful recommendations of past administrative reform commissions into a plan that can help accelerate the changing of Delhi’s role in ruling India, started by the 14th Finance Commission. The 900 IAS officers who live in Delhi must be reduced to 500. Civil servants must be moved to a cost-to-government compensation structure through the monetisation of all benefits. A mechanism that separates the compensation review for the bottom 90 per cent of civil servants must also be devised for the future.

Politicians and bureaucrats who are talented and ambitious are frustrated with the current system. Chief ministers struggle with the paradox that political priorities like water, school education, labour and health are currently considered as painful postings by the permanent, generalist civil service. Bureaucrats — particularly the talented and idealistic ones — are tired of a system in which you get the top job only two years before retirement. It is a system that does not distinguish between fraud, incompetence and bad luck when things go wrong, has no room for career-planning, and often grants postings based on deafness and blindness rather than competence. The most recent cabinet secretaries have never missed an opportunity to miss an opportunity. The next one is being engaged at a time when we have made a new appointment for our tryst with destiny. He must do his bit by boldly demolishing his cradle. The government should start by vacating some space in the PMO.

The writer is chairman, Teamlease Services

editpage@expressindia.com

-Indian express

Seventh pay commission

Suggestions for Seventh pay commission

Growth rate with external periodic inflation correction (DA) assumed

Preface

7th pay commission

#7CPC 

The fundamental differences

S.no.	a private company	a government organization
P1	Project review is open and clear	Project review is opaque and vague
P2	Job insecurity: Hire and fire policy	Job security: with an entry age of 18 and retirement age of 65;
P3	The insecurity of the job motivates the employee to be always obedient to the boss	Keeping a person motivated day in day out for 47 long years of career, is very difficult
P4	Attrition rate touch 30-40% in higher age group	Retention rate is more than 90% in higher age group
P5	A good pyramid structure	A difficult pyramid structure, sometimes an inverted pyramid
P6	The promotions, perks and allowances can be left to whims and fancies of the boss as the boss is accountable and can be fired	The promotions, perks and allowances can never be left to whims and fancies of the boss as the boss is not accountable and can never be fired
P7	The increment rate and bonus can be varied with company performance every quarter, every year	The increment rate and promotion norms are is fixed for 10 years or till next pay commission is implemented
P8	The pay, promotions, perks and allowances are in opaque system and is okay as the performances are in open	A long term, futuristic, transparent and open guidelines is the need of the hour, which don’t change year to year, to avoid demotivation, prejudices, bias and corruption
P9	Top executives take a huge pay and perks home	Top executives face pay saturation and stagnation
P10	Every work is accounted and reasonably credited with proper documentation and delegation	Charity expected by bosses with no records of any work or documentation as it is complete micromanagement
P11	Contract employee is respected as an expert in the field	Contract employee is treated as a casual daily laborer

A good and healthy private public partnership is required for growth of the country as you can’t expect the private players to be charitable to carry out non profitable services like primary education, health-care and rural infrastructure development.

Abstract

A1) Pay scale minimum = 10,000/-; max = 2,50,000/- A single and continuous band, with no grade pay or hierarchy. Lesser importance to Highest paid person's opinion (HiPPO), equal value for anyone's idea.  

The emphasis is on lesser pay saturation at the Top for lesser people at the top, with greater responsibility and accountability, and greater compensation, for successful completion of asked tasks.The starting pay should be comparable to the IITs placements.
 
A1.1) 10,000/- for tradesman entry
A1.2) 20,000/- for Assistants entry
A1.3) 30,000/- for Engineers; An annual increment @4% rate will take more than 40 years to reach to reach 1,50,000/- the L1 level.
A1.4) 75,000/- for Project managers – minimum 20 years experience as engineers.
A1.5) 1,50,000/- for Secretary L1 Level = second top most level =minimum 10 years experience as Project manager level.
A1.6) 2,00,000/- for Secretary L0 level = top most level =minimum 5 years experience as L1 level.
A1.7) Entry age of 18 and retirement age of 65 possible without pay saturation providing ample options to counter lack of motivation.

A2) APAR Grading = done by immediate superior for a team of minimum 10 persons.
A2.1) A for Above average (A1, A2, A3) not more than 20%. Annual increment of 2.5%.
A2.2) B for Average. Annual increment of 1%.
A2.3) C for below average not more than 10% .A consistent C ranker asked for relocation/reorientation by HRD or VRS for age greater than 55.Annual increment of 0%. Regular DA updates are always there twice a year.
A2.4) D for unfit for service or a case for VRS if age greater than 50.
A2.5) Superior's APAR grading =20% done by subordinates (anonymous IT-enabled) + 80% by boss
A2.6) Gradings/score open after one month
A2.7) Annual PRIS and variable increments based this grading.

A3) Open and transparent Peer review = every four years after previous promotion, irrespective of annual grading.  

Grading on objective scale like work output, patents filed, papers published, impact factor, citations, knowledge not on subjective points like honesty, sincerity, integrity.
 
A3.1) Promotion is two maximum possible annual increments (4%) paid together.

A3.2) Top 10% promoted the same year (fast track = four years), rest 90% promoted next year, if absolute score is greater than 6/10.
A3.3) Absolute score of greater than 9/10 with top 10% ranking (A1 candidates) recommended for special award/increment.
A3.4) Bottom 10% with an absolute score of less than 6/10 asked for relocation/reorientation by HRD or VRS for age >55.They are eligible for promotion peer review only after four years. They will stagnate in the same pay without any increments.
A3.5) Only two continuous fast track promotions possible for an annual lot intake of 100.
A3.6) It has to be at least 1 hour long for review of 10000 hours of works, not 15 minutes. 
A3.7) The difference in performance between the best and the rest has to be significant, say like 100:25 or 50:25 and not 20:19. Never 25:24!
A3.8) This top 10% selected as the best (to be promoted on fast track of four years), asked to present their work to their peers, to inspire them (the rest 90%) to perform better.
A3.9) The concept of a small minority winning, encourages challenging the status quo, taking risks and making mistakes! The other way round we create a bunch of losers (the discarded lot) and the winners (majority) who are afraid to fail, make mistakes and delay taking decisions! 

A4) Open and transparent Project review every six months
A4.1) Project Team score normalized to project score.
A4.2) Project team performance related incentive to promote team work.
A4.3) Complete project plan document in hand, with individual responsibility clearly defined before fund allocation for project.                                   A4.4) an insincere and vague project review will lead to complete collapse of the system

A5) Recruitment and retention: Recruitment is a costly procedure if identifying the real talent is the criteria. Hence retaining the good talents is also vital for long term growth of the organization. There are many situations when the project demands expertise not available inside the organisation. Here the recruiting a contract employee comes handy. The contract employee who is in for a particular expertise should be equally important as the permanent employee. The conducive environment where both exist with mutual respect will be beneficial for the organisation. In the long run a significant number of contract employees will lead to better efficiency and lower operating cost for the organization. All pay and allowances accounted in corresponding project budget.

A6) Retirement: Standardized retirement dates with all employees retiring on June 30 or December 31. Voluntary retirement after a maximum of forty years of service or superannuation at an age of 64, whichever earlier. All employees retire on June 30 or December 31 after their 64th birthday, or before completion of 40 years in service. Not a single day more is allowed in service, under any circumstances. Experts can be given on contract employee list. General employees can be on contract till the age of 70, distinguished fellows on roll till age of 80, the contract peer reviewed every fours. By 65th birthday they are eligible for international standard pension benefits.

A7) Project managers’ champions’ league: There will be 40 vacancies for project managers in an organisation with employee strength of 10000. They will constitute A1, A2, A3 and B-league of managers of 10 numbers each. After every two years top two A1 league managers will be declared champions, recognized by performance awards and rewarded with good bonus. Bottom two A1-league managers demoted to A2 league managers, with top two A2-league managers promoted to A1-league. Similar promotions and demotions will exist between A2-A3 and A3-B league of managers. A1 league managers will be provided with bigger project and greater responsibility with larger chunk of resources as compared to their A2, A3, and B-league peers.

A8) Awards and recognition: Organisation should promote innovation and hard work and those do that consistently and sincerely, must be recognized and rewarded. The awards must never be consolation awards and should never contradict the annual grading and promotion peer reviews.

A9) Intellectual property generation: 21^st century will have wars fought on intellectual property. The country with greatest number of IPs with a significant quality will win it. Thus all organisations should encourage the innovation at individual employee level, without red tapes. For employees who completed five years in service and earning more than 50,000/- per month will have a chance to file one patent in their career in their name with the organisation bearing the cost of fees and paper work. For all other employees, 50% of the patenting cost will be borne by the employee, paying in 5 year term easy monthly installments. An employee having an international patent will be allowed to file another, with no questions asked. The royalties earning on the patent will be shared 50-50 with organisation and the innovator. 10% of the project budget should be earmarked for the patent filing and paperwork costs. Patent filing process should be easy and each individual encouraged filing a patent.

A10) Perks and allowances: Maximum of 200% of the basic pay along with basic pay for the best performers,less than 0.1% of the employee strength. This is a very rare case (less than 10 in 10000 cases)  and after a really good detailed peer review awards this 200% allowance for very high performance, exceeding all expectations. For top 1% performers, 100% of basic pay paid as allowance after annual peer review. These extra payments approved by corresponding project budgets. For top performers not exceeding 20% of the employee strength, annual perks and allowances will be around 50-60% of the basic pay, along with the basic pay. For the rest it has to be less than 20-30% of the basic pay. For non performers not exceeding 10% of the employee strength at each level, it should be zero. Forced bottom 10% bell curve fitting is not recommended.

Details

1) Objective: To manage a public sector Research and Development (R&D) organisation, whose mandate and vision are clearly defined, efficiently and effectively, without a hire and fire policy. 

2) Introduction: I would say one of the qualities of a great leader and the most difficult to posses- are to bend down and listen and feel the ground realities and have the courage to face the criticisms with sincerity and integrity. Here I provide some basic guidelines for Management policies for the future.

3) Decline of dependence of HiPPO: Highest Paid Person’s Opinion: The next wave of management will center on the concept of harvesting expertise, solutions and knowledge — not just from within the organization, but from anywhere that expertise can be identified and gathered.

4) Guidelines: The guidelines basically try to follow the idea of “the individuals must grow with the organisation” in true letter and spirit. Any other way around –individual grows, organisation doesn’t or organisation grows, individual doesn’t - is bad for the future of any organisation. This thus implies a truly employee friendly organization with no hire and fire policy and providing enough growth opportunities for the employee.

5) What is growth: Growth needs to be defined as per the mandate and vision of the organisation. If it is basic research – it is measured in quality publications with good impact factor and number of citations, if it is R&D, it should be reflected in number of patents filed, technologies transferred and royalties earned. If it is strategic, then it is measured by defence induction, If it is plant or a service it measured by plant and service availability and if it is production it is measured by clear profit earned directly or indirectly.

Definitely we can always set our standards very low at the start and slowly raising the standards with time, experience and confidence gained. But never the other way around as it will be highly demotivating for the individual employees and devastating for the organisation in the long run.

This clear cut distinction of type of work is very important –putting a right person in the right place and promoting the right person in the right place is very important.

6) Disclaimer: The ideas mentioned here are based purely on my intuitions and experience and not based on any research and in depth analysis and doesn’t carry a stamp of authority in the subject of management. I may be using some instances as examples – should not be taken as pointing fingers.  

6.1) This scheme is to be used for organizations which use tough screening and recruitment interview with a selected to appeared candidates ratio of less than 0.1% and not for adhoc appointees. Like say 1, 00,000 candidates appeared for the written test and 1000 called for interview and less than 100 is selected. Here a cream is selected and there is not much to differentiate among them and each is equally competent and has the potential to lead the organization. Thus except for some bad patches in the career they should be provided equal and ample opportunities to correct career graph. 

6.2) Rarely, any private company can boast of such selectivity expect for a few IITs and IIMs campus placements.  

6.3) Also to expect anyone to be an A1 candidate for all the 40 years long career is ridiculous. Either the person is from another planet or the peer review is poor. As even Messi had bad days! Even FC Barcelona did not win anything in 2014!

7) HR policy: Any HR policy to produce the desirable results has to be efficient and effective. To be efficient a proper pyramid hierarchy has to be maintained in the system in harmony within the working employees running the system. To be effective, there has to be a proper review and appraisal system in place for the individual and also for the project work as per the predefined mandate and vision of the organization.

Thus a proper HR policy which is both efficient and effective will have a system in place which has the right person at the right place.

8) Recommended pay scale

Pay scale	Maximum Annual increment @4%	Financial level for entry for recruitment	Designation	Qualification/ experience/ Vacancy based responsibility	Optimum age of entry to the level	Minimum Years in service to be eligible for next level	Hierarchy levels
10000	400	Level 7	Technician	ITI	18	8	H16, H15
20000	800	Level 6	Assistant	Diploma	20	20	H14, H13, H12, H11, H10
30000	1200	Level 5	Engineer*	B.Tech	21	5	H9
40000	1600	Level 4	Sr.Engineer	Mentor	26	5	H8
50000	2000	Level 3	Team leader	400 in 10000 workers	31	10	H7,H6
75000	3000	Level 2	Project Manager**	40 in 10000 workers	41	10	H5,H4,H3
150000	6000	Level 1	Group board members	4 in 10000 workers	51	8	H2,H1
200000	8000	Level 0	Secretary	1 in 10000 workers	60	5 year term	H0

*An exceptionally talented engineer, making an entry at age of 21, can retire at 65, at the financial Level 1, without being a project manager, by continuing in technical side as an expert, professor, professor emeritus. He/she can be part of project review committee under group board where his/her expertise is required.

**Anyone in the financial level 3 can be promoted to financial level 2 as a project manager, based on his/her capability. Project managers not meeting the standards can be demoted back to financial level 3.

8.1.Pay scales in detail

Hierarchy levels	Pyramid levels	Pay	Qualification for entry	Management vertical
H16	P8	10000	12th pass/ITI equivalent	M7
H15	P8	12000	Minimum four years experienced 12th pass/ITI equivalent
H14	P8	15000	Any Graduates, Specialised Diploma starting at 20000/-
H13	P8	17500	Any Graduates with four years experience
H12	P7	21500	Specialised Diploma with experience	M6
H11	P7	26000	AMIE entry; B.Tech entry at 30,000/-
H10	P7	31000
H9	P6	38000	Specialised post graduates starting at 40000/-	M5
H8	P6	46000	Doctorate with Specialised expertise
H7	P5	55000	Post Doctorate with International experience	M4: team leaders, 400 for 10000
H6	P5	67000	Rare entry
H5	P4	81000	Rare entry	M3: project managers, 40 for 10000
H4	P4	98000	Rare entry
H3	P3	119000	Rare entry	M2:Experts for project review, ombudsmen
H2	P2	144000	Recommended	M1: Directors on Board, 8 in 10000
H1	P1	175000	Rare entry
H0	P0	211000	Recommended	M0: CEO, 1 for 10000

8.2. Direct recruitment at senior levels: Rare entry to H0-H6 levels, based on merit, academic records, experience, and age of the candidate. Contract appointment with similar package is recommended. An exceptionally talented manager, with an age less than 35 should not be recruited at project manager level as the pay will get saturated soon. It is recommended to have a project manager of age greater than 41 or one can be hired on contract basis. 

8.2.1 Any employee joining the department at any level must be able to see future growth potential and not saturation/stagnation after a few years of service as pay increase is the only motivation as the administration powers are vacancy limited.

8.2.2. Hence when any person is being recruited the management must see where it expects him/her to be, when he/she retires, with said qualifications,experience and merit, and then place him/her in that pay level or provide contract appointment.

8.3. For employee strength of 10000: For annual intake of 40 at H10 levels, 80 at H14 levels, 160 at H16 levels, assuming a 40 years long career the employee strength will reach a steady state value of 10000. We can have 1 CEO, 8 Directors on Board, Different experts for different projects, 40 project managers and 400 team leaders. There will be as per calculations around 400 employees each at P3, P4, P5 levels. Of these 40 will be project managers, 400 team leaders, the rest can be assigned task of different levels. Like being part of intellectual property management, documentation review, archiving and standardisation, interview committee, safety committee, project review committee, ombudsmen, HR and recruitment planning. In addition, to these administrative responsibilities which come on rotation basis, they can grow as experts in their fields as M.Tech & PhD guides, assistant professor, associate professor, professor, professor emeritus, provide academic support to the parent origination as well as to other institutes and colleges as visiting professor.

8.4.Grading: Each employee, except in management level M6 and M7, is annually rated by his boss and peers. The grades are normalised as per the score received in the project review report card. Each employee, in the management level M6 and M7 is bi-annually rated by his/her boss. The perks and increment decided based on these grades.

Each boss assesses their sub-ordinates in following four categories.

Grades	Implications	Score in 0-10 scale
A	Exceeds expectations/Better than me, not exceeding 20% of the sub-ordinates strength	Greater than 8
B	Meets expectations/Is okay, similar to me	Greater than 6 but Less than 8
C	Does not meet expectations / Poor than me, not exceeding 10% of the sub-ordinates strength	Greater than 4 Less than 6
D	Unfit for service- refer to HR to standard procedures. The corresponding Recruitment chairman/ previous peer review committee chairman held accountable	Less than 4
Rare	A Score of 9 and above and a score of 4 and below
Very rare	A Score of 10 and a score of 2 and below

8.5. Increment: The Maximum Annual increment @2.5% is available to only top high rated performers-category A, not exceeding 20%. This is assuming the fact that top 20% people do 80% of the significant job. The average and slightly below average performer –the category B- will only get 1% annual increment. The category C not more than 10% of the employee strength, are the poor performers and don’t deserve any increment nor any perks or allowances.

8.5.1. Sixth pay commission note: As per the sixth pay commission highlights available on the website: The high performers not exceeding 20% during the year being allowed an increment at a higher rate of 3.5% and rest a rate of 2.5%. Rest of the 6CPC is implemented but not this critical requirement, which is the crux of Pareto distribution, as identifying 1 in five persons, the peer review committee have to work harder. So they decided to make it 60-40.

8.5.2. A person with 4% annual increment will take minimum 17 years of service to double the starting pay salary. And even 40 years of service the salary will not be five times the starting pay. Annual increment of anything greater than 5% is not recommended as the pay will double in less than 14 years.

8.5.3. I recommend a 4% increment for promotion and for A1 project managers. 2.5% annual increment for high performers not exceeding 20% during the year, 1% for the rest and 0% for non-performers. I will recommend that non performers, not exceeding 10% be given 0% increment, with high performers not exceeding 20% given 2.5% increment. Also the increment rate for two increments at the time of promotion should be 4% and not 3%.

8.5.4. If we assume the pareto distribution of work, i.e. 20% of the people contribute towards the 80% of the work, the 4% contribute towards the 64% of the work and the 0.8% contribute towards 51.2% of the work. Only a minute 0.16% contribute towards a major 41% of the work. Hence the high-performers are really a small percentage. 

8.6. Career growth: To highlight the career growth rate for different increment following table is provided

Annual Increment Rate in percentage	Career Growth rate as percentage change with respect to starting pay, after corresponding years, for corresponding annual increment, not considering promotion
	1 year	5 years	10 years	15 years	20 years	25 years	30 years	35 years	40 years
1	101	105.1	110.4	116.1	122	128	135	141.6	149
2	102	110.4	121.9	134.5	148.5	164	181	200	221
2.5	102.5	113	128	144.8	163.8	185	209.7	237	268.5
3	103	115.9	134	155.7	180.6	209.3	242.7	281.3	326
3.5	103.5	118.7	141	167.5	198.9	236	280.6	333	396
4	104	121.6	148	180	219	266	324	395	480
5	105	127.6	162.8	207.9	265	339	432	551.6	704

Growth rate with external Periodic Inflation correction assumed
 

8.6.1. Basic minimum pay scale is equal to 25 times the minimum prescribed daily wages for a skilled labourer. The maximum pay scale is 25 times the Basic minimum pay scale. The ratio between the basic maximum pay scale to minimum pay scale is 25.Say for example if daily wages is fixed at 400 rupees per day, minimum pay scale should be 10,000 and the maximum pay scale should be 250,000.

8.6.2. Minimum to maximum pay scale Ratio of 1:25: The person joining in minimum pay scale can dream to retire in middle of the pay scale. The person joining in the middle of the pay scale can dream to retire in top of the pay scale. A person with 4% annual increment will take minimum 40 years of service for the salary to be five times the starting pay. Thus the minimum ratio required of minimum pay scale to middle of the pay scale is 1:5. Also the minimum ratio required of middle pay scale to top of the pay scale is 1:5. Thus the minimum required Minimum to maximum pay scale Ratio is 1:25. If the maximum annual increment is fixed at 3% the ratio can be fixed at 1:16, which is 1:12 for sixth pay commission.

8.6.3. Pay scales should be fixed based on responsibilities assigned to an individual. The responsibilities assigned to an individual should be based on potential and capacity to deliver and experience and merit of the individual. Thus a continuous evaluation should be in place which handles both management hierarchy requirements and also acts as a financial motivator for the individual. M4 level person chosen from L4 group as team leaders who in future have two options of growth. One is as project managers and another is to be a technical expert and become professor and professor emeritus. One individual can grow from L7 to L6 and to L5 based on performance and merit.

A continuous growth for all and stagnation for none is guaranteed with average annual rate of increment of 1% and maximum annual rate of increment of 2.5%. A promotion review which occurs every four years provides two increments of 4%.

8.6.4. We cannot compare a Private sector to government sector as the private sector is profit and goal oriented; they use hire and fire policy along with highly variable perks and allowances to their high performers. In government this will be difficult as it works on employee welfare and the guidelines and framework are already set and pre-defined.

Yes variable pay based on performance is must but a transparent peer and project review is vital in deciding the parameters to be judged and evaluated for performance. The review committee should be held accountable for the review.

8.6.5. The following table shows the growth rate for annual increments and promotion increments.

Annual Boss Grading @2.5%	A	B	C	A		B	C	A		B	C
	A	B	C	A		B	C	A		B	C
	A	B	C	A		B	C	A		B	C
	A	B	C	A		B	C	A		B	C
Peer review grading @4%	A	A	A	B		B	B	C		C	C
Growth rate after four years	116%	111%	108%	107%		104%	101%	107%		103%	100%
Five years	118.9%	113.7%	110.7%	111%*		112%	109%	Stagnate and relocate
case	Fast track in four years, next year annual increment @2.5%				One year delayed				Review after four years

*one year delayed, zero increment fourth year, and single 4% increment fifth year as a penalty on boss for consistently over-rating the performance for last four years. 

Growth rate with external Periodic Inflation correction assumed

 

8.6.6. It is not the package that attracts and retains the talent. It is the projects handled and work culture. You don't hire a Lion and put him on a vegetarian diet inside a zoo. The best of the Lion comes out in the real jungle with really good and healthy animals in. Healthy and fair Competition without restrictions to growth that is important with nobody stepping on each other’s foot. Stop yes boss culture and you will have best talents coming inside and also will retain them. For that- The boss should be on rotation and project basis. Let there be 360 degree evaluation of bosses. Let individuals choose their projects and their project managers. Allow a flexible system where inter department transfers are easy and transparent. Use ITES for project reporting and vacancies available in project.

8.6.7. The pay bands bring in unwanted hierarchy. I recommend a flat organisation with a continuous pay structure starting from 10000 to 250000 with 4% increment. Secretary and Project Managers have complete freedom to assign the grading and increment and no questions asked. But they should make the individuals know how they do it. They should let team leaders to assign the grades. Allow 360° evaluations of managers by the peers. 20% of the boss grading should be done by subordinates. Conduct promotion interview by independent committee every four years and let open assigned grades. Secretary and Project Managers will get their share of pay and allowances only on successful completion of objectives and projects after five years of evaluation. Proper project review is critical. If a project is successful and there is reasonable profits as per external audit share the profit as award and incentive. The pay structure should be similar in the PSU but need not pay all the allowances. Make redeployment transfers and rotations based on individual preference and easy. New responsibility new work culture brings in more energy and thus improves efficiency. Make the work responsibilities for the individual in the open forum and allow the individuals to file reports in open and transparent manner.

8.6.8. Vacancy based hierarchy: If it is that important to have a rigid pyramid command in line structure there can a post like Chief officer, senior officer, officer, junior officer, assistants and helpers in a ratio of 1:4:40:400:4000:6000, with required pay scale eligible to apply.

8.6.9. Promotions cannot maintain or provide hierarchy: Say every year we recruit 100 engineers. After every four years they undergo peer review. Top 10% are promoted that year and rest 90% eligible, next year. Thus a long term average will be 490 numbers at each level. This will be situation for any drop percentage r. The steady state average for number of persons attending the peer review at each level will be N/(1-r) where N is average number of annual intake. Thus at each level the numbers will be equal and constant, drop rates and review interval is standard and normalised.

8.6.9.1. If there is non-uniform drop rate and number years for peer review to maintain a pyramid structure hierarchy, may be possible. Drop rate and number of years of residency period decrease with each level starting from 8 years at junior level to 2 years at senior level. But this not recommended.

8.6.9.2. I recommend a standard uniform structure of peer review every four years after last promotion with uniform pass rate 10% on fast track four year case and 90% on five years case. 

8.6.9.2.1. The concept of a small minority winning, encourages challenging the status quo, taking risks and making mistakes! 

8.6.9.2.2.The other way round we create a bunch of losers (the discarded ones- the minorities) and the winners (majority) who are afraid to fail, to make mistakes and delay decision making! Also these so called "winners" tend to be bad team players, worse managers, worst listeners and highly egoistic!

8.6.9.3.If we assume the Pareto distribution of work, i.e. 20% of the people contribute towards the 80% of the work, the 4% contribute towards the 64% of the work and the 0.8% contribute towards 51.2% of the work. Only a minute 0.16% contribute towards a major 41% of the work. Hence the high-performers are really a small percentage.    In short the best stands out among the crowd! I think, thats why we call them OUTSTANDING!  

8.6.9.3.1.This should be our guiding principle. If we have 1000 very good employees, how many of them do you see to be outstanding 20 years down the lane? The leadership must able to answer this question with clarity of why, what and how.

8.6.9.3.2.The difference in performance between the best and the rest has to be significant, say like 100:25 or 50:25 and not 20:19. Never 25:24!

8.6.9.3.3. If it is number of publications, it should be 20 for the best, if the average is 10. If it is the number of citations, it should be 5 for the best if the average is 2.5 in the lot. If it is identifying the best PhD guides, number of students successfully completed PhD under the guide should be 10 if the average is 2.5.If it is number of patents filed, it should be 4 for the best engineers, when the average is 1.25. If the technology transfer earnings are considered, it should be 5 lakhs if the average is 1.25 lakhs. If it is production, the best should have delivered 1000 units, if the average has been 250 units. In short the best stands out among the crowd! I think, thats why we call them OUTSTANDING!
 
8.6.9.3.4. The parameters and peer review is critical here. This process should be difficult for the best to score more than 70%. Then only we can identify the outstanding. And can never identify the best, when everyone scores more 99%. The education sector is an example of inability to identify the outstanding students.

8.6.9.3.5. The ineligible ones that are the ones scoring less than 6/10 on absolute scale in the peer review and belonging to bottom 10% in the lot of peer review, stagnate for four years and reviewed again after four years.

8.6.9.4. To maintain pyramid hierarchy, annual recruitment at three levels in the ratio of 1:2:4 is recommended. If annual intake engineers, assistants and tradesmen are 40:80:160 the steady state employee strength will be around 11200 and the employee distribution in percentage will be as follows.

Pyramid levels	Percentage employees	Employees	Remarks
P8	35	3920	Expect to go up with contract employees
P7	39	4334
P6	15	1684
P5	4	444
P4	3.5	392
P3	3.5	397	Expect to go down due to VRS
P2	0.22	25
P1	0.01	1
Total	100	11200	Annual intake of 280 employees, 40 years career

8.6.9.5. This is possible if we have nine sub levels for the above said three levels. These sub levels are overlapping. If one joins at a lowest sub level SL8 the average person will take 40 years to reach SL0. By that time average person would have retired. Hence the sub levels slowly take the shape of pyramid at higher levels. In addition to the retirement tapering the top, one more condition is added. The promotion to top two sub levels SL1 and SL0 is single attempt. Hence only top 10% make it. This will lead to a large number stagnating at SL3 level. At this stage the expected age is 50 - 55 and a few may take VRS, leading some reduction in numbers.

8.6.9.6. Following the estimated employee statistics at each pay scale level for an annual intake of 40 engineers, 80 assistants and 160 technicians.

H16	H15	H14	H13	H12		H11	H10	H9		H8		H7		H6		H5			H4		H3			H2			H1
								196		196		196		196		196			196		397			25			1
Average age for PG specialised entry at 40000									23		28		33		38		43			48		53			58			63
		392	392	392		392	392	392		795		50		2
		20	25	30		35	40	45		50		55		60		Average age for Graduates entry at 15000
784	784	784	784	784		784	1590	101		4
18	23	28	33	38		43	48	53		58		Average age for 12th pass/ITI entry at 10000
784	784	1176	1176	1176		1176	1982	689		995		246		198		196			196		397			25			1
P8 = 3920					P7=4334				P6=1684				P5=444					P4=392					P3			P2			P1

9. Planning and budgeting: Complete plan available to the team. Debate and brainstorm on the plans and when final plan ready then only release the money. This will curb futile expenses. Then reward the reuse of existing resources. Right people at the right places not yes boss culture. People are accountable at the same time they have the freedom to take decisions. No undue interference. The jobs with clear definition of duties and responsibilities can be outsourced and should be outsourced. That is where planning is crucial. Have proper plan ready and outsource the frozen and final requirements.

Not planning to succeed is planning to fail

10) Proper pyramid hierarchy: Motivations and Needs

The pyramid shown above is as per Maslow’s hierarchy of needs (A Theory of Human Motivation A. H. Maslow (1943) Originally Published in Psychological Review, 50, 370-396).

Hierarchy levels	Needs of human nature
Hierarchy Level 0	Self actualization=self fulfillment
Hierarchy Level 1	Self esteem and reputation of the individual
Hierarchy Level 2	Sense of belonging: work group team and family
Hierarchy Level 3	Safety needs and the sense of security and stability
Hierarchy Level 4	Basic human needs of food cloth and shelter

Any officer joining the government organisation, with publication of appointment in the gazette, after the probation period, directly goes to Hierarchy Level 2 overriding the Hierarchy Levels 3 and 4.Thus it is always recommended to have a few years of contract service, and if required extending the contract, before clearing the probation and offering a permanent post in the organization. Also it is equally important to weed out the consistent long term (>10 years) non-performers from the organisation, even after the standard procedures of relocation, training and counseling.

11) Recommended type of Recruitment

11.1) Graduate level: The results of All India based written examination like GATE score used to shortlist the top 25% of the applied for interview and only 50% asked to join as trainee. The trainees choose the project and project coordinators of their choice after all the project co-coordinators make a presentation. The number of projects presented should always be 120% greater than the trainees shortlisted. The contract of 25 % basic + 75% perks with hostel stay. The contract payment comes from project associated. 2-4 years project work as on the job trainee on contract basis with high performance related incentives on par with the best in the industry. Only top 20% these consistent performers awarded MTech/MSc and absorbed in the organization. For the rest 70% contract renewed for two years and reviewed. Bottom 10% in the review asked to leave with reasonable notice period and compensation. The absorbed candidates will be posted as level H9.

11.2) Post Graduate level M.Tech and M.Sc: The results of All India based written examination like NET score used to shortlist the top 25% of the applied for interview and only 50% asked to join as trainee. The trainees choose the project and project coordinators of their choice after all the project co-coordinators make a presentation. The number of projects presented should always be 120% greater than the trainees shortlisted. The contract of 40 % basic + 60% perks with hostel stay. The contract payment comes from project associated. 4-6 years project work as on the job trainee on contract basis with high performance related incentives on par with the best in the industry. Only top 20% these consistent performers awarded PhD and absorbed in the organization. For the rest 70% contract renewed for two years and reviewed. Bottom 10% in the review asked to leave with reasonable notice period and compensation. The absorbed candidates will be posted as level H8.

11.3) Post doctoral fellows: PhDs from good institutes + the journal publication impact factor + citations based rank list. The fellows choose the project and project coordinators of their choice after all the project co-coordinators make a presentation. The projects presented should always be 120% greater than the fellows shortlisted. The contract of 50 % basic + 50% perks with hostel stay. The contract payment comes from project associated. 4-6 years project work as Post doctoral fellows on contract basis with high performance related incentives on par with the best in the industry. Only top 20% these consistent performers absorbed in the organization. For the rest 70% contract renewed for two years and reviewed. Bottom 10% in the review, asked to leave with golden handshake. The absorbed candidates will be posted as level H7.

11.4) Lateral recruitment at higher levels: A very rare case recruitment to higher levels based on previous years of experience, relevant area of expertise and merit. Generally a project based contract with an industry standard package is proposed for recruitment at a very senior level of management. The appointment of experienced persons with a specific area of expertise for specific projects should be encouraged as it has a scope to encourage new ideas and innovation.

11.5) Strategic project managers: It always recommended to appointing a senior defense personal to be the in-charge of the project. A senior technical personal can be interviewed from a list of eligible candidates and selected as part of project planning team. Once the project plan is finalized the person can be made responsible to manage the project.

11.6) The recruitment at technician level is to be done on a large scale with contract appointment of 10 times the annual average vacancy requirement with an equal number in the waiting list. Every one year 10% best technicians clear probation and 10% more appointed in contract from the waiting list. Also a 50% reservation for locals is recommended at this level.
11.7) Encouraging team-spirit in the work culture:  The 50% of the performance based pay will be dependent on the average performance of the team or group. This will encourage brain storming and sharing of knowledge pool.