Performance Based Bonus – Philippines Government
Before 2012, the Philippines Government rewarded employees from the board uniformily, regardless of their performance. In time, this approach proved to be limited in terms of motivating employees and stimulating progress. Therefore, an initiative to promote a performance and result oriented culture was implemented – The Performance Based Incetitives System (PBIS).
Based on it, employees may receive two incentives: the Productivity Enhancement Incentive (PEI) – the financial bonus mentioned above, and the Performance Based Bonus (PBB) given on individual performance and contribution to the achievement of the employee’s department targets. However, this new bonus doesn’t affect other existing benefits, such as a mid-year and year-end bonuses, the Cash Gift or the Collective Negotiation Agreement (CNA) bonus.
How does it work?
For a Government Agency to receive access to the PBB it must meet several criteria. The bureaus or delivery units will be ranked according to their performance and categorized under the following clusters: Best Bureaus, Better Bureaus, Good Bureaus and Poor Bureaus (bureaus that failed to accomplish 90% of their targets). Employees are eligible for the bonus only if their department is among the first three categories and if their individual performance was not ranked as Below Satisfactory. The value of the bonus each employee receives is calculated taken into consideration also the bureau’s performance, as it can be seen in the matrix below:
How performance is measured?
Performance is assessed through performance indicators (PI) defined by the Government „as a characteristic of performance i.e. quantity, quality, timeliness or cost that is to be measured and will illustrate the standard by which a Department is expected to deliver its services.”
For an Agency to be eligible for PBB, it must meet 90% of the performance indicators targets set for:
- The Major Final Outputs (MFOs)
- Support Operations Services (SOS) and General Administration Support Services (GASS)
- Priority Program targets under the five Key Result Areas (KRAs)
Three performance indicators must be selected for each MFOs to reflect quality, quantity, and timeliness. For SOS and GASS, performance indicators should only reflect quality and timeliness.
Who evaluates performance?
In the case of bureaus and delivery units, the Secretary or the Head of the Agency will make the evaluation with the help of a Performance Management Group (PMG), consisting of senior officials that directly oversee and observe performance. In the case of individual performance, the heads of the bureaus or delivery units are responsible for ranking employees within these units.
The implementation of this performance pay based system is governed by the Department of Budget and Management and the Office of the Executive Secretary. At the Agency and Department level, the responsibility belongs to the Department Secretaries or Heads of Agencies. Performance Management Groups are established for each Department or Agency to support this project.
To make it easier for government employees to understand the new performance pay system, all the details of the program are incorporated in an infographic available on the government’s website together with a long list of frequently asked question.
Best practices suggest that individual performance should not be stimulated only through financial incentives, but also through non-financial rewards. The effect of money on employee’s motivation is limited. It is recommended to have a holistic approach in rewarding employees, by including non-financial incentives like movie tickets, performance awards (diplomas, trophies), recognition during an official ceremony or even smaller attentions like “Thank you”.
- Philippines Government (2012), Performance-Based Incentitive Syste: Frequently asked questions, Official Gazette
- smartKPIs.com (2014), Performance-based bonus – Infographic