Anonymous

Overlapping APS pay scales proposal

Proposal

This proposal asserts that the existing linear APS classification system no longer represents the

best way to optimise employee performance and skills alignment, but could be modernised through

three complementary measures:

1. Establish overlapping APS, EL and SES pay scales similar to how functional, management and
   executive pay scales overlap in the private sector
2. Decrease, soften or remove rigid classifications within APS, EL and SES bands to eliminate
   perverse hierarchies based on tenure length, not capability
3. Introduce functional groupings linked to major qualification types such as Administrative, Cyber
   Security or Legal, with distinct pay scales linked to market prices.

Objective

A public service-wide policy of overlapping pay scales, removal of redundant work level standard

classifications, and market-based remuneration will:

1. Improve alignment of leadership and management acumen with managerial positions. That is:
   better managers, leading better teams
2. Improve the ability to attract scarce skills under flexible and non-permanent arrangements,
   thereby providing an alternative to ‘contractor creep’
3. Improve overall employee engagement - eliminating the pay-progression-seniority model will
   prevent ‘promotion for convenience’s sake’ where a merit rationale does not exist.

Rationale

Although staff are meant to only progress through APS classifications once they demonstrate

sufficient capability, current practice results in many officers reaching managerial roles by virtue of

having served long enough, without necessarily having demonstrated sufficient merit.

An overlapping pay structure allows certain employees to advance their careers in terms of

responsibility and accountability, and others in terms of technical skills and specialization, but

without forcing staff with poor aptitude for personnel management to assume such responsibilities.
In other words, only officers suitable for progression to managerial roles are incentivized to do so.

Many professional services, consulting and financial firms avoid creating perverse hierarchies

by forgoing complex and onerous top-down classification structures. Employees are employed in

positions named for their functional roles, not their alignment with a one-size-fits-all work level

classification structure. Outside of government, it is not uncommon to find high-performing teams

composed of employees with a wide range of ages and experience, working cooperatively with no

established hierarchy beyond their team manager. Individual employees are encouraged to work to

the extent of their capabilities, not the extent of their position description.

Conversely in the APS, teams typically involve multiple written and unwritten hierarchies due to the

APS classification system, which often correlates poorly with employee performance and

capabilities. This can impair team cohesion, collegiality and trust, and leads to span of control

inefficiencies. Less senior high-performing officers can at times find roles which align their

responsibilities and capability, however this is the exception rather than the norm.

Looking at APS banding differently

Large professional services firms such as engineering, legal, accountancy and advisory firms

typically offer a broad range of services, often across diverse geographical locations. Their

functional breadth and desire to attract highly talented staff is not dissimilar to federal government
Overlapping APS pay scales proposal

departments. Both organisation types engage with stakeholders at every level, and employees can

hold significant criminal and civil liabilities for services offered, or their discharge of authority.

Outside of government in analogous firms, three distinct staffing levels are often evident. The first

layer (A) includes office clerks, office managers, HR managers, graduates, engineers, lawyers,
accountants, and so on. This is the engine room of the organisation. Typically, these staff have

limited liabilities, high job mobility, and good job security. Some staff such as highly specialized

engineers, lawyers or IT specialists, can command high salaries due to their niche skillsets.

The second layer (B) exists to direct and optimise team output. Staff at this level must display

leadership aptitude and performance. While some roles require specific technical specialization,
this is generally so that managers can assure the work of teams, and sell highly technical concepts

in simple terms. These staff are typically better remunerated than the first layer, but there is

considerable overlap based on skills and market prices (e.g. a contract services manager with

managerial responsibilities may receive less remuneration than a forensic accountant with no

managerial responsibilities).

The third layer (C) is the narrowest, and is where staff hold significant financial, legal and

managerial accountabilities. In this layer it is still possible, for example, for employees with

relatively lower-risk corporate enabling accountabilities to receive lower remuneration than, for

example, a highly specialised employee in the layer A or B, although this is rare.

The below table outlines these layers, and how they correspond to similar public sector job types:

COMMON JOB TITLES TENURE RESPONSIBILITIES / EQUIVALENT JOB TITLES

(private sector) characteristics accountabilities (public sector)

A Analyst / engineer / Higher tenure Wide range of Payroll manager, policy
office clerk / office certainty, but not responsibilities, with officer, program manager,
manager / absolute. Certain accountabilities varying by legal specialist,
receptionist / skills categories role. Pay progression receptionist, cleaner,
draftsperson / legal attract more stringent involves greater security guard, Cyber
assistant / lawyer performance responsibility, but not Security specialist, etc.
etc. standards. necessarily accountability. Typically APS staff

B Manager / Associate Decreasing tenure Responsible and Director, Assistant
/ Director / HR certainty. Clear accountable for personnel Director, Team Leader,
manager / Vice performance and team management. Unit Head etc.
President etc. expectations. Increasing level of legislated Typically EL staff
accountabilities / liabilities.

C President / Deputy Tenure linked to Clear accountabilities in Secretary, Deputy
President / Exec regular performance relevant legislation e.g. ASX Secretary, First Assistant
Director / CEO / benchmarks and and other personal Secretary, Assistant
COO / Group legislative liabilities. Ultimately Secretary, CIO, COO,
Head / Partner / requirements responsible for financial and CEO, etc.
Chairperson etc. organisational performance. Typically SES staff

The fundamental distinction is that while the left column is characterised by multiple overlapping

career pathways and market-derived salary scales, the right column is characterised by a single

non-overlapping career progression pathway, with arbitrarily derived, monotonic salary scales. The

result is (chiefly across levels A and B) low APS correlation between remuneration, capability and

responsibility, particularly between functional occupational groups, and across APS departments.

It is now the right time to reset our linear, monotonic and departmentally inconsistent APS career

pathways and pay scales. Doing so will be more respectful to all employees, achieve greater fiscal

efficiency for taxpayers and will drive improved public sector performance and responsiveness.
Overlapping APS pay scales proposal

A process for reform

Several steps are suggested below to manage the transition process:

1. Two to three years from reclassification, undertake independent research to establish pay
   scales for different skillsets
   • Pay scales for functional skills groups would not need to precisely align with market
     conditions, but would need to result in current pay rates converging to some extent with
     market rates
   • For example, corporate administration pay scales would need to decrease to align with
     market rates, but perhaps not entirely so as to retain an incentive for loyalty and broader
     policy knowledge
   • In contrast, specialist legal pay levels would not need to increase to exactly match market
     rates given intrinsic / reputational incentives and attractive APS workplace conditions
2. Broadcast intent to re-classify positions, and dates of major milestones at a suitably early stage
3. Eighteen months from reclassification, start ramping up external recruitment based on the
   new pay scales and classification system
4. Set an ambitious, non-negotiable span of control target for all departments, and reinforce
   measures to hold all employees accountable for underperformance where it occurs. Ensure
   360 degree reviewing is universally established as a standard business practice for all
   departments, for all employees with managerial responsibilities
5. Six months from reclassification, provide all employees with the option to continue under the
   new pay scale and classification system, or accept a severance package
6. Provide options for employees looking for advancement, either technical or managerial, to
   apply for managerial or technical specialist rounds - e.g.:
   • A 45 year old EL officer with a postgraduate law qualifications seeking less staff management
     and specialization in privacy law could apply for a specialist APS position with equivalent
     remuneration
   • A 35 year old APS officer with a MBA, 10 years relevant non-government experience, and the
     right aptitude, skills and drive to manage a substantial team, could apply for an EL or SES
     managerial position with equivalent, or marginally higher remuneration.
7. At reclassification, enact the new classification system and through a well-sequenced APS-
   wide process, standardise remuneration for functional skills groups across all departments