Irish Water is rarely out of the news these days, but the ongoing contentious issue of performance-related pay (PRP) awards for the company’s employees has been the subject of intermittent coverage only compared to the glare of recent publicity for the numbers of paying customers and Eurostat’s adjudication that it remains on the government’s balance sheet.
The issue has been the subject of protracted talks at the Labour Relations Commission (LRC) and threatens to trigger industrial action by the members of four different unions in Irish Water if it’s not resolved to their satisfaction.
It would be, and has been easy for commentators to write this off as just another example of pampered semi-state workers wallowing in a “bonus culture” that is outdated generally and grossly inappropriate given the controversies surrounding their employer.
But it’s a bit more complex than that: because a true PRP does not equate to a bonus in the traditional sense, but represents a core element of overall remuneration that may be at risk in certain scenarios, and, in this case, PRPs replace guaranteed increments or annual pay rises to which the employees in question were entitled.
The whole point of PRPs, if managed and implemented appropriately, is that they are only paid if employees achieve pre-agreed performance targets and are calibrated to reflect the degree to which that performance has been delivered.
Irish Water’s parent company, Ervia, has incorporated PRPs in the remuneration structure of employees of its other utility subsidiary, Gas Networks Ireland, for many years and with little controversy.
No surprise then, that Ervia introduced it for Irish Water employees as well as they either transferred from local authorities or joined the company from scratch over the past two years.
Now it looks as though the principal reason PRPs are being resisted in Irish Water, and not in the gas company, is the level of controversy attaching to the company and its management generally, a controversy that might be inflamed if perceived “easy” bonuses were paid.
This attitude reflects a wider paranoia about, and misunderstanding of the nature of PRPs by the government as sole or majority shareholder in all commercial semi-state companies.
More specifically, it also probably reflects the mistrust of civil servants in overseeing government departments about the type of remuneration the employees of commercial semi-state companies might enjoy.
Either PRPs represent a widely-accepted private sector management process by which employees are incentivised to deliver agreed targets for an enterprise, its customers and owners - and lose out if targets are not delivered - or they are not.
If the government as shareholder is concerned about how this process might be perceived by an angry populace, it either does not understand the process itself; has failed to communicate the benefits of the process sufficiently, or more likely, does not trust management to implement the process effectively.
The solution? Go back to the infinitely inferior process of paying guaranteed yearly increases, regardless of performance, and simply because employees have survived another year in the company; replace the management with a team that will implement the process effectively; pay the PRPs and explain the benefits of the system; or leave it to the LRC and hope for another fudge...
