Terms of Reference of the 6th Pay Commission mandated it to devise ways for transforming the Central Government organizations into professional and citizen friendly entities dedicated to the service of the people. The Terms of Reference also made it incumbent on the Commission to work out a pay package for Central Government employees that was linked to promoting efficiency, productivity and economy. The Commission also had to look into the financial parameters and conditions that would govern the payment of bonus. Keeping in view the aforesaid Terms of Reference, the Commission had to devise compensation package which improves the efficiency and delivery mechanism in the Government and which rewards performance. This, in the view of the Commission, could be achieved by incorporating an incentive, over and above the normal salary, in the revised structure being recommended. This was all the more important because the thrust of the Report is to move to a system that increasingly recognizes performance and gives motivation in the form of monetary incentives, merit increments, etc. Giving monetary incentive over and above the normal salary will also ensure that the emoluments available in the Government become somewhat comparable to those available for similarly placed personnel in other sectors.

What is Performance?

Before elaborating further on the concept of incentive based on performance, need exists to define performance. Performance for the Government is usually not measured in terms of profit, but in terms of achieving societal goals and desired outcomes, for example, reduction of crime, enhancing the quality of life, reducing infant mortality etc. Performance is effective service delivery and responsiveness to stakeholders. In the Governmental context, performance can be defined as the ability of the Government to acquire resources and to put these resources to their most efficient use (input-output relationship) and to achieve the desired outputs and outcome goals (output-outcome relationship). It is the shift from inputs-process emphasis (efficiency) to results, social goals and outcomes (effectiveness). Performance can, in the final analysis, only be viewed in terms of the final deliverables to the user/stakeholder.

Definition of performance related pay (PRP)

Payment of incentives based on performance is not a new concept. The earlier two Pay Commissions i.e. Fourth and Fifth Pay Commissions had also commented on the issue of rewarding performance. The Fourth CPC had recommended variable increments for rewarding better performances. The Fifth Central Pay Commission had recommended the scheme of performance related increments for all Central Government employees where an extra increment was to be paid to the exceptionally meritorious performers with the under-performers being denied even the regular/normal increment.

Performance Related Incentive Schemes (PRIS) – Successful implementation in the CPSEs

The Central Public Sector Enterprises (CPSEs) have successfully implemented Performance Linked Incentive Schemes where performance related payment, not exceeding 5% of the distributable profit, is normally paid.

Change of culture through PRIS

In in In India IIM observed there is a natural increases in salary are very much guaranteed to Government employees. This leads to a situation where employees do not exert themselves for a higher level of on-the-job performance and achievements, thus find your bonuses at www.casinobonuses.io depriving the Government of potential productivity gains and service delivery enhancements, both in terms of quantum and quality. There is no external motivation for risk-taking and delivering a higher level of performance, because though the risk-taking is punished if things go wrong, it is not financially rewarded if things improve because of employees’ initiative and risk-taking. Over the years, this has led to the development of a culture where employees have become risk averse.”

The lower risk taking ability of public servants where emphasis is only on routine observance of procedures without any reference to the end result or outcome can be changed only through changes in work culture that rewards performers. This will involve changes in the extant accountability structures and linkage to outcomes and deliverables. PRI is being recommended to act as a lever to herald this new work culture.

PRIS a variable pecuniary benefit over and above the regular pay taking into account the performance of the employee during the period under consideration. It is based on the principle of differential reward for differential performance. This incentive will be payable out of the savings made due to better performance of employee(s) during the period in consideration. To ensure that employees do not lose any of their regular salary as revised by this Commission in case they are found ineligible for this incentive; the Commission proposes to pay this incentive over and above the regular pay of the employee. In this sense, the incentive being recommended in this Report is different from Performance Related Pay (PRP) in other countries as, unlike in PRP; it is a benefit over and above the regular pay of the employee.

Funding for PRIS a budget neutral framework

The essence of PRIS is that it will improve efficiency and end delivery without placing any additional financial burden through more efficient use of the available resources. Expenditure currently incurred in terms of current expenditure on ad-hoc bonus and honorarium payments will, in any case, be available to ministries/ departments. Additional finances for implementing PRIS would, therefore, have to be generated internally through cost and efficiency improvements and productivity/output increases resulting from improved work processes and extensive use of information and communication technologies. Ideally the funding for PRI should flow from savings and deployment within the budget with focus on greater organizational effectiveness and improved functioning and efficiency in working without confining it to downsizing and manpower reduction.

No uniform model for PRIS

Every organisation will, therefore, have to devise its own PRIS based on the organizational structure, levels and processes being used. The form of PRI should, accordingly, be organization and design specific and payable as a cash incentive either when it becomes due, or on a monthly/quarterly/annual basis. The adoption of PRIS is voluntary. In the event of ministries/departments deciding not to adopt the PRIS, the employees will continue to receive normal salary and compensation and will not be covered under PRIS. PRIS cannot work unless field functionaries are given

Change in accountability framework adequate freedom and autonomy to perform. Performance has to go hand-in-hand with delegation of powers. Accountability should be seen as the ability of the system to deliver results and services effectively and in a responsive manner of the appropriate quality and at the right time.

Changes required in organizational functioning

PR/S should be used as a tool for ushering in reforms rather than waiting for reforms before taking up PRIS. Following broad changes in organizational functioning are essential for effective implementation of PRIS:-

  1. Increasing employee participation through strengthening of delegation and accountability at each level of decision making to improve delivery of services to stakeholders. Delegation with accountability will also result in delaying and streamlining the hierarchy of functioning leading to latter organizations with “turning the pyramid upside down”.
  2. Complete thrust on ultimate deliverables and outcomes.
  3. Enabling work environment with adequate infrastructure facilities and proper physical working conditions.
  4. Institutionalization of stakeholder participation to ensure effectiveness and responsiveness in service delivery.
  5. Introduction of flexible and holistic job design with high performance work practices (HPWP), multi-skilled work and greater employee engagement in the decision making process-
  6. Use of ICT for transformation in work processes and public service delivery integration with minimal public interface for reduction in delay and corruption and up scaling of sectorial best practices through PRIS.
  7. Change in performance management system incorporating open and transparent assessment and linking of performance measurement indicators to deliverables in performance appraisal systems.
  8. Shift in accountability framework from emphasis on process compliance and input control to effective and responsive delivery of results and services. All these measures leveraged through PRIS will help improve service delivery of the various organisations in Government.


  • Performance Related Incentive SchemeEnhanced productivity/performance
  • Improved work processes
  • Improved deliver to the citizen send user
  • Emphasis on end result
  • Strengthening the team spirit
  • Better talent accountability


The end objective of introducing PRIS in Government is not just limited to improving employee motivation; obtaining higher productivity or output and delivering quality public service; but seeks larger goals of effectiveness and systematic change for responsive governance. PRIS is necessary in the present scenario where the focus of public administration has changed from the command and control, strongly hierarchical structures and processes necessary at the initial stages of freedom with nation building and industrialization as central tasks. This change is linked to the shift in the nature of governmental tasks with facilitation and effective and responsive service delivery becoming the new focus of public administration. This necessarily requires flexibility in functioning, delegation of decision making, and change in the concept of accountability. PRIS is envisaged as a tool which will facilitate this transformation. PRIS provides an opportunity to shift from the classical command and control administrative approach with vertical and horizontal differentiation to more holistic, flexible, empowering and consultative styles of working leading to greater job satisfaction and productivity. This flexible model will enable better responsiveness and performance for service delivery. It is structured around better use of human potential, thus improving the quality of work and stakeholder satisfaction. The structure of PRIS allows flexibility with freedom to innovate and bring about public service delivery oriented changes in work processes utilizing ICT; up-scaling of best practices; with greater delegation and introduction of High Performance Work Practices (HPWP) in a budget neutral framework. PRIS is also an important tool to inculcate pride in public service for employees with reinforcements of their contribution and potential and creation of a sense of ownership. Introduction of PRIS as an incentive system should, therefore, lead to improvement in effectiveness and responsive service delivery to the stakeholders without any losers.

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