18 January 2007 | Jennifer Taylor
Local authorities have until the end of March to complete a job evaluation process. Jennifer Taylor examines the likely effect on buyers
News that salaries for procurement officers at Staffordshire County Council may be slashed as a result of the job evaluation process has led to fears of cuts to buyers' pay at other local authorities.
At Staffordshire, it could lead to a pay cut of up to £4,500 per procurement officer and £6,000 for those in senior roles (News, 30 November).
But it isn't just buyers. Job evaluation is taking place in local government across the UK, with councils facing a requirement under the 2004 Pay Agreement to have completed and implemented a pay review by ?31 March. To date, only a third of local authorities have met that target. And local government is not being singled out. ?All public and private sector organisations are affected by job evaluation to some degree. Research by Michael Armstrong, managing partner of E-Reward, an online guide to reward management, shows that 68 per cent of public and voluntary sector organisations have a scheme, compared with 39 per cent of private sector companies. But the public sector puts great emphasis on job evaluation because it is heavily unionised.
"The unions are very hot on job evaluation," says Armstrong. "And they are more likely to take action on equal pay claims than private sector organisations, where unions are relatively weak or non-existent."
Phil White, head of negotiations at Local Government Employers, which advises local authorities on pay, pensions and employment strategy, explains further: "Every employer in the country is bound by the Equal Pay Act. The only realistic way of demonstrating that you've got a pay structure that complies with it is to justify where people are positioned in that pay system through job evaluation."
Effect on salaries In any job evaluation, to prevent a large pay bill, there will be winners and losers. It is usually blue-collar workers, such as refuse collectors and gardeners, whose pay has previously been supported by bonuses, who lose out.
This situation is less likely for office workers and the prevailing feeling among procurement experts is that Staffordshire is an isolated case. Most procurement officers will not be disadvantaged, and in fact will see their pay rise over the long term as the role moves from being operational to more strategic, requiring a greater range of skills. ?However, observers are loath to estimate the percentage by which salaries might increase, particularly with so few job evaluations complete.
Bryan Duggan, head of recruitment at PMMS Consulting Group, says the current average salary for procurement officers is about £28,500. ?The typical London wage is £32,000. His research showed that salaries for this post range from £17,000 to £40,000, depending on location and level of responsibility.
David Pointon, chairman of the Society of Procurement Officers in Local Government, says a fall in salary is unlikely. "There is an expanding role for heavyweight purchasers in local authorities," he says. "Since the National Procurement Strategy for Local Government started, there's an awareness that the procurement role should be strategic."
Within that role, there is a need for procurement professionals with detailed and extensive knowledge of major procurement, to work on high value PFI and PPP projects. "Those things don't sit comfortably with cutting the salaries of procurement practitioners," Pointon says. "But, frankly, if local authority purchasers aren't demonstrating that they can give a significant added value to the procurement process they're vulnerable."
Skills gap While people may be prepared to start on a low salary in local government, the challenge to employers is to retain them when they become skilled professionals and can earn more in the private sector or as consultants. This is creating a skills gap.
Pointon says: "In Portsmouth, when we advertise for senior professionals, both the number and the quality of applicants is disappointing because we're not paying enough to attract the right people into the business."
Roy Ayliffe, CIPS director of professional practice, agrees that increased demand for skilled procurement professionals should, in turn, increase salaries. "Whenever you get a higher demand for something, the price ?goes up," he says. "In this case the price equals pay."
He adds that the job evaluation carried out by local authorities should identify this: "If it is being done well, it should result in an increase [in pay], not a decrease, because those are the market forces in play now."
But what if the job evaluation fails to pick this up? In the private sector, Duggan says, heads of procurement sometimes opt out of the job evaluation scheme if it results in bad pay. "If HR have a whip hand, they use a Hay scale and come up with some ridiculous level for purchasing people. Client after client has to break that to recruit good quality people."
He argues that market forces should dictate what organisations pay, but says HR don't take that into account. "If job evaluation is done by the head of procurement, it's probably done realistically," he adds.
Moving away from job evaluation Is it possible to "break out of job evaluation" in local government, with its strong union presence? This might be the result at Bournemouth Borough Council, where Gary Moore is strategic procurement manager. The council has completed a job evaluation process but the effect on pay is not yet known.
Moore has already asked the council about the possibility of making pay adjustments as the procurement role becomes more strategic: "If we're proving successful I want to reflect that in the salaries here. That's me setting my stall out."
He discussed the idea with HR, who said there are things that could be done.
"If it's too rigid in terms of grading, I believe it's not a problem [to offer] one-off cash bonuses for good performance, such as hitting targets," Moore says. "So there are ways round this."
Moore knows that the demand for procurement professionals is high because he has investigated the interim market to fill some gaps at Bournemouth.
"Anybody half-decent costs more than £500 a day," he says. "The private sector is able to offer better packages, which means that it's a difficult market for us to compete in. You have to rely on other factors to attract staff such as helping the community - the softer aspects of doing the job."
E-Reward's Armstrong says bonuses could work: "You could pay a bonus to procurement officers but it would have to be demonstrated that this was earned by performance and that the performance element of pay is available equally to men and to women."
One local authority content with its job evaluation process is Cambridge County Council.
Ian Stewart, strategic procurement manager (contract review & advice), says: "We have quite a robust process in Cambridgeshire for all job evaluation. It's based on the quality of the job description and responsibilities, not necessarily on the ability to pay."
Stewart says the council had a major reorganisation three years ago, when the then new chief executive arrived. There was a total restructure and posts were re-evaluated. "There was a slightly upward shift when they reviewed[procurement roles] because we're more of a strategic procurement unit, we're not buyers as such," he says.
But he admits that many procurement colleagues in local government do not share his situation. "In some authorities it's been a fight to gain recognition for the impact that we can have and the professional status and standing we deserve."
HISTORY OF JOB EVALUATION
How the process has changed
- The idea was first mooted in the 19th century, when an efficiency engineer said it was possible to measure the value of work.
- Company WD Scott invented a formal system of job evaluation in 1910 and other schemes were introduced over the next 60 or so years, including the Hay pay and grading system which is still used today.
- "Job evaluation began to burgeon as a means of demonstrating relative value," says Michael Armstrong, managing partner of E-Reward.
- A backlash against job evaluation occurred in the 1980s and 90s, when it was criticised as bureaucratic, time-consuming, paper-intensive, and unscientific.
- The process has all but died out in the US where market pricing, when a job is priced according to its value on the marketplace, is prevalent.
- However, it remains very much alive in the UK, particularly in the public sector, in large part because of the 1970 Equal Pay Act.
- Various schemes are used in the public sector. Agenda for Change incorporates it in the NHS, while the civil service uses Job Evaluation and Grading Support.
Jennifer Taylor is a freelance journalist