Frequently Asked Questions on the Performance Management Program Results for Executives

Questions

1. What is the Performance Management Program for Executives??
2. What are the requirements of the Performance Management Program for Executives?
3. What are individual commitments?
4. What is the government-wide corporate commitment?
5. How is performance assessed?
6. What is performance pay?
7. What comprises executive remuneration?
8. Who is eligible to receive performance pay?
9. Are there executives who do not receive performance pay?
10. What is the maximum amount of performance pay that an executive can earn?
11. Do organizations have a limit on the amount they can spend on performance pay?
12. When does performance pay get paid to executives?
13. What is Treasury Board Secretariat's role with respect to the Performance Management Program for Executives?

Answers

1. What is the Performance Management Program for Executives??

The Performance Management Program for Executives is designed to encourage excellent performance by setting clear objectives and evaluating the achievement of results; recognize and reward performance; and provide a framework within which a consistent approach to performance management can be applied.

2. What are the requirements of the Performance Management Program for Executives?

The Performance Management Program for Executives requires that all executives in the core public administration develop performance agreements with their immediate manager at the beginning of each cycle. Performance agreements describe the commitments and measures against which performance will be assessed at the end of the performance cycle. The establishment of robust and meaningful commitments and performance measures is a cornerstone of the performance management process. Commitments support both individual and corporate objectives and require ongoing demonstration of the Key Leadership Competencies.

3. What are individual commitments?

Individual commitments are directly linked to government and departmental priorities, and are the principal results that executives are expected to achieve given the individual executive's level and scope of responsibility.

4. What is the government-wide corporate commitment?

Upon recommendation from the Advisory Committee on Senior Level Retention and Compensation, a government-wide corporate commitment was introduced in July 2011. The aim of the corporate commitment is to encourage public service-wide outcomes in support of the Government's priorities.

The 2013-2014 corporate commitment that must be included in all executives' performance agreements reads as follows:

This commitment is designed to foster continued focus on cost containment, and to reflect the role of senior public servants in promoting a workplace committed to stewardship, managing excellence and improving productivity in the service of Canadians. Having employees work towards achieving a corporate (enterprise-wide) goal is a best practice in the private sector.

5. How is performance assessed?

Executive performance is assessed using a five-point rating scale that clearly measures the extent to which commitments have been met ranging from unsatisfactory to exceptional.

At the end of the performance management cycle, executives and their managers engage in a performance feedback discussion about the executive's achievement of individual commitments and contribution towards the corporate commitment, as well as how the executive achieved these results (i.e. demonstration of the Key Leadership Competencies). The manager then proposes two performance ratings for consideration by the Departmental Review Committee and ultimately the deputy head, as follows:

• A rating reflective of results achieved against the executive's individual commitments; and,
• A rating reflective of the executive's contribution towards the achievement of the government-wide corporate commitment.

The deputy head, supported by a departmental review committee, finalizes and communicates performance ratings to executives.

6. What is performance pay?

In recognition of the specific nature and scope of their work, executives are compensated differently than other employees in the core public administration. Executive pay in the core public administration is divided into two components: a base salary and performance pay.

Performance pay is a best practice in the private sector, and is used as a mechanism to motivate employees. For executives in the core public administration, performance pay can include both “at-risk” pay and a bonus.

“At-risk” pay is calculated as a portion of base pay that must be re-earned each year based on the level of achievement against corporate and individual commitments, as well as on the demonstration of the Key Leadership Competencies. Since 2011-2012, at-risk pay has been divided into two components:

• individual at-risk pay, which is linked to achievement against individual commitments; and,
• corporate at-risk pay, which is linked to achievement against the government-wide corporate commitment.

Thirty-three percent of at-risk pay is linked to achievement against the corporate commitment and 67 percent of at-risk pay is linked to achievement against individual commitments.

In addition to “at-risk” pay, executives who have achieved truly exceptional results against their individual commitments may receive a bonus.

7. What comprises executive remuneration?

Executive remuneration includes:

• base pay
• *economic increase
• *in-range salary movements
• **at-risk pay
• **bonus

*These amounts become part of base pay for future year calculations of pay.

**These amounts do not become part of base pay for future year calculations of pay.

8. Who is eligible to receive performance pay?

Executives at the EX-01 to EX-05 levels and employees occupying a position in the EX Group for at least three months during the fiscal year are eligible for performance pay.

9. Are there executives who do not receive performance pay?

Yes. Executives do not receive performance pay when their performance does not meet expectations or when their performance cannot be assessed due to insufficient opportunity to demonstrate progress against commitments.

10. What is the maximum amount of performance pay that an executive can earn?

Performance pay is calculated as a portion of base pay, and cannot exceed the limits established by Treasury Board Secretariat.

Executives at the EX-01 to EX-03 levels are eligible to receive up to 12 percent of their base pay as at-risk pay and up to 3 percent as bonus. In recognition of their unique role and responsibilities, executives at the EX-04 and EX-05 levels are eligible to receive up to 20 percent of their base pay as at-risk pay and up to 6 percent as bonus.

11. Do organizations have a limit on the amount they can spend on performance pay?

Performance pay spending limits are established by the Treasury Board Secretariat and may not be exceeded. Departmental spending limits are calculated as a percentage of the executive payroll on March 31 each year. Spending limits provide flexibility to deputy heads to reward good performance, while controlling the amount spent on performance pay.

12. When does performance pay get paid to executives?

The performance management program cycle is aligned with fiscal years and ends on March 31. Performance pay is typically provided before the fall of each fiscal year. The annual results for the Performance management program for Executives are posted on the Treasury Board Secretariat website each year.

13. What is Treasury Board Secretariat's role with respect to the Performance Management Program for Executives?

Treasury Board Secretariat reports performance pay data annually for executives in the core public administration. The “core public administration” consists of almost 80 departments and agencies for which the Treasury Board is the employer.

Performance pay for other non-represented or excluded senior personnel is managed by departments themselves and is not subject to reporting by the Treasury Board Secretariat.

Public service organizations that are outside of the core public administration (such as the Canada Revenue Agency, Canadian Food Inspection Agency and Crown corporations) are responsible for their own compensation policies.