EC(1999-2000)12

For discussion
on 19 May 1999

ITEM FOR ESTABLISHMENT SUBCOMMITTEE
OF FINANCE COMMITTEE

HEAD 143 - GOVERNMENT SECRETARIAT :
CIVIL SERVICE BUREAU
Subhead 001 Salaries
    Members are invited to recommend to Finance Committee the following in the Civil Service Bureau -

  1. the retention of the following supernumerary post for a period of 18 months with effect from 1 July 1999 -

    1 Administrative Officer Staff Grade "C"
    (D2) ($116,650 - $123,850); and

  2. the creation of the following supernumerary post for a period of 12 months with effect from 1 July 1999 -

    1 Principal Executive Officer
    (D1) ($98,250 - $104,250)

PROBLEM

The Secretary for the Civil Service (SCS) needs dedicated support at the directorate level to cope with the Civil Service Reform exercise.

PROPOSAL

2. We propose to retain/create the following two supernumerary directorate posts in the Civil Service Bureau to facilitate and implement the Civil Service Reform -

  1. retention of one Administrative Officer Staff Grade "C" (AOSGC) (D2) for 18 months with effect from 1 July 1999; and

  2. creation of one Principal Executive Officer (PEO) (D1) for 12 months with effect from 1 July 1999.

JUSTIFICATION

3. It is imperative that the Civil Service reinvents and adapts itself to keep pace with the community it serves, improves itself and enhances its efficiency. A review and reform of the Civil Service management system has become a matter of priority.

A. Retention of a AOSGC Post

4. The proposed AOSGC post will be responsible for the review of the Civil Service Starting Salaries and the study and implementation of a performance-based pay system and its accompanying performance appraisal system in the Civil Service. In addition to these two tasks, the proposed AOSGC will take up the 1999 and the 2000 Civil Service Pay Adjustment exercises.

Starting Salaries Review

5. The Government has commissioned the Standing Commission on Civil Service Pay and Conditions of Service (Standing Commission) to undertake a Starting Salaries Review to establish the appropriate pay level for recruits at entry ranks. The full results will be available in mid-1999. The Review undertaken by the Standing Commission will soon be completed. The Government will need to consider how to take forward and implement the findings of the review across the Civil Service and decide whether further reviews are necessary after receipt of recommendations on this from the Standing Commission. As part of the Civil Service Reform, we have announced proposals to introduce new entry terms to replace the current permanent and pensionable appointment system for entry. One of the ideas is to employ basic rank civil servants on agreement terms. To complement such a new appointment system, a new entry pay system will have to be established. It is necessary to have a dedicated D2 officer to give policy input to the implementation of the recommendations arising from the starting salaries review and to spearhead the design of a new entry pay system.

Performance-Based Pay System

6. The existing system of annual increments in the Civil Service pay scale is not closely linked to performance. Under the existing system, the reward for good performance comes through accelerated promotion. Such a system is not in line with trends in modern human resource management. Our aim is to introduce progressively elements of performance-based reward systems into the Civil Service. The proposed AOSGC post will be responsible for the design, trial and implementation of performance-based pay systems in the Civil Service. This is a major task and will make up a considerable portion of the officer's portfolio.

7. Almost all private sector companies and most public sector organizations in and outside Hong Kong practise some form of performance-linked pay system. In the context of the Civil Service in Hong Kong, we need to balance the move to performance-linked pay systems while ensuring the stability and harmony of the Civil Service. The proposed AOSGC will study the different forms of performance-based system and performance appraisal system used by both the private and public sectors in and outside Hong Kong, and work out options that best suit the circumstances of our Civil Service.

8. Given the size and diversity of the Civil Service, we do not consider at this stage that any single model of performance pay could be applied throughout.

9. A pre-requisite to the acceptance of a performance-linked pay system is a fair, open and transparent performance appraisal system. Without a credible, rational and transparent performance appraisal system, no performance pay system can be successful. The proposed AOSGC will need to study how our current performance appraisal system could be developed to complement a performance-based pay system. Some of the ideas being considered include the setting up of a system of assessment panels to monitor distribution of grading and handle appeals against performance appraisal and the use of benchmark for grading distribution.

10. The proposed AOSGC will report to Deputy Secretary (Civil Service) 2 (DS(CS)2). At present, DS(CS)2 has the support of three Principal Assistant Secretaries (PASs) ranked at the level of AOSGC. These PASs are responsible for policies on housing benefits, leave and passage, medical and dental benefits, all the other Civil Service fringe benefits and allowances, and matters related to the disciplined forces. They are already heavily committed to assist DS(CS)2 in the review of various fringe benefits and allowances in the context of the Civil Service Reform. In addition to this, they are also responsible for staffing matters of a total of 52 government departments/bureaux. It would be impossible for the PASs under DS(CS)2 to absorb the duties of the proposed AOSGC post as they already have full schedules of duties.

11. As for the two other Deputy Secretaries under SCS, each of them is in charge of three divisions, headed either by a PAS or PEO. DS(CS)1 is responsible for policies on appointment, pensions, directorates, qualifications, management of the Administrative Officer grade, and other administrative matters in CSB. In addition, she is responsible for the review of the entry and exit mechanisms in the context of the Civil Service Reform. DS(CS)3 is responsible for policies on staff relations, human resources management and training, trading funds, privatisation and corporatisation, conduct and discipline. She is also responsible for staffing matters of 37 departments and the review of disciplinary procedures and training in the context of the Civil Service Reform. Both DSs and their PASs are fully occupied with their schedules and none of them could take on the duties of the proposed AOSGC.

12. In view of the urgent need to take forward the various reforms, we created under delegated authority the supernumerary AOSGC post on 4 January 1999 for a period of six months. During the past five months, the officer has held meetings with some 20 private companies to learn about their performance pay and appraisal systems. She has also carried out research into the practices in overseas civil services. On the Starting Salaries Review, she has been working with the Secretariat for the Standing Commission on Civil Service Salaries and Conditions of Service to monitor progress on the survey of starting salaries in private sector companies and has been looking at options to take the matter forward. To regularise the establishment position, the retention of the supernumerary AOSGC post for a period of 18 months by the Establishment Subcommittee is required. We are now collating views and suggestions on various Civil Service Reform proposals and will work out detailed packages for more in-depth consultation and gradual implementation over the next 18 months. The duration of the AOSGC post will tie in with the implementation plan for the Civil Service Reform exercise.

B. Creation of a PEO Post

13. The Administration is committed to maintaining a high level of integrity in the Civil Service. This is particularly essential in the face of the challenges ahead and public expectations and demands on the Civil Service. Upholding integrity in the Civil Service means more than simple compliance with the letter of the rules and regulations. It means embedding a culture of probity in the organizations, internalizing the values of integrity and honesty in staff, and providing timely and effective systems to deter abuse and detect malpractice. As part of the Civil Service Reform, we need to ensure that our rules and regulations governing the standards of conduct of civil servants are sufficiently up-to-date to meet the present day circumstances. To this end, we are working closely with the Independent Commission Against Corruption (ICAC) and Heads of Departments to promote anti-corruption practices. SCS has pledged in his Policy Commitments to reach out and help departments to draw up departmental guidelines on avoidance of conflict of interest in 1999-2000 and to provide advice and support in integrity training in departments. The initiative, as part of the joint CSB/ICAC Civil Service Integrity Programme, will be taken forward by a Task Force headed by a PEO. The objectives of the Civil Service Integrity Programme are as follows -

  1. to review and update the central guidelines on conduct and discipline;

  2. to assist departments in drawing up supplementary guidelines on avoidance of conflict of interest situations specific to departmental operations; and

  3. to provide support to departments in promoting probity and good conduct through training.

  4. Reviewing and updating central guidelines

14. The rules and regulations governing the standard of conduct of civil servants are laid down in the Civil Service Regulations and various circulars and memoranda. These documents were issued over the past 20 years in response to specific needs and circumstances at different times. The passage of time has rendered some of them inadequate to meet present day circumstances. There is a need to review, update and consolidate these documents to ensure their adequacy and clarity as central guidelines for staff management. The Task Force will carry out the review exercise jointly with ICAC and aims at completing the review for promulgation of updated central guidelines in 1999-2000.

Assisting departments in drawing up supplementary guidelines

15. The central guidelines are designed to set out the service-wide standards on conduct and discipline. The drawing up of supplementary guidelines by individual departments specific to departmental operations will help place the rules and regulations in perspective to facilitate staff understanding and address specific problem areas identified in individual departments. The Task Force will visit departments, examine the adequacy of departmental guidelines and assist individual departments in drawing up additional guidelines to cater for different operating circumstances.

16. In the first phase of the Programme, priority will be accorded to about 20 departments whose operations involve wide public interface and are more open to potential conflict of interest situations. The effectiveness of the Programme will be assessed in early 2000 for extension of the Programme to all departments in 2000-2001.

Promoting staff awareness

17. To enhance staff awareness of the high standard of integrity expected of them, departments will be encouraged to organize briefings/seminars to tie in with the promulgation of the supplementary guidelines. The Task Force will support the ICAC in organizing corruption prevention training for new recruits and serving officers of various ranks from senior management to front-line staff. The training programmes will be tailor-made to cater for the different needs of departments.

18. The proposed PEO will lead the Task Force in the review of central guidelines, provision of assistance to departments in the drawing up of supplementary guidelines and organization of training. Given the wide scope of the Programme and the need for a top-down approach to demonstrate departmental resolve and commitment to the cause of the Civil Service Integrity Programme, the head of the Task Force will need to be ranked at an appropriate level to work closely with the senior management in departments to provide the necessary support and advice on the formulation of an integrated departmental strategy to uphold integrity. The proposed ranking of the PEO post reflects the need for an officer with broad executive experience and knowledge of departmental management and the ability to take forward the Civil Service Integrity Programme.

19. As explained above, since all the existing directorate staff are fully occupied, it is not feasible to launch the Civil Service Integrity Programme through redeployment of existing staff. The PAS responsible for policy relating to conduct and discipline is heavily committed to assist DS(CS)3 in reviewing the disciplinary mechanism in terms of streamlining disciplinary procedures and administrative arrangements for handling disciplinary cases in the context of the Civil Service Reform. She has no spare capacity for the two-year Civil Service Integrity Programme, which involved policy work at the bureau level as well as out-reaching work to all departments. The only viable option is to enlist additional resources to plan and implement the Programme and monitor its progress. The continued need for the PEO post beyond the 12-month period will be reviewed with regard to the outcome of the first phase of the Programme.

20. The job descriptions of the proposed supernumerary AOSGC and PEO posts are at Enclosures 1 and 2 respectively. An organization chart showing the proposed posts is at Enclosure 3.Encls. 1&2
Encl. 3

FINANCIAL IMPLICATIONS

21. The additional notional annual salary cost at MID-POINT and the full annual average staff cost of the proposal, including salaries and staff on-costs, are -

Supernumerary Post Notional Annual Salary Cost at MID-POINT
$ 		Full Annual
Average Staff Cost
$ 		No. of Posts
AOSGC 1,443,0002,502,2521
PEO1,213,2001,994,5561
Total2,656,2004,496,8082

22. We have created two non-directorate posts (one Senior Administrative Officer and one Senior Executive Officer) through the departmental establishment committee machinery to support the AOSGC. The total notional annual mid-point salary cost and the full annual average staff cost of these two posts are $1,707,540 and $2,808,336 respectively. Consideration is being given to create one Personal Secretary I post to support the three officers.

Six non-directorate posts (one Chief Executive Officer, two Senior Executive Officers, one Executive Officer I, one Assistant Clerical Officer and one Personal Secretary II) to support the PEO will be proposed for creation through the departmental establishment committee machinery. The total notional annual mid-point salary cost and the full annual average staff cost of these seven non-directorate posts are $3,594,360 and $5,521,488 respectively.

23. We have included sufficient provision in the 1999-2000 Estimates to meet the cost of the proposal.

BACKGROUND INFORMATION

24. On 14 January 1999, the Chief Executive announced a review of the Hong Kong Civil Service management system to facilitate greater openness, improve efficiency and enhance performance. Civil Service Bureau is taking forward the review. The overall framework and our preliminary views on the reform of the Civil Service are set out in a consultation paper released on 8 March 1999. The objectives of the Reform are, on the basis of the strengths of the current system, to create -

  1. an open, flexible, equitable and structured civil service framework;

  2. an enabling and motivating environment for civil servants; and

  3. a proactive, accountable and responsible culture.

25. The Reform will cover the following policy areas -

  1. entry and exit mechanisms;

  2. pay and fringe benefits;

  3. disciplinary procedures; and

  4. performance management, professional training and personal development.

A consultative document was published on 8 March 1999. The Government is soliciting comments on the document from staff, other parties concerned as well as the public during a 3-month consultation period.

ADVICE OF THE STANDING COMMITTEE ON DIRECTORATE SALARIES AND CONDITIONS OF SERVICE

26. As the two directorate posts are proposed on a supernumerary basis, their retention/creation, if approved, will be reported to the Standing Committee on Directorate Salaries and Conditions of Service in accordance with the agreed procedure.

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Civil Service Bureau
May 1999

Enclosure 1 to EC(1999-2000)12

Job Description of the Proposed Post of
Principal Assistant Secretary (Civil Service) (Special Duties)

Post Title:Principal Assistant Secretary (Civil Service) (Special Duties)
Rank :Administrative Officer Staff Grade "C"Responsible to:Deputy Secretary (Civil Service) 2

Main duties and responsibilities -

1. the overall co-ordination of the Administration's input on matters relating to the Starting Salaries Review being conducted by the Standing Commission on Civil Service Salaries and Conditions of Service (Standing Commission);

2. liaising with policy bureaux, departments, grades and other relevant parties and formulating policy advice to ensure that a consistent, rational, and publicly acceptable approach is adopted in the development, formulation and implementation of policy on the Starting Salaries Review;

3. attending meetings of the Standing Commission and its steering group on the Starting Salaries Review as necessary;

4. formulating policy advice on possible further reviews on Civil Service salaries following the Starting Salaries Review;

5. formulating policy advice in connection with the 1999 Civil Service pay adjustment;

6. studying and researching into different forms of performance-based pay system used by both the private and public sectors in and outside Hong Kong; and

7. formulating policy advice on and implementation of a performance-based pay model(s) most suitable for the Hong Kong Special Administrative Region Civil Service.

Enclosure 2 to EC(1999-2000)12

Job Description of the Proposed Post of
Principal Executive Officer (Task Force)

Post Title:Principal Executive Officer (Task Force)
Rank:Principal Executive Officer
Responsible to:Deputy Secretary (Civil Service) 3

Main duties and responsibilities -

1. as head of the Task Force, overseeing the review of central guidelines on conduct and discipline to ensure that they are up-to-date to meet present day circumstances;

2. visiting departments to present the Civil Service Integrity Programme to the senior management;

3. assisting departments in developing an integrated departmental strategy to minimize opportunities for conflict of interest and uphold integrity and good conduct; and

4. advising and assisting departments in devising tailor-made training programmes for staff of all grades and ranks.

Enclosure 3 to EC(1999-2000)12

Organisation Chart of Civil Service Bureau

Note 1Management Division is the subject division responsible for general administration and resource management.

Note 2Appointments Division is the subject division responsible for mainly policies on appointments, qualification assessment and examinations, common terms, pensions, retirement and post-retirement employment.

Note 3Administrative Service Division is responsible for the management of Administrative Officer Grade.

Note 4Division 1 is the subject division for mainly policies on housing and quartering. It also provides Bureau advice to 11 departments.

Note 5Division 2 is the subject division for policies on leave and passage, and travelling expenses. It also provides Bureau advice to 16 departments.

Note 6Division 3 is the subject division for mainly policies on education/job-related allowances, medical & dental benefits, conditions of service. It also provides Bureau advice to 25 departments.

Note 7Division 4 is the subject division for mainly policies on conduct and discipline and industrial actions. It also provides Bureau advice to 16 departments.

Note 8Division 5 is the subject division for mainly policies on Human Resource Management, training, privatisation/corporatisation and trading funds. It also provides Bureau advice to 21 departments.

Note 9Staff Relations Division looks after mainly matters on staff relations and welfare, the central consultative councils and departmental consultative committees.