Non-consolidated performance payments are an integral element of the reward package for staff. Non-consolidated performance pay has a number of key advantages:
it encourages continuous high attainment because the payments are dependent upon continuing strong performance;
it prevents a permanent rise in salary and an increase in pension on the basis of one off performances while still allowing good performance to be rewarded;
it has no long term costs, in particular it does not increase future pension payments.
it focuses the work of employees more directly on the priority goals of the organisation;
it motivates employees by linking an element of compensation to the achievement of departmental objectives rather than offering payment for time served; and
it targets money at those who make the biggest contribution.
The wages/salary budget for the Department of Energy and Climate Change for 2009-10 is expected to be in the region of £57 million. Non-consolidated annual performance payments may total an estimated 1.6 per cent. of the wages/salary budget while non consolidated special bonuses may total 0.4 per cent. of the wages/salary budget.