HMRC staff appraisal system sparks concerns
As HMRC workers hold rolling strikes against job cuts and pension changes, their bosses have introduced a new and potentially controversial job appraisal system. Nick Huber reports.
Under the new system, which started in April, workers’ performance will be given three “ratings”. Around 20% of workers will be told that they have exceeded expectations; 70% that they have met expectations and 10% that they “must improve.”
Other Whitehall departments are also introducing new appraisal systems.
“For those jobholders receiving a 'must improve' rating it means that they have not met performance expectations and will be offered development and support to help them improve,” HMRC told AccountingWEB in a statement. “It is not a disciplinary matter, or a pre-cursor to disciplinary proceedings, nor is it the same as being a formal poor performer.”
HMRC's new job appraisal system may have its merits but simplicity doesn't seem to be one of them. A copy of the "performance management policy" document for civil servants seen by AccountingWEB is 69 pages long.
The Public and Commercial Services (PCS) union is worried that that the new appraisal system has a pre-determined quota for under-performing staff, regardless of whether this is true.
According to the PCS, which has about 60,000 members at HMRC, under the old appraisal system, about 1.5% of HMRC workers were told they needed to improve.
The PCS says that new appraisal system will worsen staff morale.
Meanwhile, there are doubts about whether appraisal systems provide useful information to employees and managers. One survey concluded that more than 90% of performance appraisal systems are failures.
How would HMRC’s performance be judged by its own appraisal system?
On the plus side, HMRC is collecting more tax: £475.6bn in 2012-13, £1.4bn more than in 2011-12, according to this year's annual accounts.
But Amyas Morse, head of the NAO, which scrutinises public spending on behalf of parliament, said there are "inherent tensions" in reconciling HMRC's three priorities of reinvesting money from efficiency savings, reducing operating costs and improving customer relations.
"We have found good progress by HMRC in reducing costs and meeting its revenue targets," Morse said. "In respect of raising customer service levels to an acceptable standard, it has a much longer way to go."
Despite grumbles from unions, there are some signs that staff morale is improving. HMRC employees were increasingly positive about the organisation’s direction and management, giving hope of improvements in customer service, according to a report by Bloomsbury Professional.
The overall staff satisfaction score was 41% in 2012, compared with 32% three years earlier, according to Bloomsbury, although staff morale is still low when compared to other government departments.
On cost cutting, HMRC is also making progress.
In February, the NAO said that HMRC was ahead of schedule for achieving a target of cutting costs by 25% by 2015.
The NAO’s Progress on Reducing Costs report assessed HMRC’s savings programme over 18 months. The public spending watchdog found that HMRC made savings of £296m in 2011‑12, exceeding its target by 19%.
Most savings came from staff and property cuts, plus improved productivity through the use of technology, the NAO said.
But some experts doubt whether HMRC can continue to cut costs - 10,000 job cuts are planned between 2010 and 2015 - without worsening the quality of its service.
Spending review cuts
Financial pressure on HMRC will increase. Its budget will be cut by another 5%, although it will get extra money to tackle tax evasion, the government announced in its spending review for 2015-2016.
Chancellor George Osborne said HMRC is expected to raise an additional £1bn more in tax by revenues in 2015-16. The target for extra tax revenue has increased from £23.5bn in 2014-15 to £24.5bn in 2015-16.
HMRC will spend £200m for online services to encourage people to sort more of their tax affairs online. It will use email more often to communicate with taxpayers and tax advisers.
Call centre culture
One common complaint among accountants is that HMRC call centre staff often don’t pick up the phone. An NAO report on HMRC customer service published in 2012 found that one in four (26%) of about 20m calls to HMRC call centres were unanswered.
After more than 37,000 job cuts since 2005, according to PCS, accountants often complain there aren’t enough experienced tax inspectors capable of dealing with complex tax enquiries.
HMRC is trying to improve its training and attract younger staff, but these measures are unlikely to produce quick improvements in the tax department’s service quality or low staff morale.
Accounting WEB members have plenty of examples of poor service from HMRC: communication via post rather than email; heavy-handed debt-collection agencies collecting tax owed on behalf of HMRC; and a general lack of common sense.
“I really do think that better staff monitoring, warnings, etc would be a really good idea to get their staff to do the job properly,” said AccountingWEB member Ken Howard. “It's very frustrating to wait on the phone for an hour in a queue or to wait for 4-8 weeks for a letter to be dealt with, only to find that the HMRC person doesn't deal with it properly and you have to go through it all again to get someone else.”
But staff performance should be judged “properly”, Howard said, “based on service quality, not potentially useless/dangerous criteria such as speed of answering the phone or speed of replying to a letter - that kind of thing is pointless if they don't monitor the quality”.
Frustratedwithhmrc said that the new appraisal system may make things worse.
“The problem with appraisal systems is that they tend to be based upon what is measurable (answering phones/letters within a reasonable timeframe, ensuring that investigations are in HMRC's favour, etc.) rather than what is important...
“Too often it seems that HMRC call centre staff are under pressure to ‘deal with’ a call as quickly as possible. So if they find an easy way to end the call by saying ‘computer says no’ then they will do so, whereas someone who takes the time to go through the issue will get an actual correct response (sadly often still ‘No’).”
Nigel May, tax partner at MHA MacIntyre Hudson, reckons that the new appraisal system will alienate staff. “The last thing it will do is to improve staff morale.”
May says that HMRC’s problems are “systemic” and cannot easily be fixed. “It doesn’t feel like the department is working as it should. I don’t think the problem is the staff it’s the system.”
Some experts reckon that many of HMRC’s problems can be traced back to the merger between Customs & Excise and the Inland Revenue in 2005.
Before the merger, the Revenue was run like the army, says Richard Mannion, national tax director at Smith & Williamson.
It was “very hierarchical” and the training was generally good quality, with new recruits getting good feedback from their manager, he said. “Old [Revenue] staff look back fondly on their training.”
Mannion reckons that the merger between Inland Revenue and Customs & Excise confused many staff. Some were unsure what their role was in the new organisation and who they should work with.
He remembers seeing a “colour coded” chart which attempted to explain the structure of the newly-merged HMRC. “It was the most confused chart you could wish to see,” he said. “It was all colour coded so if you were a ‘green’ person you weren’t supposed to talk to a ‘red’ person. People in the head office had fancy [job] titles but didn’t seem to know who they should talk to.”
HMRC hopes that its new appraisal system will create clarity rather than confusion - identifying workers who need support and help to improve the department’s overall performance. But given recent history it seems likely that the new appraisal system will only further antagonise workers and possibly lead to more strikes.