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A large majority of revenue bodies reported having targets for increasing staff capability, and it is probable (although the question was not asked) that this is closely linked with a higher objective of increasing organisational capability. There is a strong inverse correlation between those countries who are not targeting increasing staff capability and those who are not planning or undertaking major changes in policy in areas of recruitment, training, performance or reward and remuneration i.e. those countries who are not planning or undertaking significant changes in these policy areas are most likely not targeting staff capability increases.

High performing organisations tend to score highly in staff engagement, satisfaction and motivation, sharing the results of surveys of these areas with staff, and involving them in the selection, design and implementation of changes determined to be needed – refer examples in Box 4.2. It is important to note that everyone has a role to play in this – it is not just the responsibility of the senior leadership. Most revenue bodies (81%) conduct periodic surveys of staff satisfaction, although the frequency of surveys varies from twice per year to once every two or three years. Almost all (93%) of those revenue bodies who survey staff also share survey results with staff and most (83% also consult with staff when considering responses to survey findings.

There is a statistically significant variation between OECD and non-OECD revenue bodies in these aspects of HRM strategy. More than two thirds (68%) of OECD-countries responded positively across all categories in this basket of indicators while the same is only true for a minority (39%) of non-OECD countries. The variation is in large part explained by the fact that a higher proportion of nonOECD revenue bodies do not survey staff on satisfaction, and that those who do survey staff are less likely to communicate findings and engage staff in designing plans to respond to issues identified.

Changes in policy in aspects of HRM within revenue bodies

About two thirds of revenue bodies reported that they have major policy changes planned or underway in at least one of the following key HRM areas: recruitment, training, performance management, and rewards and remuneration (see Table 2.5) – refer Box 4.3 for a number of examples. More than three quarters of these (77%) are planning changes in two or more of these major areas. The most affected area is training (77%) followed by performance management (63%), recruitment (54%), and rewards and remuneration (40%).

In the current budgetary climate it is perhaps not surprising that revenue bodies have less freedom in the area of reward and remuneration, although more innovation in terms of non-monetary rewards might help revenue bodies overcome other HRM challenges. Some examples of such non-monetary rewards are included in the section on reward and remuneration.

Just over 50% of surveyed revenue bodies experienced (sometimes quite significant) reductions in headcount over the last year while only about a third expanded their workforce. Other revenue bodies reported significant budget reductions over recent years or planned for the coming years. For most revenue bodies, staff are the single biggest cost. Reductions in budgets therefore have a significant impact on numbers of staff revenue bodies are able to maintain. To be able to achieve objectives in times of an often increasing scope of responsibility combined with reductions in budgets and staffing levels, an increase in both organisational and individual capability is likely to be required.

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Box 4.2. Measuring staff engagement and satisfaction

Finland: Job satisfaction in the Finnish Tax Administration is measured using the annual VMBaro job satisfaction survey. VMBaro has been used for seven years and each time the response rate has been high. In 2011, it was 68%. The high response rate and the positive results are explained by the fact that the results are discussed in individual units with staff members and the decisions on areas for development and concrete measures are made jointly by all those involved. In 2011, staff members’ opportunities to reconcile work with family life (4.01 in a scale of 1-5), fair treatment by colleagues (3.86) and the challenges encountered at work (3.85) were rated highest.

Since 2005, the biggest improvements have been in the reconciling of work with family life, employer reputation, feedback from supervisors and fair treatment by supervisors. At the same time, there has been a slight decrease in the ability to work independently, opportunity to influence work content, and working facilities and equipment. This may be a result of the fact that regional units have lost some of their autonomy as a result of the introduction of a nation-wide organisation.

Compared with employees in other central government agencies, the personnel rate job security and the overall employer image of the Tax Administration as positive factors. Almost 71% of the respondents would recommend a job in the Tax Administration to their friends.

Results of job satisfaction surveys at the Tax Administration, 2007-11

(Scale 1-5, 1 = very dissatisfied and 5 = very satisfied)

*New questions and indices were introduced in 2010. Results are therefore not fully comparable with previous years.

Singapore: IRAS conducts the Organisational Climate Survey (OCS) biennially to gather staff feedback on its development and initiatives. The feedback also helps IRAS to identify areas of improvement to make it a better workplace for staff. IRAS engaged an external consultant – Towers Watson – to conduct the OCS in January 2011 and 95% of staff participated in the survey.

The survey found that 73% of staff are satisfied or very satisfied working in IRAS. This is a 3% improvement over the rate achieved for OCS 2009 and 6% higher than the 2010 Towers Watson Singapore National Norm, which comprises survey results from local and international companies in Singapore.

United States: The US Office of Personnel Management conducts an annual employee survey to obtain feedback on a wide range of workplace issues. Using 11 questions from that survey, the IRS has developed an index that measures employee engagement and is using the index to compare itself to other large Federal agencies with 20 000 or more civilian employees. The target value is for the IRS to remain in the top quartile among the large federal agencies by 2012 based on that employee engagement index.

IRS employee engagement index

Source: Reproduced with minor adaption from the Annual Reports (2011) of the Finnish and Singaporean revenue bodies, and the 2011 report of the IRS Oversight Board.

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Box 4.3. Revenue body examples of major HRM policy change

Belgium: Increased focus on developing capabilities of staff, making sure these are aligned with strategies, improving the quality of training offers, and taking advantage of innovative learning solutions, including e-learning. Key Performance Indicators have been identified starting from a strategy map covering key HR activities across the organisation. When possible these indicators are used to set and evaluate objectives. As from May 2012 the indicators are being actualised in order to reflect modifications in the operational plan 2012-13 and in the strategic plan 2012-17.

Malaysia: Increased requirements for training with 60% of staff required to attend 56 hours of training per year. Performance management is now managed online and supported by a new competence model.

Romania: A HR training plan is being developed. Training and consultancy in specific areas will be developed with support from the World Bank, as part of a multi-year modernisation programme that will include re-organisation of local units and redesign of critical processes. A HR strategy is also being developed to increase productivity, increase voluntary compliance, and reduce the cost of collection.

Finland: Training is planned in accordance with operational and strategic needs. Model study paths help to plan the training. Internet, videos and video conferences are used in training.

Ireland: Government-wide performance management and development framework was simplified in 2012 with further changes (including the competency framework, the ratings system and the role of the independent reviewer) under consideration. Revenue has also developed a new performance measurement system to assist managers in maximising resource efficiencies.

Source: CIS survey responses.

Reductions in headcount also constitute a major HR challenge in itself. There are several elements to this. If the reductions are over and above what can be achieved through expected staff turnover, the revenue body need as a first step to manage both the uncertainties and practical aspects related to this in accordance with the values of the organisation. Significant reductions will also often require careful knowledge management and possibly involve training and/or redeployment of remaining staff. These challenges calls for a systematic approach, and one revenue body (the Netherlands) report having developed a strategy to accommodate projected reductions in staff numbers over the coming years. Measures include hiring restrictions, training and initiatives to support internal mobility, and assistance to find employment outside the revenue body.

Staff recruitment and appointment

Governments in most countries give some autonomy to their revenue body for determining: the numbers and types of staff to be hired; the skills and qualifications required for specific jobs; the duration and types of employment contracts; and the location of staff (see Table 2.6). However, most revenue bodies have autonomy governed by laws or budgetary constraints determined at governmental level, and there is wide variation in the extent of the autonomy. Revenue bodies report most autonomy in location of staff (83%) and skills and qualifications (83%) followed by duration of contract (77%) and finally number and types of staff to be hired (65%). Recruitment freezes were reported by a number of revenue bodies.

Although the rate of external recruitment has declined in many revenue bodies, it remains important to have high quality recruitment processes allowing critical skills and new talent to be brought in when and where it is needed. A number of revenue bodies reported initiatives in this area for this series – Box 4.4.

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Box 4.4. Revenue body examples of developments with recruitment practices

Australia: The ATO has recently completed a job profiling project to identify and categorise the work performed by all positions. This has enabled the revenue body to streamline recruitment processes and implement more robust work level standards for each job. It will also help focus manager/employee conversations on performance and identify training requirements. A new rating scale is used to assess applications and interviews, a new candidate assessment template has been introduced, and a recruitment officer provides selection panels with end-to-end client service throughout each recruitment process.

Italy: Recruitment policies have been highly influenced by changes in legislation which recently have been rather restrictive concerning the possibility of public sector agencies taking autonomous recruitment action. Nevertheless, financial laws have allowed the Revenue Agency to hire qualified graduates in support of increasing and improving tax controls. As a result of this recruitment policy, about 8 000 officials have been employed since 2003 (opposed to about 1 100 retired employees per year). The selective procedure takes place through four phases:1) Technical-professional tests: to verify the academic knowledge in a specific subject area; 2) Aptitude tests: to verify candidates’ aptitudes and skills, required for professional profile; 3) Apprenticeship: applicants must also serve an apprenticeship period of at least six months in Revenue Agency offices, during which the applicant must demonstrate the ability to apply knowledge in the solution of operational problems and demonstrate organisational behaviours (e.g. problem solving, team building, results orientation competencies) so called workplace performance appraisal; and 4) A final oral exam/interview, based on an evaluation of professional preparation, aptitudes and motivations.

During the apprenticeship period, the candidate has access to a blended learning training path, a methodology that combines different modes of learning: classroom training, on-the-job training and training with the aid of computer-based tools (e.g. e-tutors, posted blogs of different casestudies related to the Revenue Agency’s main activities). At the end of the apprenticeship period the Director of the Office assesses the candidate’s suitability for work.

Source: CIS survey responses.

Most surveyed revenue bodies (88%) reported that they are able to recruit staff and make appointments based on clearly defined qualification and experience criteria. A number of revenue bodies reported that whilst requirements are not published, they are assessed prior to any recruitment exercise and used to inform the recruitment process. Some countries (including France, India, Ireland and Luxembourg) have separate recruitment agencies or other mechanisms to manage recruitment for all of the public sector.

Staff development

Most revenue bodies reported they are undertaking staff development in the areas of commercial awareness (77%), risk management (82%) and financial management (77%) – see Table 4.2. About two thirds (68%) of the 40 revenue bodies that are undertaking staff development in the area of commercial awareness utilise networks with external organisations including legal and accounting firms, at least in part to help develop commercial awareness skills of their staff. For instance in South Africa activities like dialogue with large corporates, participation in commercial forums and attendance to presentations of annual financial statements are considered essential in helping technical staff in the large business area understand the climate within which large businesses operate. The “networked” approach to commercial awareness may also be reflected in other areas, although this was not covered by the survey. For instance in Argentina training activities in the area of risk management have been developed in co-operation with other state entities addressing complex risks, including the central bank, police, national security and intelligence.

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Table 4.2. Aspects of staff recruitment and development

For notes indicated by “/ (number)”, see Notes to Tables section at the end of the chapter, p. 166. Sources: CIS survey responses.

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An interesting development seen in a number of countries concerns revenue bodies partnering with educational establishments for training purposes. Three revenue bodies (i.e. United Kingdom, Ireland and Saudi Arabia) reported having worked directly with universities to develop externally accredited training programmes, and an additional revenue body (i.e. the Netherlands) reported nurturing a close relationship with a number of universities that offer training in tax and risk management topics – see Box 4.5. Among the obvious benefits of these arrangements is that they contribute to raising the professional standing of the tax profession. This is in line with the overall tendency in some OECD countries to further professionalise the public sector through increased access to universityaccredited training in a range of public services professions. One revenue body (i.e. Ireland) reported being in the process of identifying appropriate training and accreditation options.

Box 4.5. Examples of training partnerships

United Kingdom: HMRC launched its Tax Academy in April 2012. Once fully established, it will provide staff with access to training and externally accredited qualifications up to BA (Honours) degree level. It is the ambition that new tax professional qualifications, underpinned by external accreditation from the Association of Accounting Technicians and Manchester Metropolitan University, will help raise the capability of some 18 000 staff. At the same time, the Academy will provide clearer career options for staff and increase the pool of talent available for recruitment.

Hungary: The revenue body’s central office and several of its local directorates have close cooperation with universities. The universities provide opportunities for the professional education of employees. The revenue body cooperates with the universities in the shaping of subjects where it has special knowledge (e.g. taxes, customs, and excise duties).

Saudi Arabia: The revenue body has worked with the Institute for Public Administration to develop an advanced two-year taxation programme that qualifies candidates who are holders of a Bachelor’s Degree in accounting to work in technical positions (audit) within the revenue body.

Netherlands: Nyenrode Business University has developed a tax assurance programme. A range of other universities also offer courses and programs on risk management strategies. Experts from the revenue body contribute to and participate in these programs.

Singapore: IRAS” training arm, the Tax Academy (TA) has jointly set up the Singapore Institute of Accredited Tax Professionals (SIATP) with the Institute of Certified Public Accountants of Singapore (ICPAS). The SIATP aims to raise the standards of tax practice and the technical competence and capabilities of tax professionals in practice, business and government through accreditation. This initiative reflected IRAS” emphasis on the important role that tax agents play in tax administration especially in the facilitation of tax compliance.

Source: CIS survey responses, UK HMRC 2012-15 business plan, and survey responses concerning the FTA’s 2012 project – Engaging and involving SME taxpayers and stakeholders.

Performance management

Almost all revenue bodies (92%) reported that they have performance management systems in place, although close to a third of these (29%) do not set individual objectives for each staff member at the start of the performance period – see Table 4.3. Some of the revenue bodies that already have performance management systems in place reported that they are in the process of improving these. For instance Canada reported being in the process of redesigning performance management policies and tools to shift the emphasis away from paper-based reporting and towards continuous feedback. A number of revenue bodies underscored the importance of relating individual objectives and behaviours to the overall objectives and values of the organisation,

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Table 4.3. Performance management and remuneration

For notes indicated by “/ (number)”, see Notes to Tables section at the end of the chapter, p. 167. Sources: CIS survey responses.

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A large majority of surveyed revenue bodies (90%) review the performance of each staff member at least annually while an additional revenue body (Italy) reviews the performance of staff with management responsibility annually. These performance reviews can be based on any combination of individual objectives, objectives set for a particular team or unit, and overall objectives and values, and the performance review is frequently linked to rewards and remuneration as well as personal development plans. Normally the performance review is carried out by the closest manager, often in dialogue with the individual staff member concerned, but a small number of revenue bodies also reported the use of so-called “360 degree” assessment systems (where an individual’s performance is assessed based on input from a wide selection of people with whom the individual interact professionally) – see Box 4.6.

Box 4.6. Use of 360 degree feedback on employee performance

In human resources or industrial psychology, 360-degree feedback, also known as multi-rater feedback, multi source feedback, or multi source assessment, is feedback that comes from members of an employee’s immediate work circle. Most often, 360-degree feedback will include direct feedback from an employee’s subordinates, peers, and supervisor(s), as well as a selfevaluation. It can also include, in some cases, feedback from external sources, such as customers and suppliers or other interested stakeholders. It may be contrasted with “upward feedback,” where managers are given feedback only by their direct reports, or a “traditional performance appraisal”, where the employees are most often reviewed only by their managers. The results from a 360-degree evaluation are often used by the person receiving the feedback to plan and map specific paths in their development. Results are also used by some organisations in making administrative decisions related to pay and promotions. When this is the case, the 360 assessment is for evaluation purposes, and is sometimes called a “360-degree review”. However, there is a great deal of controversy as to whether 360-degree feedback should be used exclusively for development purposes,[1] or should be used for appraisal purposes as well.

Source: Wikipedia.

Reward and remuneration

A large majority of revenue bodies (almost 80%) reported have staff remuneration levels tied to wider public sector pay scales. Just over two thirds of revenue bodies (71%) report having some flexibility to reward good performance. The nature of reward mechanisms vary greatly and include individual or collective bonuses; permanent salary raises or promotion; and non-monetary rewards – see Table 4.3.

A number of revenue bodies have a set portion of the total salary budget available for awarding performance bonuses, and bonuses can constitute a significant proportion of total remuneration. For instance in Finland individual bonuses may add up to 48% of basic salary according to the pay scale and in Slovakia they may add up to 100% of basic salary. In some countries (e.g. Australia, Canada, France, Italy and Saudi Arabia) individual bonuses are limited to senior staff or staff with special responsibilities, and overall there is a clear tendency to have a larger proportion of the salary for senior staff tied to performance. There is great variation with respect to the frequency with which individual bonuses are paid ranging from a monthly over a quarterly and six-monthly to an annual basis, and in one country (i.e. United Kingdom) excellent performance can under some circumstances be promptly rewarded. A number of revenue bodies (e.g. Argentina, France and South Africa) reported having collective bonuses based on the performance of the organisation as a whole, and at least one additional revenue body (i.e. Chile) indicated that

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