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2010 APS SES Remuneration survey

This is not the latest report. Go to our Remuneration reports page for the most recent publication.

Data as at 31 December 2010

To ensure the confidentiality of all data, a minimum number of observations is required in order for statistics to be displayed. Three organisations must report at least three observations for a variable in order for the mean to be displayed. Four organisations and four observations are required for display of the median. Four organisations reporting at least four observations are required to display 25th and 75th Percentiles. Where there has been insufficient data for analysis, this has been indicated with “-“.

Variances may exist in survey data. Data may fluctuate slightly from year to year due to changes in the participant base. It is also important to note that within a sample, a significant amount of data may be reported by one organisation. It is also possible for data to change drastically from year to year due to internal departmental and agency related factors and economic conditions.

The information and data contained in this report are for information purposes only and are not intended nor implied to be a substitute for professional advice. In no event will Mercer be liable to you or to any third party for any decision made or action taken in reliance of the results obtained through the use of the information and/or data contained or provided in this report.

Mercer is providing this survey information to the participants to permit them to make independent decisions regarding salaries and benefits. Mercer has taken appropriate steps in collecting and disseminating this information in order to avoid information about particular Departments or organisations being disclosed.

© Mercer (Australia) Pty Ltd ABN 32 005 315 917

This document has been prepared solely for the client to whom it is addressed, for its internal use for the purpose stated in this document. It contains confidential and proprietary information of Mercer and is not to be distributed more widely without the prior permission of Mercer. Mercer and its employees do not accept responsibility to any third party for anything in or arising out of the material and information herein, and it is not intended that any third party should rely on such material.

Executive summary

Survey purpose and objectives

The Australian Public Service Commission (APSC) commissioned Mercer (Australia) Pty Ltd (Mercer) to conduct the 2010 Australian Public Service (APS) Remuneration Survey. The Survey of Senior Executive Service (SES) and non-SES remuneration plus the Broader Market Comparison provides a comprehensive overview of remuneration trends and outcomes across the APS, State and Territory public services, and the wider market. It should be noted that the Survey does not take into account non-monetary benefits.

The Survey aims to inform APS agencies in the determination of remuneration practice and policy. Specifically, it seeks to provide:

  • comparisons with previous APS Remuneration Surveys
  • detailed information about individual remuneration components and the value of each remuneration package by classification and agency
  • remuneration ranges for the classification levels in each participating APS agency and the APS as a whole, providing capacity for agencies to compare remuneration of their SES and non-SES employees with comparable positions in the private sector, and State and Territory public services
  • individual agency reports which allow each participating agency to compare its current data with APS-wide data.

The 2010 Survey is based on a sample of remuneration data as at 31 December 2010 and payments/entitlements for the 2010 calendar year. The Survey findings are presented in four reports: an SES Report, a NonSES Report, a Broader Market Comparison Report and an Individual Agency Report.

The 2010 SES Report provides a detailed analysis of remuneration data and policies affecting all SES classifications.

Survey participants and methodology

Last year a government decision mandated that all agencies participate in the 2010 APS Remuneration Survey. A total of 105 agencies participated in 2010 and, of these, 57 also participated in 2009 (one agency that participated in 2009 did not participate in 2010). For 2010, a total of 96 agencies provided SES data, an increase of 38 over 2009. Two survey briefings were held in January 2011 and further instructions were provided to all agencies after the briefings.

The size of the SES sample increased by ~14 per cent for 2010. Of the 2,620 SES records submitted, 2,612 records were included in the APS-wide SES survey remuneration database[1]. For further information in relation to survey participants, please refer to Appendix A.

To ensure the accuracy of the data collected, Mercer performed several integrity checks. Where the data was not within expected values, Mercer returned the data to the relevant agency for confirmation and only included the data once it had been confirmed. In excess of 1,800 calculations (such as the costing of individual packages and the main remuneration statistics quoted throughout this report) were then submitted to the statistics department of the University of New South Wales for review and verification. Once the calculations were confirmed, Mercer finalised the dataset and commenced data analysis and reporting.

Prior to releasing the final report, Mercer and APSC agreed on all items to be included in the analyses. Mercer presented a summary of initial findings and draft reports to APSC for review. However, Mercer retains full responsibility for the accuracy and integrity of all data presented in this report. For an overview of Mercer’s methodology for the 2010 APS Remuneration Survey, please refer to Appendix B.

Data in this report is provided for the following components/aggregates of remuneration:

  • Base Salary
  • Total Remuneration Package, including Base Salary, plus:
    • Superannuation
    • Motor vehicles
    • Other benefits (including Fringe Benefits Tax (FBT) where applicable)
  • Total Reward, including Total Remuneration Package, plus:
    • Performance bonuses
    • Retention bonuses
    • Other bonuses.

Please refer to Appendix C for definitions of these terms.

Analysis for each SES classification provides the spread of remuneration from the minimum to the maximum across the sample, as well as descriptive statistics including the 5th percentile, Q1, median, Q3, 95th percentile and average for each level (refer to Appendix C for definitions). Commentary also indicates the presence of outliers in the sample and a comparison with the 2009 dataset.

Information is also provided regarding the following remuneration policies and practices:

  • Executive remuneration strategy
  • Remuneration management practices
  • Total remuneration approach
  • Performance and reward linkages.

Main remuneration findings

Detailed remuneration data table s are contained in Section 3: “Remuneration Data and Analysis – Details by SES classification”. Consolidated summary data table s are contained in Appendix E. A summary of the main findings is outlined below.

Base salary

Table 1.1 provides a summary of median and average Base Salary movements for SES employees from 2009 to 2010.

Table 1.1 – Base Salary Median and Average Movements for SES 1, SES 2 and SES 3
Band Median Base Salary Average Base Salary
2009 2010 Movement 2009 2010 Movement
SES 1 $149,987 $158,277 5.5% $153,523 $160,972 4.9%
SES 2 $189,633 $200,726 5.8% $193,448 $205,288 6.1%
SES 3 $248,000 $261,910 5.6% $257,017 $267,877 4.2%

The median 2010 Base Salary movement across all SES classifications was 5.7 per cent; this is a decrease from 7.3 per cent in 2009. In comparison to 2009, the median movements for 2010 decreased across all SES levels. The overall average movement across all SES classifications was 5.1 per cent, a decrease of 1.3 per cent on the 2009 movement.

Total remuneration package

Table 1.2 provides a summary of median and average Total Remuneration Package (TRP) movements for SES employees from 2009 to 2010.

Table 1.2 – TRP Median and Average Movements for SES 1, SES 2 and SES 3
Band Median TRP Average TRP
2009 2010 Movement 2009 2010 Movement
SES 1 $203,136 $210,175 3.5% $203,848 $210,459 3.2%
SES 2 $254,222 $262,680 3.3% $254,577 $264,364 3.8%
SES 3 $325,125 $335,335 3.1% $332,704 $338,619 1.8%

Overall, the median 2010 TRP movement across all SES classifications was 3.3 per cent, with overall average movements being 3.0 per cent. Both the 2010 median and average TRP movements have increased slightly from the previous year, where the median was 2.9 per cent and the average was 2.5 per cent.

Major benefits

Superannuation

Average employer superannuation contributions across SES 1 and SES 2 classifications were higher in 2010 than in 2009, however average contributions for SES 3 employees were lower. Similarly, median superannuation payment for SES 1 and SES 2 were higher in 2010 than in 2009, whereas median payments for SES 3 were less than the previous year.

As a proportion of Base Salary, average superannuation contributions were 17.5 per cent for SES 1, 18.2 per cent for SES 2 and 19 per cent for SES 3. These proportions have decreased slightly across all SES levels from those reported in 2009. Superannuation contributions for Commonwealth Superannuation Scheme (CSS) members remain considerably higher than for members of other funds.

Motor vehicle costs

Whilst the cost of motor vehicles has gone up, the proportion of SES employees with a motor vehicle as part of their remuneration has decreased. Median vehicle costs were $25,186 for SES 1, $26,500 for SES 2, and $27,005 for SES 3, indicating that there was an increase in the vehicle costs component of remuneration in line with the classification of the employee.

Cash in lieu of motor vehicle

Cash provided in lieu of motor vehicles also increased in line with SES classification and the 2010 payments ranged from $24,553 to $27,902 at the median. Since 2009, both the cash amount paid and the proportion of SES employees receiving these payments has increased.

Car parking

Car parking costs vary slightly across SES classifications. Higher payments are due to location, rather than the SES classification of the individual employees concerned. The proportion of SES employees receiving this benefit has remained fairly stable for SES1 and SES2 but increased slightly for SES3 (SES 1: 52 per cent; SES 2: 48 per cent; SES 3: 54 per cent).

Other benefits

Other benefits such as home computing equipment, remote access, airline lounge memberships, and living and entertainment allowances have median payments of $2,231 for SES 1 and $1,830 for SES 2 levels. No data is available for other benefits applicable to SES 3 employees as the sample size was insufficient to report this statistic. For SES 1, the median payment for other benefits has increased slightly in 2010 (while that for SES 2 decreased slightly), however the figures remain a significant reduction from the median payments in 2008, which ranged from $9,719 to $19,407. As in previous years, there are a small number of significant payments provided at each SES classification which can generally be traced back to employees posted overseas.

Total reward

Table 1.3 provides a summary of median and average Total Reward (TR) movements for SES employees from 2009 to 2010.

Table 1.3 – TR Median and Average Movements for SES 1, SES 2 and SES 3
Band Median TR Average TR
2009 2010 Movement 2009 2010 Movement
SES 1 $207,730 $213,017 2.5% $209,490 $214,300 2.3%
SES 2 $263,461 $266,763 1.3% $262,850 $269,862 2.7%
SES 3 $336,029 $340,627 1.4% $342,648 $344,946 0.7%

Overall, the median 2010 TR movement across all SES classifications was 1.7 per cent, with overall average movements being 1.9 per cent. These movements have reduced slightly from the previous year, where the median and average movements were 2.3 per cent and 2.2 per cent respectively.

Bonuses

Performance bonuses

Across all SES classifications, 38 per cent of SES employees were eligible for a performance bonus in 2010. Of those eligible, 89 per cent actually received a performance bonus payment. These results show a decrease in eligibility of 16 per cent compared to 2009, whilst the proportion of eligible SES employees who actually received a performance bonus payment in 2010 remained constant.

Table 1.4 shows median and average performance bonus payments in 2009 and 2010.

Table 1.4 – Median and average performance bonuses for SES 1, SES 2 and SES 3
Band Median performance bonus Average performance bonus
2009 2010 Movement 2009 2010 Movement
SES 1 $8,955 $7,972 -11.0% $9,842 $8,860 -10.0%
SES 2 $14,078 $12,768 -9.3% $14,334 $14,892 3.9%
SES 3 $20,114 $7,000 -65.2% $19,524 $13,907 -28.8%

Across all SES classifications, median performance bonus payments reduced in 2010, with a significant decrease of ~$13,000 at the SES 3 level. Average performance bonus payments remained fairly consistent for SES 2 employees between 2009 and 2010, however average for SES 1 and SES 3 were reduced, with average payments for SES 3 decreasing by ~$5,500.

Retention bonuses

Across all SES classifications, only 70 SES employees (2.7 per cent) were eligible for retention bonuses in 2010, more than the 46 SES employees (2 per cent) in 2009. Of those eligible for retention bonuses, just under two thirds actually received a payment.

Other bonuses

Only 2 per cent of SES 3 employees received other bonus payments, and this sample size provides insufficient data for statistical analysis. Approximately 5.5 per cent of SES 1 and SES 2 employees were eligible for other bonus payments. Whilst other bonus payments are not a common feature of SES remuneration, the payments can be significant, ranging from a minimum of $1,000 to a maximum of $45,000 for SES 2 in 2010.

Remuneration package breakdown

The proportion of TR made up by Base Salary ranged from 75 per cent to 77 per cent across the three SES levels. Bonuses made up 2 per cent of TR for all SES classifications. Superannuation varies slightly across SES classifications, ranging from 13 per cent for SES 1 to 15 per cent for SES 3, increasing with classification. Motor vehicles ranged from 10 per cent of TR for SES 1, 8 per cent of TR for SES 2, and 6 per cent of TR for SES 3, a slight decrease from 2009 proportions. Other benefits remained consistent with the 2009 figure (0 per cent) across all SES classifications.

Remuneration policy findings

Details of the remuneration policy findings are provided in Section 7, and a summary of the key remuneration policy findings is outlined below.

Executive remuneration strategy

In 2010, 57 per cent of agencies reported that they had a formal SES remuneration strategy which was used as a basis for program design and pay decisions. Of those agencies, 68 per cent communicated the strategy to employees, a significant drop from the 2009 figure of 98 per cent.

The focus of remuneration strategy for SES employees was Base Salary or TRP rather than TR or Base Salary plus Bonus.

Many participating agencies indicated that they preferred to use the APS Remuneration Survey and/or selected public sector agencies for benchmarking their SES remuneration arrangements. Shifting from the trend over the last few years, a higher proportion of agencies reported benchmarking at the median rather than the upper quartile against both the APS Remuneration Survey group and selected public sector agencies.

Although agencies mostly report primarily benchmarking their remuneration for SES employees against other APS agencies and other public sector organisations, Government Business Enterprises and the private sector generally continue to be regarded as competitors for the attraction and retention of SES employees. Although such organisations are considered to be a market for talent, they are infrequently considered as a benchmark when determining salary levels.

Starting salaries are usually set at the discretion of the Agency Head, although in some cases starting salaries are set at the minimum of the SES classification.

For individuals employed under Australian Workplace Agreements[2] (AWA), Common Law Agreements (CLA) and Individual Section 24(1) Determinations (S24(1)I), most agencies reported a policy to use a standard template with some variation within a given framework for the employees’ terms and conditions. Only a small proportion of agencies tailored pay, terms and conditions based on the individual or provided the same across all employees.

Seventy-three per cent of agencies reported having a regular remuneration review process for employees, with the majority of these agencies reviewing remuneration on a yearly basis at the same time for all or most SES employees.

Apart from superannuation, motor vehicles continue to be the most significant benefit item offered to SES employees. The clear majority of agencies have either developed a predetermined budget amount for each SES classification, or established a standard vehicle costing covering all actual costs, which is similar to the trends found last year. Where cash payments in lieu of a motor vehicle are available to SES employees, most agencies use the same cash value as the vehicle’s benefit value.

Within the APS, formal links between performance and reward have been a key element of SES remuneration strategy for some years, with 32 per cent to 38 per cent of agencies (depending on SES classification) reporting the use of performance bonus arrangements, a significant drop from 2009 where the respective figures were 83 per cent to 94 per cent. Depending on SES classification, only 2 per cent to 4 per cent of agencies reported the use of retention bonuses in 2010 (down from 16 per cent to 18 per cent in 2009).

Rating scales are commonly used to manage performance pay arrangements, with the majority of agencies using a five point rating scale. The majority of agencies required at least a ‘satisfactory’ level of performance to trigger receipt of a performance payment.

Agencies typically provide retention bonuses based on an employee’s specialist skills or their criticality to a particular project. Retention bonuses tend to be paid at a specified point in time or upon completion of a milestone and could be substantial amounts for the few individuals at any SES classification who actually receive such payments.

Remuneration outcomes by various parameters

Generally, results showed that across all SES classifications, agencies of 100 to 499 employees pay the highest median Base Salary, whilst agencies employing between 1000 and 2499 people pay the highest TRP. However, remuneration differences by agency size are only statistically significant for SES 1 and SES 3.

There were also statistically significant remuneration differences for SES 1 and SES 2 employees by location, with employees based overseas receiving the lowest TRP amounts.

Job family appears to have a statistically significant effect on TRP levels for SES 1 and SES 2 employees. Medical professionals appear to be the highest paying job family for SES 1 and SES 2. At SES 3, ‘Other’ roles were higher than other job family categories, but these differences were not statistically significant. Refer to Appendix D for details.

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[1] The Australian Electoral Commission provided SES records which were excluded from the APS-wide remuneration database because their SES employees are employed under different legislation.

[2] Refers to continuing AWA which were entered into prior to November 2007.

[3] Also includes all continuing collective agreements signed prior to 1 July 2009.

[4] Refers to continuing AWA which were entered into prior to November 2007.