On Call: Streeting’s plans for senior manager pay

Last week saw the publication of the first comprehensive pay framework for very senior managers since 2013 – quite the wait.

The Department of Health and Social Care’s announcement proclaimed a “carrot and stick” approach, adding: “Failing trust leaders will have annual pay rises docked under tough new measures.”

Top performers can earn bonuses of up to 10 per cent, while leaders in the worst-performing organisations will see annual pay uplifts withheld – subject to some exceptions.

The move has elicited a strong reaction from senior managers – most of them questioning how the regime will work in practice to improve recruitment and motivation in those toughest organisations and systems.

Hopes and fears

There are, however, some practical benefits of having a refreshed, published framework for the first time in more than a decade. It segments trusts by size, based on annual turnover. This means updated segments which make more sense in today’s NHS and gets rid of the previous structure where they were further disaggregated by trust type.

There is logic to this: many trusts have moved towards shared leadership and the distinction between service sectors have broken down. More acute providers have taken over community services, and some are combined with mental health. There are now formal guidelines – although they are not 100 per cent clear – for rewarding shared roles.

On the face of it, the potential to pay more significant bonuses (which have doubled from 5 per cent permitted under previous guidance), and 15 per cent recruitment premiums at struggling trusts, may be useful. Such flexibilities have long been encouraged by the independent Senior Salaries Review Body.

Merry-go-round

But there are plenty of challenges, too.

The first, crucial, question is whether the guidance will work in practice to incentivise the right behaviour from VSMs and trusts.

There are numerous potential pitfalls, which will require nuance to navigate.

In just one example, an HSJ reader, a VSM working across one financially sound trust, and another in deficit, queries: “Does that mean I am a good VSM deserving of my carrot or a useless VSM deserving of my stick?”

Another warns that factors such as rural isolation and deprivation risk being misread as leadership failures. They wrote: “This is great politically, but… the law of unintended consequences means this will come back to bite them.”

For VSMs in failing organisations and integrated care boards – now to be known as “segment five” – the framework appears to create a cliff-edge shift from “carrots” to “sticks” two years after joining.

VSMs who join segment five organisations will be eligible for the “recruitment premium”, to encourage people to join. Although this can be extended by an additional two years, it requires “sufficient justification” and NHSE approval – meaning there will be no certainty for those thinking about a job change.

At the two-year point, not only do they lose the premium, but if they are still in segment five, they stand to start losing their annual pay rise, too. That will be a pretty clear and personal message that they are deemed to have had their chance and blown it.

The big problem is that, despite politicians’ impatience, it often takes more than two years to turn around a failing organisation, even for the best leaders.

HSJ analysis, carried out when health and social care secretary Wes Streeting first trailed his tough approach to bosses, found three quarters of bottom-tier trusts had already seen their chair and/or CEO replaced in the past two years.

Will even more churn really help?

And I am already aware of concerns, cited widely by recruiters over recent months, about a slump in strong candidates applying for top executive positions, forcing trusts and ICBs to rerun recruitment.

For some considering making the leap, the further risk of losing your pay rise will be another disincentive. 

There are also concerns for the many trusts and ICBs which will fall between the two stalls, being neither among the most struggling, nor an outstanding performer deserving bonuses. In these organisations, retention can be crucial, requiring ways to give talented, experienced leaders reasons to stay.

First among peers

Another major question mark over the framework is ICB chiefs’ pay being set notably higher than that of their peers in providers.

ICB VSM pay was set high when their star was in the ascendancy ahead of their creation in 2022, with an expansive brief of system leadership. The aim was to attract experienced big hitters, though it didn’t always work.

Now the higher pay levels stand in stark contrast to other government and NHSE policy and messaging, which is about stripping the ICB role back to “strategic commissioning”, and cutting staffing and costs.

Jon Restell, chief executive of the Managers in Partnership trade union, pointed out to On Call that after the planned round of mergers, pretty much all ICBs leaders will be covering populations of 2 million-plus. That will put them in line for a minimum of £262,500, maximum of £283,500, and “exception zone” ceiling of £304,500. 

That is more than the NHS – although not parts of the rest of the world – is used to paying for good commissioning leaders.

Mr Restell told me: “Questions like, ‘what is the role of the ICB,’ will then become really important [regarding] who we are trying to attract into those jobs.”

Many expect a swathe of even bigger integrated provider group trusts and collaboratives to emerge in the coming years, with a bigger role leading transformation. It appears their leaders will be paid less.

A former ICB leader told On Call they would have agreed system leaders should have been higher paid before the latest “reset”, but now admit: “It’s difficult to be first among peers when they are paid a lot more than you.”

‘Earn your money’

The third challenge is how this all falls on local remuneration committees.

Mr Restell believes it will be hard for them to make “fine judgements about individual contributions and performance”.

They will also be well aware of the risk – with ongoing political and media attention on manager pay – of any bonuses they issue being seen as “a perk”, he said.

“Remuneration committees, some of them, will be very, very alive to that and will be reluctant to award.”

These concerns about the “optics” of issuing a bonus or recruitment premiums may be “enough to make sure they are not [paid] at all”, Mr Restell warned.

Bonuses were uncommon under the 2013 framework, and there is not much to suggest that will change under the new government.

The anti-NHS manager rhetoric is still strong in some quarters. To overcome it, Mr Restell argues Mr Streeting will need to press the NHS in the coming years, asking: “Why aren’t you rewarding your top performers?”

Mr Restell adds: “I guess my challenge back to Wes and crew is, yes, this is an important part of any sort of package of measures.

“But [it is also about] the broader environment that people have to work in, the support they get in their careers, the sense of risk, and ability to do their jobs.”