Performance Measurement and Pay-At-Risk || Alberta Health || 15 Apr 2010

EDMONTON – The executive contracts tabled by the Liberal Party of Alberta in the legislature this week are more than a year out of date and reflect past practices long since overhauled by the Alberta Health Services Board of Directors and the AHS Executive Team. They do not represent AHS practice today.
The contracts included both agreements signed under the authority of the former Health Regions and the interim AHS Board. The provisions for senior executives in the former regions varied by region and, where provisions existed, often varied by individual contract. These “legacy” agreements were contractual obligations that AHS inherited. AHS was legally bound to comply with these agreements until new rules were put in place.

The AHS Board recognized the need to overhaul the process of executive contract negotiation and took decisive steps last year to address concerns held by the Board and the public. The Board implemented a standardized contract for all executives, effective January 2010, which ensures clarity, consistency and best-practice governance on human resources management. In January 2010, the AHS Board established a standardized contract for all executives. Highlights of the contract template include the following:

o Severance terms standardized at up to 12 months base pay (excluding "pay at risk") and a fixed 15% of base pay (excluding "pay at risk") in lieu of benefits;
o A duty to mitigate damages by diligently seeking alternate employment – whereby severance payments cease and an amount equal to 50% of the outstanding severance is paid out;
o "Pay at risk" standardized as part of base salary but withheld until completion of annual individual performance review and receipt of an unqualified opinion of the Auditor General confirming organizational performance;
o Benefits standardized including any professional / personal allowances;
o Relocation allowances standardized including need to repay if voluntary termination occurs within first 12 months of employment;
o Standardized confidentiality and contract enforceability.

Pay-at-risk is just that: Performance measures are established at the beginning of the budget year. Pay is withheld throughout the year subject to completion of the agreed-upon objectives and measures. Payment is not made if performance measures are not met.

This follows a series of measures implemented to ensure best practice:
o In April 2009, AHS established benchmark executive salary ranges and has been using these consistently for job offers made to Vice Presidents and above;
o In September 2009, job evaluation protocols were completed for all positions of Vice President and above;
o In October 2009, based on performance measures consistent with AHS' strategic direction, the CEO established "pay at risk" for its Senior Management team (Vice President and above) at percentages consistent with the April 2009 market data;
o In November 2009, AHS responded to the Auditor General report by ensuring the SVP Human Resources reviewed all job offers at Vice President and above until a standardized contract was approved by the Board.