A review of the way the civil service works has also called for new controls on the way ministerial special advisers operate and greater transparency.
The independent panel charged with overhauling the civil service opposed performance-related pay for senior officials.
This was because such payments encouraged civil servants to concentrate on short-term goals rather than long-term achievements, the report warned.
A bonus culture also goes against the ethos of the civil service as it sometimes rewarded individuals for team efforts, stated the panel, which reported to Public Expenditure Reform Minister Brendan Howlin.
The review, headed by Prof Kevin Rafter, noted that the issue of under-performance and non-performance by civil servants was raised regularly when it examined how the system operates.
Prof Rafter said there needed to be a clearer procedure for dealing with under-performing civil servants and those who failed to improve would face dismissal.
“It is frequently said the private sector appears more willing to dismiss those who are not performing adequately,” the report stated as it called for “robust” support for managers dealing with non-performing civil servants.
“While the numbers directly involved are limited, the problem is wider than the individuals concerned as it adversely impacts on the morale of staff who are performing well.
“It also poses challenges for the delivery and implementation of objectives and impacts negatively on effective accountability and performance,” the panel said.
A new accountability board overseeing the civil service should also include four external members, the independent panel has recommended.
An overall head of the civil service should also be appointed with responsibility to monitor secretary generals and senior mandarins.
Panel chairperson Prof Rafter warned, at present, there is no official centre to the civil service.