Wednesday, August 11, 2010

Pay peanuts, get monkeys

This was my column on the date indicated above. This post is antedated.

I can understand it when the average person—the proverbial man on the street—raises his hackles over the fact that some government appointee is receiving millions of pesos in annual compensation. A couple of million pesos is probably a mind-boggling amount for someone who doesn’t know when his family’s next meal is coming from. It would be futile to try to explain concepts like market rates, compensation bands, external equity, accountability for risks and results, global competencies, and other determinants of compensation.

This is probably not a politically correct statement to make (although I must insist that being politically correct should never be at the expense of telling the truth) but the complexities of corporate organizations are probably incomprehensible to the ordinary Filipino.

So I like I said, I can understand how Juan de la Cruz can be shocked upon hearing that a President and Chief Executive Officer of a government-owned and -controlled corporation receives seven —perhaps even eight—figures in annual compensation. The words “president and chief executive officer” and “government-owned and -controlled” would probably go over their heads, which is really sad because those words are critical in this context. The people in question are the top honchos. The entities in question are government-controlled but really function like private organizations. The fact that these words have gone over the head of certain other people is tragic.

Thus I cannot understand how certain government officials, legislators, and even media men—in short, people we expect to know better and to possess some degree of corporate maturity—feign shock at the compensation levels of top executives today.

It is possible that these people are truly naïve and that their knowledge of corporate organizations and compensation structures have not kept up with the times, which actually does not speak well of them. The issue of the compensation of the top executives of GOCCs hogged the headlines at about the same time that news of the exodus of Philippine Airline pilots supposedly because of compensation factors broke the surface. The pilots were presumably getting almost half a million in monthly salaries at PAL and were being offered almost triple that amount by foreign airlines. Anybody with basic arithmetic skills can do the sums. I know we’re comparing apples and oranges here, but surely, nobody expects our CEOs to receive less than what a pilot earns in a month?

It is also possible that those who are hyperventilating over the compensation of the top executives of GOCCs are clinging to this outmoded paradigm that government service is tantamount to involuntary servitude. I know that we cannot make changes overnight and that upgrading the salary structures of those who work in government is a process that will take time, but surely, the correct paradigm is to think big and aim high rather than to be miserly and aim very low. How, pray, do we expect to attract the best people in the private sector to work for government if we offer them salaries that are ridiculously lower than market rates? Unless of course we expect them to be corrupt and to cover the shortfall in other creative ways, which is worse than simply paying them market rates. Which would you rather have, executives who are honest but are paid well or ones who are paid cheap but steal the government blind?

As they say, you pay peanuts you get monkeys. Or even worse, you pay peanuts you get corrupt monkeys.

Or could it be that these people are indulging in double standard, which in this country is often a synonym for hypocrisy? It certainly smacks of hypocrisy when some congressman almost bursts a vein condemning the fact that a CEO of a GOCC IS receiving P4 million in compensation annually while he receives triple that amount in travel and representation allowances and kickbacks from anomalous transactions. It certainly smacks of hypocrisy when a congressman flails around and expresses shock that someone receives that much money while conveniently forgetting that he or she just spent fifty times that amount to buy his or her seat in Congress!

Some of these congressmen have shares in family corporations and are privy to the compensation packages of their executives. I know, I know. Some people insist that working in the private sector is different from working for government. Really? Should it? Why should it be? Do we really want to prop up this paradigm that says a government career is inferior to a career in the private sector?

I also have something to say to these broadcast journalists who have the gall to condemn executives who join government for receiving compensation that’s within market rates: How about sharing with the general public how much you get for simply looking pretty on television in those Manolo Blahnik shoes and designer getups? Anyone who preaches frugality and simple living should have no qualms applying the same tenets on themselves particularly if his job requires passing judgment on others.

Oh sure, executives who join government should tone down their expectations and try to simplify their lives so that they can survive on much less. But lost in the din and dynamics of the discussion is the matter of regulatory oversights and the discretionary powers of whoever appointed these executives into office. Surely someone made an offer to these executives? And where, oh where is the Commission on Audit in the whole scheme of things? If these executives appropriated into themselves perks over and above the ordinary, who allowed them?

I don’t know these people personally —all these presidents and chief executive officers of GOCCs. I am arguing on principle as a management person, as a human resource management professional who is aware of the market rates of top-caliber executives in the private sector today. I am arguing as a person who champions global competencies rather than just good old sipag at tiyaga. These are great work ethics, but they don’t produce more than the minimum wage.

The most important point in this whole discussion, the one thing that has tragically been glossed over is this: The issue is not how much these people are getting, the issue should be whether or not they are worth every cent of it!

If they are not, then they should be kicked out of office and not be entitled to even one cent of their salaries. But it would be tragic to let go of someone really competent and outstanding and doing so well in his job simply because he refuses to sell his skills short.

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