In between

Last week, we began our discourse on the compensation being received by government officials. The issue was sparked by the 2012 bonuses that were supposed to be paid to the directors, officers and employees of the SSS, MWSS and PhilHealth and other government owned and controlled corporations (GOCCs) which drew a collective howl. But before we pass judgment, we should first examine the work performed by the Governance Commission (GCG). 

The GCG was created by law last October 2011 to particularly curb the excesses committed by these GOCCs.  In the past, positions in these entities were viewed as a reward for those who are in the good graces of the President and oftentimes served as “milking cows” for its appointees. With the GCG, the idea was to enable a regulatory body to set standardized rules in the operation of GOCCs. On the other hand, it also had to provide incentives that rewarded good behavior.  In this regard, the three person of GCG, led by former Ateneo Law dean Cesar Villanueva, has put in place a fit and proper rule for potential appointees as well as a performance score card similar to that employed in certain private companies.  These are steps in the right direction. I am also certain that the GCG went through a formal process before approving the award of these bonuses.  The GCG has endeavoured to make public the reform measures it has undertaken and those concerned and interested about the work they do should take the time and effort to read the comprehensive report the GCG has prepared.

*    *    *    *

Having worked in the private sector for over 20 years, let me share my four centavos regarding the matter with the caveat that I am by no means a human resources professional nor a benefits practitioner. As far as I am concerned, the following elements should perhaps be considered in determining how an individual should be compensated.  

  First, rather than focusing merely on the salary or the bonus, one should consider the entire compensation package that an individual receives. There are companies which pay low base salaries but provide huge bonuses. In addition, benefits such as insurance, pension, travel and representation, vehicle plan, job security, etc. should be factored in as well.

   Second, we need to take into account the level of sophistication and requisite skills needed to perform the functions required by the job.  In this regard, we should consider the number of people who are able and qualified to perform such tasks.  In the real world, the more such people exist, the lesser the economic value placed on their services.  This is simply the law of supply and demand in action.  For example, teachers are not paid as handsomely as other professionals even if they arguably perform a more important function in society partly because of their relatively large population.

Third, the cardinal rule is that money begets money. And those that bring in the revenue or directly contribute to the bottom line tend to be better compensated. For example, sales personnel are usually better paid than back room technical support. Yet following this line of argument, I do not understand why the president of a government financial institution gets paid better than the Secretary of Finance when the latter’s performance (or non-performance as the case may be) has a direct impact on the country’s financial well-being. The Finance Secretary should be given the same compensation package as the Bangko Sentral Governor who performs an equally sensitive role in our economy.

Fourth, a premium must be paid for those who are able to get the job done. Many promise but few deliver. This is why it is important for the superior and the subordinate to agree upon and set annual quantifiable goals and objectives. Note that such goals should not all be about making money. For example, charitable foundations are primarily assessed on how they are able to spend their budgets wisely to support their advocacies. Or if we are to review the government’s conditional cash transfer (CCT) program it would seem that the relevant agreement would be the number of individuals that are uplifted from poverty.

Fifth, compensation should also take into account the assumption of risk involved in the job. Those who take more risk should get paid more. In this regard, query as to why the general counsel of a GOCC should be paid more than the Secretary of Justice who assumes not only significant reputational but physical risk as well.   In addition, the latter’s scope of work is much wider and with a greater capacity to impact the effectivity of our justice system.

Sixth, compensation in the private and public sectors should be compared but not equalized. It may interest the reader to know that in the legal profession, entry level lawyers in government earn more than their private sector counterparts. But as they climb the professional ladder (senior associate to partner level), the trend reverses and the disparity in favor of the private practitioners becomes noticeably wider over the years.  Yet we should not forget that part of the compensation received by a public servant is the honor and privilege to render public service.  After all, no one is compelled to join government.  That said, we also have to ensure that public officials are paid a “living wage” in accordance with the parameters provided above. This will hopefully lessen the temptation to engage in corrupt practices. 

The foregoing are but some of the factors that need to be considered in creating a fair compensation scheme for our public officials.  So in reality, how then should they be compensated? I would surmise that the compensation package of government officials should be adjusted somewhere in between what they are currently receiving as compared to what their counterparts in the private sector are getting paid. 

*    *    *    *

“Do your job and demand your compensation —

but in that order.”

*    *    *    *

Email: [email protected]