Pay for Performance

~by: Tan Kin Lian~

I wish to add my views to the big debate about the revised salary package for government ministers and other senior political offices.

I find the basic salaries to be adequate for the office bearers and acceptable to me, and perhaps many Singaporeans. Although they are still higher than political salaries in other countries, they are not excessive, considering that this is a “clean wage” with no pension benefits and other perks.

Bonus for politicians

What I disagree with is the high rate of bonus that is being paid to the political leaders based on the concept of “pay for performance”, i.e. the ministers get a higher rate of bonus, if they perform well.

Does this mean that if they do not get a good bonus, they will not perform to the best of their ability? At the highest level of leadership in our country, do we need to motivate them with money? Surely, a basic salary that is already higher than international benchmark is sufficient!

I prefer to see our top political leaders being driven by the sense of public service and the privilege to serve, rather than by monetary rewards.

I wish to apply this argument to the private sector as well. After getting an adequate package, they should achieve the best results, out of a sense of pride and achievement and to leave a legacy.

Lesson from Japan

I recall that top executives in Japan earn a small multiple of the average wage of the ordinary workers, unlike the case in USA and other countries. The performance of large Japanese companies has not been hampered by this lack of money motivation.

Negative Impact

I wish to highlight the negative impact of “pay for performance”.

We have seen in Singapore a culture of “passing the buck around”. Many government agencies prefer to refer the public to another agency to solve the problem, instead of taking charge of it.

Recently, there was a news report about the the nuisance caused by the mynah bird. Channel New Asia found that the National Environment Agency deals with crow and the Agri-Food and Veterinary Agency deal with pigeons, but no agency wants to take charge of dealing with the mynah birds.

Why do these agencies take this approach? If they deal with the problem, they have to spend time and resources. This would increase their cost and reduce the performance. The leaders in these agencies with have a lower performance score and will a lower rate of bonus.

http://sglinks.com/pages/2308162-s-charge-bird-nuisance

My friend who works in the Land Transport Authority told me that there is a similar situation on taking care of the land. The space between the shops and the drain is the responsibility of the town council. The drain is the responsibility of the National Environment Agency. The Land Transport Authority is responsible for the roads.  If there is pollution that affects all of these areas, the public will be referred from one agency to another.

This type of issue will not arise, if the public sector is not driven by “pay for performance” or by key performance indicators (KPI) like the private sector.

We have also seen, in the private sector and especially with the banks and public transport, a culture of pursuing profit to the detriment of the public and cost of living. The top executives want to increase the profit and earn a higher bonus or stock options.

Set a Good Example

Leaders have to set a good example of carrying out their duty diligently and not be driven by greed and money. Even if they claim that they are not, it is better to remove the concept of “pay for performance” at the top levels of our political leadership.

If we set the framework right, we will hopefully see a change in the environment and culture over the years ahead. It will be slow but the step must be taken.

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Mr Tan Kin Lian is the former chief of NTUC Income and a candidate in the Presidential Election 2011. Mr Tan blogs at www.tankinlian.blogspot.com.