Link pay to performance
Vandudzai Zirebwa Buy Zimbabwe
Buy Zimbabwe will be holding its annual conference in April this year amid a worsening trade deficit and a decline in the country’s competitiveness.The situation has been exacerbated by some top company executives who have been drawing huge salaries and allowances yet their companies are clearly struggling.
While human capital has emerged as a central component for unlocking value in a global world that is now driven by knowledge, events of the past months in Zimbabwe suggest that serious attention should be made to ensure that remuneration is not only fair but should also be linked to general company performance and productivity.
During the leadership summit held in the country last year, internationally recognised leadership expert, speaker, coach, and author Dr John Maxwell said the reason why some organisations succeed and others fail, is because of leadership. Applied to our own situation this means most of the challenges that we are experiencing have to do with the shortcomings of leaders in most of our organisations.
Most of the organisations whose bosses have been in the news for earning hefty salaries are struggling. For instance PSMAS is failing to pay service providers yet it’s affording to pay hefty salaries to top management. Its cost structure is 10 times more than that of its nearest rival. Its salary bill is in the range of US$33 million per year, its closest rival sits at US$4,5 million.
Its nearest rival has been able to submit quarterly management accounts and annual audited accounts but PSMAS has been unable to do so since 2008.
At the public broadcaster ZBC, top management were earning hefty salaries and generous allowances while the majority of the employees were going for months without their salaries. The salaries were being paid at a time when the public broadcaster is financially crippled largely due to falling revenues as a result of dwindling advertisements.
The public broadcaster has also lost its audience and viewers to rivals such as Multichoice’s DSTV, Zambia’s Muvi TV and recently BosTV. In short, the management of human capital and the way pay structures are linked to performance are central to ensuring that organisations compete effectively.
While matters of liquidity and retooling are without doubt important, without the core drivers of such issues, who are the people charged with the responsibility to navigate the day to day operational concerns; success becomes an unlikely proposition even in companies that have a monopoly. In fact the same advantages that may create success with a different set of leaders are likely to the basis for abuse of power if they are not channelled appropriately.
Interestingly in the two most cited cases PSMAS and ZBC the question is not about their ability to generate cash but its management and distribution to create value, serve customers and reward superior performance at all levels.
Chances are that with a more accountable leadership and responsible boards both organisations would have used the resources they had to deliver superior performance. In such situation society would definitely agitate for such bosses to be given greater consideration.
In fact in developed markets it is not unusual for executives to earn amounts that surpass hundreds of millions in bonuses each year if their organisations have posted superior returns.
While we must correct the current distorted anomalies, it is critical that as a country we benchmark ourselves against world practices and seek to define our performance and productivity in line with global trends, after all we are using international currencies.
Just last week we were informed of how this country was hit by a mass exodus of medical doctors in 2009 when the NGO community withdrew salary incentives on account of Government having taken the responsibility to pay such personnel. What simply happened is that most of the affected staffers left for neighbouring countries that paid better than the local market.
As such in our dealing with this worrisome case of salaries, let’s resist the temptation of doing so without linking pay to performance and benchmarking against regional and even global trends.
The crisis that has been presented by the exposure of the salaries in our public institutions should not be a wasted opportunity. We must use it to discuss in detail how we can enhance our productivity as a country as well as ensure that our human capital plays its role in driving Zimbabwe forward.
The Annual Buy Zimbabwe conference whose focus is on building Zimbabwe’ competitiveness will centre around the effective use of our human capital.
Despite our present circumstances we must always plan with the future in mind. An ingenious man on social media posed an interesting scenario for Zimbabwe 40 years from now.
They had a future impression of the Herald. The lead story had picture of the convicted Gumbura now old and just released from prison. Another story said Zimbabwe had beaten Brazil and was going to the finals of the Football World Cup.
While the majority of commentators could relate to the story of Gumbura, many found the football story a little too difficult to relate to. Many could not imagine the Zimbabwean national squad as they know it today qualifying for the World Cup, let alone advance to the finals.
Forgotten in that analysis is that this is 40 years from now. The question to pose is that, as a country, do we have what it takes to transform our present circumstances to higher levels of performance? Are we able to fully unlock our human capital to levels that ensure that what today we see as a scandal might be taken for granted by most people in the decades to come?
What future of Zimbabwe do we envision? Will unemployment remain high? How much new wealth will we have? How proud a people will we be? Whatever the answer to these questions, one thing is clear. It all centres on human capital.
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