In the design of a successful incentive plan, an obvious starting point is "what do we hope to achieve ?". In other words, "What is the objective of the proposed incentive scheme?"
As organisational practitioners, it is always challenging to frame the main purpose of an incentive plan and its competing agendas. Organisations may adopt SMART ideas in determining the goals and objectives of the plans. Performance standards and measures may be formulated using economic value added models or balanced (HR) scorecard templates. With performance measures aligned to the strategic intent of incentive plans and the goals and objectives of the organisation, the causal link between pay and performance may perhaps be forged in theory, and may not necessarily be forged in practice.
As its name implies, the primary purpose of incentives is to incentivise and reward behavioural change towards performance targets. A significant challenge in the design and implementation of successful incentive schemes (both long and short term plans) is the notion of line of sight. If we are unable to "set our sights and sight our targets", it will be problematic for us to achieve our goals regardless of our competencies and motivation. If the line of sight is remote or obscure, organisations would simply be offering us more money for nothing.
In an attempt to make the civil service careers more attractive, the public service division of Singapore announced it would provide extensive career development opportunities and performance based pay for its public servants. An aspect of the performance based pay is the concept of a "Growth Bonus".
According to its press release of 25 October 2007:
"A new Growth Bonus, to be paid in times of exceptional economic performance, will also be introduced. In line with the philosophy to link rewards to performance, this bonus will be tied closely to individual performance, with the better performers receiving more ... The Growth Bonus will only be paid when the
With an expectation of a "Growth Bonus" for a stellar economic performance to be payable in March 2008, the public service division under the Singapore Prime Minister Office may be setting another quantitative benchmark on short term incentives for the private sector to follow.
As a tiny red dot, the economic performance of Singapore may be driven mostly by external factors, such as the growth economies of China and India, and may be beyond the grasp of our public servants. No matter how hard we may try, we are still a sampan in an ocean. Do we reward ourselves while we sail in calm waters, and blame the tankers for creating waves when they are in close proximity? What happens when the sea level raises?
As a servant of the public, performance standards and measures may be difficult to articulate. In addition, the line of sight between the performance and contributions of civil servants and the exceptional (?) economic performance of Singapore may be obscure, or even remote. Seriously, is there a line of sight between a high performing civil servant offering public service and the
What about incorporating measures that go beyond economic performance to focus on the well-being of its residents such as income disparity and work-life expectancy in a knowledge-based Singapore. Should we include the Human Development Index (HDI) and its composite people dimensions of longevity, knowledge, and purchasing power parity, as well the Gini coefficient as key performance indicators for public servants. Surely, we should align the well-being of its residents to the economic growth of the economy, or shouldn't we?
While the public service division attempts to incentivise its civil servants through "a sharper link between pay and performance to recognise staff according to contribution", will the servants of the public run into "the folly of rewarding A while hoping for B?"
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TodayOnline, 11 April 2007, Singapore
Why the GDP link? Bonus peg a good indicator of how ministers, top civil servants have created wealth for all of Singapore
Derrick A Pauloderrick@mediacorp.com.sg
FEW would probably take issue with the fact that a minister's pay - in fact anybody's pay - should be linked to his performance. But when his pay packet is also tied to
If Monday's parliamentary debate on pay revisions for ministers and civil servants focused mainly on that "benchmark thing", yesterday's session saw the spotlight being trained on the "GDP bonus".
This bonus is a component which ministers, parliamentary secretaries, top civil servants and MPs are eligible for.
Several of the 13 backbenchers who spoke yesterday had reservations about the GDP bonus, even as they expressed support for the tighter link between pay and performance in the public sector, a distinctive feature of the revisions compared to past exercises.
One common refrain heard in the House was whether it is a fair performance peg to use.
"We all know that a rise in GDP may not benefit all sectors of society equally. Some may even lag behind. I would suggest that the Government consider using indicators that directly impact the livelihood of all Singaporeans," said Dr Lim Wee Kiak (Sembawang GRC).
Nominated MP Loo Choon Yong, while "relieved" that a large part of the salary increases are not in the fixed salary component, said that relying on the GDP alone is "simple, convenient but inadequate".
He proposed one other indicator to be considered: That of the total cost of running the Government as a percentage of total revenue.
After all, CEOs in the private sector have to ensure profits are not eroded by increasing costs and expenses, Mr Loo said.
Other suggestions of alternative benchmarks included: The consumer price index and the inflation rate, as a way to keep cost of living affordable and protect savings; citizens' feedback to major public services; the number of jobs created for Singaporeans; and even the number of Singaporeans who migrate.
Based on the latest revisions, ministers will enjoy a GDP bonus of between three and eight months if the economy grows between 5 and 10 per cent or more. But they will not get any bonus if the economy grows by 2 per cent or less.
For example, the entry-level annual salary of a minister this year is expected to include a 5.9-month bonus based on
Mr Teo Chee Hean, Defence Minister and Minister-in-Charge of the Civil Service, heard them all. In his response midway through the debate, Mr Teo pointed out that the Government has to cater to all Singaporeans, not just individual groups.
"Therefore, the GDP is a good indicator of being able to create wealth for all of Singapore, and with that wealth, to make even those Singaporeans who may not benefit directly from the GDP growth better off as well ... through asset enhancement and wealth transfers."
In his hour-long speech, Mr Teo delved into each of the major talking points, raised by both MPs and the public, on ministerial and civil service salaries.
One of these is the question of comparing salaries to the private sector instead of a comparison with what politicians earn in other countries.
The latter would not be comparing apples with apples, said Mr Teo. "Our salaries are clean. Everything is there. You look at the salary of the Prime Minister of Britain or
More importantly, though, as civil servants or office-holders in
"You have to look at what a young man in his 30s or 40s is comparing himself to when he's deciding what he's going to do with his life. These are the relevant market comparisons - not what politicians in
Another comparison, between the civil service pay increases and the $30 monthly increase for those on Public Assistance, was raised in the House by both a backbencher and Mr Teo.
Said NMP Kalyani Mehta: "If we are going to be generous to civil servants, then let's be generous to the very poor." In response, Mr Teo said: "The needs of these individuals are quite different and we need to find more holistic and flexible ways of looking after their needs."
Commenting on salary revisions in the context of a widening income gap, he added: "Capping the salaries of ministers and top civil servants will not solve this problem. The problem can be best addressed by à sound policies and programmes, like those introduced in the Budget recently à but most importantly by creating jobs and the resources so we can help everyone in
One new issue that cropped up yesterday was the danger of concentrating too much power and money in the hands of top public officers.
MP Denise Phua (Jalan Besar GRC) said: "As responsible leaders, we must be careful not to leave behind a system or structure that combines power and monetary rewards to such high levels that incumbents are so handcuffed by this lethal combination that they find it hard to let go."
NMP Eunice Olsen argued that the coupling of political and financial power is more likely to lead to the creation of a rogue government.
On this issue, Mr Teo said that the checks are elections and the ruling party's selection process. "If (a person's) motivations are self-serving or to make money, we do not select him. And if we discover that's what he's about after he has come in, we drop him," he said.
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The Straits Times, Nov 27, 2007, Singapore
Two month year-end bonus for civil servants
Better performers' can also expect growth bonus of up to 0.8 months
By Li Xueying
Add on the half-month bonus they received in July and the total bonus civil servants will get this year amounts to 2.5 months.
Tuesday's bonus announcement is likely to be a guide for the private sector, as was typically the case in the past.
Although the payout is a dip from the 2.7 per cent given last year, most civil servants will still go home with more - thanks to the new 'growth bonus'. Introduced this year, it will be given in times of exceptional economic performance.
This year, the Government is forecasting the economy to grow by 7.5 to 8 per cent. For 'good performers', this new payout will bring another 0.5 month's bonus, and for 'better performers', up to 0.8 months, said the Public Service Division in a statement on Tuesday.
The payout comes in a year when the economy has 'performed better than expected', it added. Mr Teo Yock Ngee, general secretary of the Amalgamated Union of Public Employees, said he expects most civil servants - those banded in the top three of the four tiers - to receive the growth bonus. It is to be paid out in March.
This new bonus is in line with the Government’s policy to strengthen further the link between performance and pay.
And what's given this year is consistent with what the private sector companies are planning to hand out, the executive director of the Singapore National Employers Federation, Mr Koh Juan Kiat, told The Straits Times.
A survey it conducted among 276 companies in September shows that this year's bonus will range from two to 3.5 months. The median is 2.8 months.
This annual announcement of the bonus for civil servants is closely watched by the private sector, which often uses it as a guide for how much bonus to give out.
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