31 December 2007

Is Grow 2.0 the Growth Bonus?

Based on the response from the Singapore Teachers Union on the Ministry of Education's (MOE) announcement of its new renumeration scheme, Grow 2.0 may have the effect of attracting talented people to the education profession and positioning teachers and educators more than "a step child" to the other professions.


http://www.todayonline.com, 29 December 2007, More Apples For Teachers

From a reward management perspective, money is never enough. Simply throwing more cash at a problem may motivate teachers to behave like mercenaries. It may also have the undesired outcome of attracting more people into the profession for the wrong reasons, as semi-retired military officers and the unemployed may have once dream of becoming teachers in our schools.

The internet poll conducted by Channel News Asia (accessed on 31 December 2007, 0535 hr Singapore time) re-enforces the notion of "money for nothing" syndrome.


http://www.channelnewsasia.com/polls/index.php?action=vote&id=74&ranid=7757&voteNr=1

Perhaps, Grow 2.0 may address the "money not enough" mentality fueled by debates on ministerial salaries and pay hikes of public servants. The most significant change in Grow 2.0, in my opinion, is that public servants at the Singapore Ministry of Education may no longer be perceived as "money-grabbers" conducting the business of education.

Competitive salaries, as the Singapore Minister of Education commented, are "a necessary condition, even if they are not sufficient to ensuring a top-class teaching service.” He adds that “there is no trade-off between ensuring that we pay teachers competitively and sustaining the commitment and passion for teaching”.

More importantly, the Growth, Career Development, and Well-Being components of the MOE's reward program may be relevant in attracting and retaining people who have the passion to teach, to share knowledge, and to do something useful with their lives. After all, it has always been the non-tangible rewards that attracted the "people sculptors' into the teaching profession and education in the first place.

In addition, Growth 2.0 may be a breath of fresh air in an otherwise "Gordon Gekko" playground. Resource allocation, continuous learning, career mobility, balance in work life for teachers and their spouses regardless of gender, work performance differentiation, spot bonuses, and the refinements contained in the connect (gratuity?) program could spark an "education revolution" within the teaching profession. Whether it stays a revolution in the classroom remains to be seen as the devil is always in the details.

On a positive note, Grow 2.0 may not be contingent on the exceptionable growth (?) of the Singapore economy. Inspiring young people to be entrepreneurs through education is very different from motivating "bottom-line" results-oriented behaviours regardless of ethics, morality, and its undesired consequences.

An English teacher from a secondary school sums up the MOE reward initiative aptly, “Performance-based pay is a double edged sword because it benefits those who shine the most.” The teacher who declined to be named adds “But there are teachers who are more low-profile, yet doing very good work that might go unnoticed.” But then, if you are starving, it is better to be in the kitchen.

Regardless, the anonymous English teacher has a point. We want our teachers to mould our kids and young adults into thinkers, and reflective practitioners. In the realm of "Gordon Gekko", people may have substantial form and dubious substance. These are the extrovert "money-grabbers", and the highly successful players in the game. As we frame our performance indicators for teachers and educators, we should avoid the folly of "rewarding A while hoping for B".

Incidentally, GROW is an acronym for the MOE pay package for "the professional and personal Growth of education officers, through better Recognition, Opportunities, and seeing to their Well-being". What a mouthful !!! and how creative can our public servants at MOE get?

Version 1.0 was announced on 4 September 2006, and version 2.0 on Friday. Perhaps, our technocrats are migrating from Web 1.0 to Web 2.0 metaphorically. Can we stop dehumanizing people by digitalizing them with alphanumeric labels? Otherwise, we may get to GROW version 3.0, release 8A in quick time.

Tomorrow will be a brand new year. If there is a new year message, it would be a "keep it simple, stupid" (KISS) message. The success of a reward program lies in its simplicity, and the ability to communicate its value. Not many of us will comprehend the details of our hospitalization benefits or our insurance policy until we are warded, strapped to our hospital beds, and search frantically for that additional insurance cover presented in small prints.

Happy New Year and Good Health !!!

20 December 2007

Is greed really good?



PROFILE - Sir Adrian Cadbury
Cambridge
Alumni Magazine, No 52, Michaelmas Term 2007

Sir Adrian Cadbury (King’s 1949) has spent a lifetime promoting ethical standards in the boardroom, says Peter Richards. And it’s largely thanks to him that corporate governance is transforming the way we do business. Why greed isn’t good?

Watching Oliver Stone’s Wall Street in a cinema on the Upper East Side is one of my abiding memories of the eighties: seduced from the first cheesy moments by Sinatra singing ‘Fly me to the moon’ as the camera pans over a fiery dawn in lower Manhattan, then pinned to my seat by the sheer gusto of the performances. As a film it has its faults. But no one ever forgets Michael Douglas’s Oscar-winning turn as the cutthroat financier Gordon Gekko, or his ‘Greed is good’ speech to a shareholders’ meeting that is the turning point of the movie.

Gekko is suitably reptilian: all candy-striped shirts, power braces and slicked-back hair – the very archetype of unbridled capitalism, concerned only with the next deal and contemptuous of the interests of any ‘little people’ – employees or shareholders – who get in the way. He’s the snarling villain who steals the show; not some hapless victim like Sherman McCoy in Tom Wolfe’s blistering New York satire, The Bonfire of the Vanities, but a real Master of the Universe.

The irony, of course, is that Wall Street became a call to arms that fired up a whole new generation of tycoons. Fuelled by what Ronald Reagan used to call ‘the magic of the marketplace’, the greedy eighties bounced back in the nineties as the dot.com boom, and they’re still alive and well today (albeit a little wobblier since August). Nine of the top ten buy-outs of all time have been announced in the last year.

Business can still be gladiatorial, but top executives have become sticklers for the rules – not least because white-collar fraud can now get you a life sentence. Bernie Ebbers, the former boss of Worldcom, is currently serving 25 years for an $11bn accounting fraud. Jeffrey Skilling, who at the energy giant Enron built an astonishing $65bn house of cards that collapsed in 2001, is serving 24 years. And these are billions not millions remember: sums so enormous that they make the £1.6bn losses run up by our own ‘bouncing Czech’, Robert Maxwell, look almost modest.

With the collapse of the Soviet empire, capitalism became the only game in town. So the key public interest issue now is how we regulate: not just the stock exchange roller coaster John Maynard Keynes famously called ‘casino capitalism’ but corporations themselves. At least that’s the message of Adrian Cadbury’s friend Bob Monks, the lifelong Republican who pioneered shareholder activism in the United States. ‘It’s almost as if we have created a doom machine in our search for wealth and prosperity,’ says Monks in the recent award winning documentary The Corporation. ‘We’ve created something that’s going to destroy us.’

Still mulling this over, I crest a humpback-bridge over a canal and come abruptly on Cadbury’s house, crunching to a halt beside the duck pond. It’s a handsome, half-timbered Midlands farmhouse, grown deep into the landscape and of similar vintage to King’s College chapel (a resonance any Kingsman as devout as Cadbury must surely relish). Out back, screened today by dripping trees, are a swimming pool and tennis court, but it’s a comfortable home not an ostentatious one. You can only sleep in one bed, and Cadbury would be the last man to crave a Poussin to hang over it. He’s lived here for fifty-one years, ever since leaving home in his twenties – an upheaval, jokes Susan, his wife, he found so traumatic that he vowed never voluntarily to move again.

In person Cadbury is tall, spare, self-deprecating, immensely courteous and endlessly interested in people: not their foibles and absurdities but their abilities and interests. Born into the Cadbury chocolate dynasty and still an Eton schoolboy during the Second World War, at Cambridge he read Economics and rowed, just as his father, Laurence, had done at Trinity a generation earlier.

The river became a lifelong love affair. He stroked King’s first boat in the Lents and Mays, and then in the 1952 Boat Race rowed in the only Blue Boat ever to contain two Kingsmen (his compatriot was George Marshall).

It was one of the outstanding contests in Boat Race history, rowed in a snowstorm but remembered above all for the closest finish since the dead heat of 1877. At Barnes, Cambridge was leading but at the line Oxford won by a canvas (12 feet), leaving both crews to pass beneath Hammersmith Bridge abreast. ‘All the time we were side by side I kept thinking, “Now’s the time to make a move, now’s the time to pounce”, but we never did and they won,’ says Cadbury now. Even today he wishes he had stroked the boat, particularly as Oxford’s win put them back in the game after a five-year losing streak.

Cadbury’s consolation that summer was to row for England in the coxless fours at the Helsinki Olympics alongside the captain of the Blue Boat, his great friend James Crowden (Pembroke 1948). In a frame somewhere, he still has the letter the formidable King’s economist Nicky Kaldor sent him to wish him luck in the Olympics and congratulate him on his finals results. In the end the crew came fourth, missing a medal by the narrowest of margins. Honour was only restored the following year when they won the coveted Grand Trophy at Henley Royal Regatta.

When Cadbury joined the family firm in 1952, he brought with him not just the famous pink socks and hippo tie of the Leander Club but attitudes to corporate life drawn from his Quaker background and from rowing: a set of values completely at variance with Gordon Gekko’s rampant egotism. Remembering that last hectic summer training on the Cam, he emphasises the importance of team harmony, trust and time management. As in the wider world, everyone had their talents and a part to play. ‘The beauty of racing in a crew is that you learn that any victory is the combined effort of everyone,’ he says. ‘In the same way company results reflect the performance of the whole firm.’

It was Cadbury who over a generation steered the company into the modern world. Until 1953 the home market was distorted by sweet rationing, but within ten years growth was healthy enough for the company to become publicly quoted. When, contrary to his expectations, Adrian Cadbury became managing director in 1965, he found himself not just the youngest member of the board but a new broom who could see that the company needed a complete organisational overhaul.

The board itself was in the front line. With help from the management consultants McKinsey, says Cadbury, ‘we gradually moved from being a board of management, which met at 9am every Monday morning, to being a directing board’.

In 1969, determined to achieve critical mass in the world market, the company merged with Schweppes, a long established drinks business that looked an ideal fit, both ideologically and in market terms. Cadbury had to sell the deal to the family shareholders, but found inspiration in his Boat Race defeat.

‘There was a certain amount of inertia at Cadbury. We weren’t doing badly, so there was no real motivation to go through the trauma of a merger, but that was too similar to the ‘52 Boat Race attitude. It reminded me of that sensation of feeling comfortable, but dangerously so. I felt the time was right, just as I did when stroking.’ The merger finally went through and proved an outstanding success. Over the next thirty five years turnover increased from £260 million to £6.7 billion.

Over time, what did become clear was that the food strand of the merged business didn’t fit with the rest. In 1986, the company’s food, coffee and tea brands such as Smash, Chivers Hartley, Kenco, Typhoo and Marvel were therefore sold in a management buyout to a team led by Cadbury- Schweppes then planning director Paul Judge (Trinity 1968). Judge borrowed £90,000 to invest in the new company, Premier Brands Ltd, which he then transformed into such a roaring success that he was left £45m the richer when it was sold on three years later.

In 1990 he gave a generous £8m to Cambridge, which, augmented by £5m from the philanthropist Simon Sainsbury (Trinity 1950), allowed the Judge Business School to be established in the symbolic centre of the university opposite the Fitzwilliam Museum.

What Adrian Cadbury didn’t forsee when he stepped down as chairman of Cadbury-Schweppes at sixty was that he was embarking on a new career that would quickly shred any notions of retirement. Convinced that better, more effective boards were the key to good business decisions, he put his thoughts together in a little book called The Company Chairman (1990). Concise, free of jargon and full of good sense, it had an immediate impact.

Then, in the wake of the Polly Peck and Coloroll scandals, where accounts showing companies to be in good shape had been published just weeks before their total collapse, Cadbury was invited by the London Stock Exchange and big City accounting firms to chair a committee on financial corporate governance that would come up with a code of good practice.

Within weeks, new upheavals stretched their terms of reference. ‘First we had the BCCI bank collapse [with a loss of £9bn], then Maxwell pillaging £429m from his employees’ pension funds. Suddenly we couldn’t just stick to reports and accounts. So we tried to frame guidelines for companies to define what their duties are when it comes to reporting and accounting for their stewardship.

‘It was not a big report. We made nineteen recommendations, and most of them are one sentence. But the essence was disclosure: you must be open about the way you’re running your business. Particularly in a publicly quoted company, the equations can become difficult. But your job as directors is to balance your duties towards your investors, your employees, your consumers and society as a whole.’

Issued in December 1992, the ‘Cadbury Report’ proved a watershed that thanks to its chairman’s tireless advocacy continues even now to make waves around the world. Later reports and fifteen years of academic research have only served to uphold the fundamental Cadbury principles of openness and transparency.

Some publicly traded companies still do not separate the jobs of chairman and chief executive or have on their boards three or more outside directors, as Cadbury recommended, but increasingly they are seen as mavericks about whom investors can draw their own conclusions.

In 1992, Cadbury recalls, even after the BCCI and Maxwell scandals, there were plenty of naysayers who said, ‘Who are these people? This is interference with the way businesses are run’. The Confederation of British Industry didn’t like the recommendations, even though both it and The Institute of Directors had been represented on the committee.

‘They gave me the chance to have my say at the CBI conference, so they could oppose such intervention. But I really believed in what we’d done, so I was prepared to speak anywhere, to any audience, and say, “We believe that these things are in your interest – and if you don’t meet the expectations society has of you as directors, you are going to have regulation imposed on you.” In the event, I got almost total support from the CBI membership.

‘Our code of practice had no legal force. All we asked companies to do in their annual reports was to comply or explain why they weren’t doing so. There were all kinds of people who didn’t wish to comply: until very recently [the supermarket group] Morrisons didn’t. Fine. They explained that to their shareholders, and their shareholders initially supported them. It was only when things began to get a bit rocky that they had to make changes.’

One unexpected consequence of the report has been a huge amount of travel, says Cadbury. ‘I’ve been to 24 different countries, some of them several times, to talk about corporate governance and reporting. And it’s that concept of “comply or explain” that has had such impact internationally. It’s been taken up by the World Bank, right across Europe, and taken root almost everywhere except the United States.’

America, of course, has its own Sarbanes-Oxley legislation, introduced in 2002 in response to the Enron and WorldCom scandals, but this has been widely disparaged as cumbersome and overly prescriptive, loaded down with the sort of detail that positively challenges lawyers to find loopholes. By comparison, the simplicity of the Cadbury code and the way it places the onus to comply squarely on the company has made it self-recommending across most of the rest of the world.

This transatlantic split reflects a genuine ideological divide, says Cadbury. Gordon Gekko wouldn’t agree that companies have any ethical responsibilities to the society in which they operate. They exist solely to make money, which is why the mantra ‘greed is good’ is hardwired into so many brains. Ethics exist only to be left at the office door with your coat.

As the free-market economist Milton Friedman once put it: ‘Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible.’ For Friedman, a corporation’s sole ethical imperative is to stay legal.

So what does Cadbury think companies are for? ‘The fundamental role of a company is to provide the goods and services people want, and to do so efficiently, ethically and profitably,’ he says. ‘Companies are chartered by society. They have a legal existence; they have benefits; and in return there is an implied contract with society. Companies need to deliver the benefits society expects from them. Why should they have favoured status otherwise?’

On that definition, he says, corporate governance is the job of ‘holding the balance between economic and social goals. The aim is to align as nearly as possible the interests of individuals, corporations and society. The incentive for corporations is to achieve their corporate aims and to attract investment. The incentive for states is to strengthen their economies and discourage fraud and mismanagement.’

The contrast is stark. In continental Europe and Scandinavia companies have an important and established social role in the community, whereas the Friedman approach – the American way – insists that companies have no business meddling in social affairs. They don’t have a mandate and it’s not their job.

‘For business,’ says Cadbury, ‘the dilemma we are faced with in questioning the American way, of course, is that they’re very successful. Their companies work very well. In Britain we’re in a sense caught between the European and American approaches. We do very much admire American success, but we worry more about social consequences than they do.’

‘Many benefits flow from the changes we have made in Britain, particularly under pressure from pension funds and insurance companies. For instance, by law companies now have to state in their annual reports how far they take social, environmental and ethical considerations into investment decisions.’

Recently Cadbury pulled together the fruits of his earlier and later careers in a further, equally crisply written, book, Corporate Governance and Chairmanship. A Personal View (Oxford 2002). Ten years on from the Cadbury Report, he offers a wealth of practical advice to company chairmen and directors – including some trenchant remarks about boardroom tables – and reviews how far corporate governance has come. In the final analysis, he says, ‘the character of the company is collectively in our hands. We have inherited its reputation and standing and it is for us to advance them.’

In other words, as one early Cadbury statement of aims so admirably puts it, ‘nothing is too good for the public.’

14 December 2007

Money not enough?

This year has been rather eventful for reward management practitioners. Firstly, an upward pressure on salaries, amidst a tight labour market, caused numerous companies to match counteroffers of competitor firms to retain key employees. Secondly, the Singapore government revamped the salary management system of its civil service to keep pace with benchmark salaries of the private sector. To link rewards more closely to performance, the government increased the proportion of annual salary that is variable. At the senior levels, as much as 50 per cent of the annual salary is performance-based. According to a compensation consultant, “the civil service increasingly finds itself competing for talent against the private sector and as such, needs to ensure that its pay packages are competitive and aligned with its objective of attracting top talent’

Although the justification for paying public servants top salaries is to attract and retain key civil servants, it may have created a bridge that connects the stigmatised lowly paid public servants and the highly paid private enterprise executives. The dichotomy between public and private sector salaries will be blurred, and the traditional mindset of lowly salaried public servants may over time be eradicated. With the revised salary management system for public servants, the Singapore Government is setting the salary benchmarks that private enterprises will inevitably follow to stay competitive.

In the public sector, pay is symbolic. The perception of pay equity is an emotional topic. It is more so if the rewards of the political leaders of the country are intimately pegged to market pricing, benchmarked against the most successful chief executives of global corporations, and built on the public servant salary structures. It must be the dream of public servants to be rewarded as corporate entrepreneurs without the risks, responsibilities, accountability and/or competence to manage a business. As expected, ministerial salaries and bonuses created much attention and debate these past months.

In recent years, compensation of chief executives and senior management of private enterprises have been under scrutiny by stakeholders. At shareholders meetings, stakeholders are disgusted at the manner senior managers reward themselves regardless of company performance and returns on investments. In many instances, non-performing executives are offered golden parachutes amounting to millions of dollars as they are shown the back door. One need to go no further than to examine the classic case of Enron to understand why pay for performance and incentive schemes of the Anglo-Saxons led to the collapse of the organisation.

For more than twenty years, the Anglo-Saxons embrace pay for performance system as the panacea for driving employees’ behaviours towards the goals and objectives of organizations, often ignoring “the folly of rewarding A while hoping for B”. In his research on the mythology of management compensation, Edward Lawler III argued against the effectiveness of pay for performance in “why is pay no longer an incentive to better job performance". More recently, Michael de Beer conducted a survey on a sample of global senior executives examining “if incentives work?” Their results suggested that careful efforts to design an incentive system to make pay contingent on unit performance may be misguided, and raised questions about the worldwide trend towards the use of more executive incentives. Unfortunately, many organisational practitioners are still paying extraordinary attention to pay for performance. Are practitioners familiar with the notion of pay without performance?

The Singapore government may have embedded the cultural aspects of reward management by imposing Anglo-Saxon practices on its servants in predominant Singaporean Chinese work communities. As an example, the dimension of power distance as espoused by Hofstede, within the context of reward management, refers to the degree of inequality that is tolerable between salaries. Countries with a high power distance can have extremely wide salary gaps (income disparities) that would not be tolerated in countries with a low power distance. Within countries (as well as companies) with a high power distance, it is accepted both implicitly and explicitly that people at lower levels of the organization should be paid little, and people at the top should be paid a great deal. Under these circumstances, is there a sense of guilt at the boardroom where people at the top are compensating themselves with obscene salaries and bonuses and the lower levels of an organization are drawing minimal wages barely adequate to meet hygiene levels? In the context of a high power distance work environment of "Yes Minister", the ethics of performance reward should be taken seriously. Otherwise, pay and performance may arbitrarily be determined by a "few good men", regardless of corporate governance.

Although the government has announced the revised salary management system, many questions remained unanswered:

  • Is the Anglo-Saxon’s pay for performance scheme designed on the premise of private sector enterprises, relevant and aligned to the Singapore civil service in terms of its purpose, its objectives, and the culture of public servants?
  • Should the rejuvenated public service rewards scheme be a pay for (past?) performance, pay for competence, pay for (future?) contributions, or simply pay for service excellence?
  • Are we encouraging public servants to be mercenaries as we throw more monies at them?

Soon, public servants, accustomed to higher salaries, will seek more salaries and bonuses so that they will not be dissatisfied with work. Seriously, is there a causal link between civil servants offering public service and an economy doing exceptionally well? Perhaps, we will experience Steven Kerr’s “folly of rewarding A while hoping for B?” in due course.

It is always convenient to justify salary increases with market pricing of benchmark companies. Inevitably, adopting salary surveys for competitive benchmarking purposes will result in upward spiraling salary costs, and intense pressure on companies to pay more. In addition, salary surveys are dated, and is an indication of pay for past performance. Do we really need to look back in order to move forward?

Reward management practitioners should go beyond the cash components of compensation and examine total rewards in the context of the industry the reward plan operates. Just as it is a folly to pay public servants private sector salaries, it will be a folly to pay volunteers and full time employees of charitable and/or non profit organizations private sector salaries, as a senior public servant suggested in his keynote speech at a recent charity dinner.

Regardless, money is never enough.

Are we motivating public servants to behave like mercenaries by throwing more money at them?


TodayOnline, 14 December 2007, Singapore

13 December 2007

A special monthly bonus for our employee of the month?

Incentive strategy works for designerintimex business solutions
South China Morning Post, 13 December 2007
(c) 2007 South China Morning Post Publishers Limited, Hong Kong. All rights reserved.

Employees are bound to look around for better opportunities in a booming economy and few will hesitate to jump ship when a tempting offer comes along, particularly if the offer comes from a larger, more established company than their present employer.

Daisy Chow Oi-yee, chief operations officer at website design company Intimex Business Solutions, understands the problem. "For a small company, attracting new members involves a big effort and a large investment. So losing staff is a big loss," she said.

She knew she could not win if staff simply wanted the kudos of working for a big-name company, so she created a working environment that discouraged staff from making the decision to leave.

The innovative approach to retention won her company a place in the finals at the HKIHRM/SCMP People Management Awards 2007. The company was entered into the small enterprise category.

Key to Ms Chow's approach is her introduction of large company human resources practices and systems to her small business. She adopted this strategy after completing her Open University MBA course in 2004.

Her successful formula is the "Motivate" principle which stands for motives, open communication, trust, innovation and creativity, vision, appreciation and rewards, thoughtful feedback and entrepreneurship. Consequently it helped to reduce turnover by 60 per cent in two years. In the past six months she has had less than three of her 20 staff leave her company.

Her industry is rapidly expanding and changing so she encourages her staff to be entrepreneurial, which means thinking outside the box and generating work that is fresh, exciting and different to the competition.

"We encourage employees to try new things and we allow trial-by-error, as this can stimulate creativity," she said.

The designers are encouraged to be creative during their monthly design competition. Each designer selects their favourite website from that month and puts it forward for judgment by colleagues. It is voted on and commented on by all members of the company.

Designers are also asked to make sure they are proud of their work. "If they are proud of their work, they will also engage the customer," she said. "There is a 30 per cent fail rate in this industry, because the service is not satisfactory, or projects are delayed. So we have a promise to our customers that we will finish the job by all means at our disposal," she said.

Management is encouraged to show appreciation by e-mail and regular appraisals are given every six months, with outstanding employees offered promotions and salary rises.

An unusual incentive is the special monthly bonus that is paid in recognition of the outstanding performance of staff during the month. The company divides 20 per cent of a month's profit among deserving staff.

__________________

Finalists strong to the core
Strong faith in human capital management and link between HR and business strategy help to impress the judges, writes Rosheen Rodwell

South China Morning Post, 13 December 2007
(c) 2007 South China Morning Post Publishers Limited, Hong Kong. All rights reserved.

Finalists of this year's HKIHRM/SCMP People Management Awards impressed the judging panel with their strong faith in human capital management - a vital element of a successful business.

The final results will be announced at the gala dinner tonight at the JW Marriott Hong Kong - an occasion which also marks the 30th anniversary of the Hong Kong Institute of Human Resource Management (HKIHRM).

All five judges are strong believers in the importance for businesses of good human resource management and they were pleased to discover that all of the finalists demonstrated a similarly strong faith in human capital management and that this faith was borne out in the implementation of their HR strategies.

They met at the end of November to hear presentations from this year's four finalists.

"The most enjoyable part of the process is seeing the results for the different projects demonstrate that the HR profession is of much more value to companies than just payroll and admin," said Gary Fielding, regional president Asia of Clariant International.

Equally rewarding, said Aaron Yim Chong-kee, managing director of Ricoh Hong Kong, was the fact that the commitment to these strategies went all the way to the top. "The strong link between HR strategy and business strategy was very clear. The chief executives demonstrated a strong belief that successful people development could uplift the productivity of the workforce and generate better profit for the company," he said.

The presentation day gave the judges a good opportunity to gather more information on the projects put forward and assess whether each project had involved the whole company.

Andrea Zavadszky, editor of Special Reports and Classified Post for the South China Morning Post, said: "We always want to make sure that the awards go to a project which had a great deal of involvement by the HR department, was fully supported by the chief executive and embraced by the staff. All of these points would have to be fulfilled for a project to win.

"We really have to base the judging on a thorough investigation," she said. "Sometimes the project looks perfect on paper, but when we visit the company we cannot find the results as described.

"The same thing is true in reverse. Sometimes the paperwork is a bit lacking and we doubt if the project should get in at all, but during the company visit and the presentation we gain a better understanding and become really impressed with what the company has achieved."

Each finalist impressed the judges in a different way. China State Construction International Holdings, which presented first and was among the three finalists in the large enterprise category, was congratulated for the united front it presented and for the consistency of its approach to the performance and profit sharing reward scheme, which had proven successful during difficult times for the industry.

Eddie Ng Hak-kim, past president, international committee chairman and external affairs director for the HKIHRM said: "China State has applied a generic performance and reward scheme and profit sharing system that cascades down to everyone. Workers in the field, people with different skills sets and with a variety of educational levels are all participants in the same scheme. This is a very proactive and professional people management ideal set."

City Telecom (HK) came next and made a good impression with a dynamic presentation. Ms Zavadszky said: "I really enjoyed the City Telecom presentation. It was presented by an ex-police officer and was bursting with energy. As a start, he took off his jacket and rolled up his shirtsleeves, with his teammates following his example. It was a little theatrical but it was a fun element and it well represented the leadership's management style: energetic, detail minded and team spirited."

NWS Holdings presented third and the company, which employs 42,000 people across a huge range of businesses, was commended for its Outstanding Employee Grand Award scheme.

Mr Ng said: "Being big, being diverse is a challenge. The beauty of what NWS Holdings has done is to hold one scheme common to all, even though the company is so big. The idea of the employee award cascading down to individual companies first, so each one would present their own unique contribution, [thus] building a culture of appreciation, is very important for today's community."

Finally, in the small enterprise category, Daisy Chow Oi-yee, chief operations officer at website design company Intimex Business Solutions, introduced her HR strategies. They had been specifically designed to combat the turnover that so drastically affects small businesses.

Ms Zavadszky said: "This presentation was impressive. Through her presentation you could see the everyday struggle of SMEs trying to change from a small company employing a few people, to something more structured as the company grows. "Ms Chow had terrific stamina and a great love of her job, her staff, and high objectives. Therefore she could remain in the black in a very competitive industry, with crippling attrition and could count some big and famous companies among her clientele."

11 December 2007

Are we willing to match an offer from a competitor firm to retain a key employee?

"A key employee has just presented his business manager with a job offer for significantly higher pay from a competitor firm. The threatened departure of the employee catches the business manager by surprise. Alarmed, the business manager contacts the human resource manager seeking to counter the external recruitment effort. An impassioned plea is made to authorize an exceptional pay package to match the offer. Under pressure and constrained for time, the human resource manager accedes to the business manager’s request, retaining the employee and in the process undermines the integrity of the company’s overall pay policy and practice."

As practitioners, we encounter a dilemma when the extension of a counteroffer is necessary to retain key employees. On one hand, we are reluctant to participate in an upward pay spiral by matching competitors’ offers with counteroffers. On the other hand, the bidding may be justified when the potential contributions and/or the difficulty of replacing the employee are great. In addition, matching offers of competitor firms promulgate a 'greed is good' culture whereby opportunistic employees solicit bids from competitor firms to extort higher pay from the company.

Simply aligning employee pay rates with the market median rates may not be sufficient to keep the headhunters at bay. Also, it would be naïve to presume that adherence to a market median, or an upper quartile pay practice should automatically translates into employee retention.

It is time to focus on market pricing of jobs and institute retention tactics in anticipation of the prospect of employees receiving job offers from competitor firms. Regardless of perceived pay equity challenges, market pricing of jobs is individual centric.

In anticipation of competitive bids in the war for talented people, should we offer key employees salaries commensurate with the alternative jobs (real or hypothetical) they could hold, or can we afford not to?

A recent employment outlook survey suggests that the "barbarians are already at the gates" ...

__________________________

Employers see strong hiring in Q1 next year: survey
Business Times Singapore, 11 December 2007
By Chow Penn Nee
(c) 2007 Singapore Press Holdings Limited

THE hunt for talent shows no signs of abating, as Singapore employers will actively recruit qualified staff from January to March next year, according to a quarterly survey measuring employers' intentions to hire or fire employees.

Conducted by US-based Manpower Inc, the Manpower Employment Outlook Survey polled 52,000 public and private companies in 27 countries.

Of the 736 employers polled in Singapore, net employment outlook - the percentage of employers looking to hire minus those expecting a decrease in employment - was 51 per cent. This indicates that employers throughout Singapore will continue to hire at a vigorous pace, said Manpower. This is nine percentage points higher than in the fourth quarter of 2007.

Forty-five per cent of employers said they expect to hire more people during the first quarter of 2008, while 2 per cent expect to reduce staffing levels, and 24 per cent report no change in hiring intentions.

C K Goh Rosa, country manager of Manpower Singapore, noted that job seekers are more selective with job offers and are more demanding in negotiating salary packages. 'With the consistently strong hiring outlook, we may see a continuous trend of rising salary packages to attract and retain talent. This will drive up operating costs and is a source of concern for most companies.'

She added: 'It will be a good time to invest in training the mature workforce to narrow the gap of talent shortages.'

Employers in the public administration and education sector report the strongest hiring outlook of 70 per cent, which is a marked increase from the previous quarter, and from a year ago. The finance, insurance and real estate sector was the second strongest with a net outlook of 67 per cent, a slight drop from the previous quarter, and a fall from a year ago.

The mining and construction sector was the third strongest in hiring outlook, with 59 per cent, up from a quarter ago, but a drop year-on-year. Employers in the wholesale and retail trade sector report the slowest hiring pace with an outlook of 33 per cent, higher than a quarter ago but a fall from the previous year.

'The sharp increase in the public administration and education sector outlook is likely due to the increase in enrolments in training institutions and learning centres in Singapore,' said Ms Goh Rosa. 'More people are looking to invest in personal advancement and marketability. We are seeing signs of companies sending their mature employees to courses to improve their skill sets and knowledge in an effort to extend their employment.'

In the Asia-Pacific, hiring activity is expected to be positive, but employers in Australia, China, Japan, New Zealand, Singapore and Taiwan show a slower pace of hiring from a year ago. On a quarterly basis, however, net employment outlook improved in China, Hong Kong, Singapore and Taiwan.

Globally, the strongest first quarter hiring expectations were reported in Peru, Singapore, India, Argentina, Costa Rica, Hong Kong and South Africa. Employers in Ireland reported the least optimistic hiring plans.

Is mandatory annuity scheme for old age still palatable on the back of 8 years of poor health?

Annuity made palatable
Straits Times Singapore, 11 December 2007
Review - Editorial
(c) 2007 Singapore Press Holdings Limited

BIT BY bit, the probable final shape of the compulsory annuity scheme for old-age support is emerging. Two features of the proposal which a good many people found objectionable may be modified, according to the principals working on the plan. These are the sequestering from the policyholder's heirs of surplus sums left upon death, and the seemingly ambitious age of 85 at which payouts from the annuity are to begin. Under modifications being studied by a government-appointed panel headed by Professor Lim Pin, the unused portion will revert to the family. This will be welcomed and should remove the one impediment that stands between voluntary and grudging acceptance of the old-age protection idea.

Just as cognisant of public unhappiness expressed is the concession that policyholders could have a choice of starting ages at which they will begin receiving payouts. Manpower Minister Ng Eng Hen, who is steering the annuity scheme, mentioned by way of illustration a range from age 65 up to 90. The base is obviously too low. A credible number could be 75 or 80. Senior Minister Goh Chok Tong has said he favours age 80. The original access age of 85 on the face of it is scaled too high. All that the Government has said of longevity projections is that half of those Singaporeans who attain age 62 will go on to live beyond 85. How many would that be? The incredulity with which this was received by many people was undoubtedly a visceral response, but it was enough to dump controversy on a proposal which by rights should get easy passage, as about half of CPF members simply would not have enough money in their accounts to support themselves if they lived to extreme old age. The Government will now engage private actuaries to verify data on projected life spans. This preferably should have accompanied the announcement of the original proposal, but better late than never.

Two points arising are worth recording. First, the Government has taken on board views and criticisms that clearly are deeply felt, even if these should eventually turn out to be not completely justified. The receptiveness will be welcomed by the people. But they should be prepared to pay higher premiums, and consequently have reduced CPF balances, for the relaxed criteria. Second, it should be remembered reform of old-age pension proposals had begun in the 1980s. Data showed Singaporeans were living longer and outstripping their modest savings. Life expectancy was only 61 years when the CPF was started in 1955. As those who need help most are least able to accumulate enough in voluntary savings, a mandated plan is unavoidable.
_____________________________________


S'poreans live longer but suffer 8 years of poor health
Straits Times Singapore, 3 December 2007
By Salma Khalik, Health Correspondent
(c) 2007 Singapore Press Holdings Limited

MOH study shows main causes of sickness are diseases that could be prevented early on

IF YOU needed another reason to lead a healthy lifestyle, here it is: A study shows that Singaporeans may be living longer now, but they are also sick for more years than people in some other countries.

The main culprits are heart disease and stroke, cancer, diabetes and even mental illness.

Now, the average Singapore woman should live to 81.8, but she will spend eight of those years ill or disabled. Men too will spend eight of their 78 years in poor health.

So while Singapore does well on life expectancy charts, a different picture emerges when good health is tracked.

The Ministry of Health study confirmed that a lot of suffering and premature deaths come from diseases that could be prevented - such as heart attacks, stroke and diabetes. Some cancers too could be caught early.

The prevalence of such diseases also suggests that more should be done to tell people what they can do to save themselves from becoming ill, said Dr Lam Pin Min, a member of the Government Parliamentary Committee for Health.

He called for more public education on how these ailments can be prevented, and screening to catch problems like diabetes and cancer early.

He added: 'With early detection of diseases, prompt medical treatment can hopefully minimise illness and medical complications.'

But health authorities can only do so much, argued unionist and Health GPC head Madam Halimah Yacob. People must take ownership of their health if they want to keep such illnesses at bay.

Her advice: 'Go for regular screening, eat more vegetables, less salt and do more exercise. That could cut the number of years you suffer from ill health.'

Dr Derrick Heng, deputy director of the Ministry of Health's non-communicable diseases branch said the study will guide the authorities on how to spend health resources.

But though it 'shines the torch' on diseases that cause the most suffering, the ministry will have to see which actually benefit from preventive measures.

The study will be repeated every three years, to track if the main causes of disability change, or are reduced, as the ministry puts in more effort to tackle them.

A surprising finding was how mental disorders count as much as diabetes and stroke for the wasted years. Mental health is getting a boost as the ministry has committed $80 million over the next five years to improving it.

Zooming in on problem areas could help Singapore catch up with countries that fare best - such as Japan, the top country in the world for long, healthy lives.

Japanese women live an average of 77.7 years in good health, compared to only 71.3 years for women here. Japanese men have 72.3 years of good health, compared to 68.8 years for Singapore men.

The ministry has already made the treatment and prevention of chronic disease a priority. People can now use money previously reserved for hospitalisation to treat diabetes, high cholesterol, high blood pressure and stroke.

The intention is to treat those conditions early before complications set in.

Unfortunately the programme has not been popular, said Madam Halimah. She suggested expanding the use of Medisave money to include an annual health check.

Men should also take a leaf from their wives.

Women all over the world live longer and healthier lives. The World Health Organisation (WHO) attributes it to their smoking less, exercising more and being more health conscious than men. As for Japan, its explanation is the low rate of cardiovascular diseases comes from their high-in-fish diets.

Madam Halimah said: 'We should also start eating more fish and less meat.'

salma@sph.com.sg

10 December 2007

Can we moderate economic performance with superannuation contribution rates?

Fight inflation with CPF, GST: economists
Business Times Singapore, 10 December 2007
By Siow Li Sen
(c) 2007 Singapore Press Holdings Limited

Cool labour demand by raising employer contribution, roll back July GST hike

(SINGAPORE) The government should restore some of the CPF employer contribution cuts as a way to cool labour demand, which in turn will moderate growth.

That should help ease inflation and help people cope with runaway prices that are biting into the lives of most Singaporeans, said Chua Hak Bin, Citi economist.

Another way to help people cope with higher prices is to target the punitive 2 percentage point increase in the Goods and Services Tax, other economists added. This is because when the 2 per cent GST hike was pushed through on July 1, the government had not reckoned on food and energy prices shooting up the way they have done.

'Higher CPF (Central Provident Fund) contribution rates will help cool labour demand and moderate growth,' said Dr Chua.

Economists expect the government to soon announce more specific measures to help the poor, who are especially hard hit by inflation.

But Dr Chua thinks more has to be done for the wider population, and restoring CPF employer contribution cuts will go a long way towards tackling the problem.

Inflation jumped to a shocking 3.6 per cent in October - a 16-year high - and the projection is that it could go as high as 5 per cent early next year, before easing.

Standard Chartered economist Alvin Liew said while the policy of having a stronger Singapore dollar can 'quite effectively deal with import inflation, it is less effective against domestic price pressures such as rising rents and higher wage expectations'.

'We are likely to see more government measures to moderate rental increases, business costs and wage expectations,' said Mr Liew.

Some measures could be to increase property tax rebates and raise the corporate tax exemption threshold, said Mr Liew.

Dr Chua thinks it's strong growth that must be tackled, and one way would be to restore the CPF contribution cuts by one percentage point and more for older workers.

'Job growth is running at too strong a pace, given such a tight labour market,' he said.

Job growth is running at 200,000 a year, or at an 8 per cent pace and the unemployment rate is now down to below 2 per cent. Easing the rules on hiring foreigners is not the solution, he said.

'Where will you house the foreigners?' Dr Chua asked.

Higher CPF rates will also help the middle class cope with rising living costs, by giving them more cash to pay for things which have become too expensive, he said.

When the CPF rates were cut, many had to dip into their disposable income to help with their monthly mortgage payments.

CPF cuts over 2003-06 (which brought the employer's rate to 13 per cent) were probably overzealous, especially for older workers, Dr Chua said.

This year, the government restored by 1.5 percentage points the employer's rate to 14.5 per cent, bringing the total CPF savings to 34.5 per cent for younger workers. But for employees past 50, the contribution rates are much lower to encourage employers to hang on to these older workers.

Suan Teck Kin, economist at United Overseas Bank, thinks the government will not restore CPF rates because it will add on to the wage pressure.

And companies enjoying strong growth will just hire more, he said.

To reduce some of the cost pressures, the government should do more to defray the punitive 2 per cent hike in GST, Mr Suan said.

Dr Chua agrees.

'With the benefit of hindsight, hiking the GST by 2 percentage points was probably unnecessary, given the fiscal windfall and inflation impact,' he said.

Dr Chua listed the windfalls.

The Ministry of Finance had projected tax revenue to increase by only 7.9 per cent, according to the 2007 Budget, but actual tax revenue increase may be more than double that rate.

The government projected income taxes to rise by 7.5 per cent. But income taxes for the first 6 months of the fiscal year actually rose by about 20 per cent.

The government expected GST revenue to rise by about 23 per cent. But GST collected (for the first 6 months of the fiscal year) has risen by about 49 per cent.

The 2 percentage point GST hike was expected to raise $1.5 billion, and the government was projecting a primary deficit of about $600 million (with the 2 per cent GST hike).

'But even without the $1.5 billion proceeds from the 2 percentage point GST hike, back-of-the-envelope calculations suggest the government will likely run a small primary fiscal surplus,' Dr Chua said.

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Interest rates not the only monetary policy lever
Wednesday, 28 Nov 2007 11:51AM
By Alex Dunnin
www.financialstandard.com.au/index.php?id=11421

With Australia’s super system looking more and more like Singapore’s every day, maybe it’s time we also followed their lead in using contribution rates as a de facto monetary policy tool.

The Singapore Central Provident Fund (CFP) is their A$100 billion national provident fund that helps Singaporeans save for retirement, to buy a home, for medical expenses and to build wealth though a series of non-retirement investment schemes.

But where it gets interesting is that while the only official lever Australia uses to slow down an overheating economy is raising interest rates, in Singapore they sometimes use the CPF contribution rates.

Contribution rates being up to 36 per cent of wages means changes these rates are likely to have much more impact controlling surplus discretionary spending anyway, especially as Singaporeans buying their home through the CFP account are only paying interest rates of 2.6 per cent anyway.

“With the economy doing well, it is timely to retune the balance of our CPF contribution rates towards the upper end of the 30-36 per cent range. A modest CPF increase will not erode our economic competitiveness and will allow us to better meet the needs of an ageing population.

“To enable our workers to benefit from economic growth and to help them build up their CPF savings, effective 1 July 2007 the Government will raise the employer's CPF contribution rate by 1.5 percentage points,” said a statement from the CFP back in February this year.

While a 2.6 per cent mortgage rate compared to the 8+per cent paid by Australians is incredibly attractive, the cost for this low rate is that returns paid by the CFP are generally only 2.5 per cent because the overwhelming majority of CPF assets are held as government bonds.

Another trade-off is that if Singaporeans use their CFP-funded mortgage to buy their initially publicly funded home they are not allowed to sell it for more than three years and they have to live in it themselves, a policy that Australia might consider as a means to limit house price speculation amid our housing affordability crisis.

While it would an administrative nightmare, if Australia really wanted to take the heat off our currency and mortgage rates, we could introduce floating superannuation contribution rates and really watch savings rates go through the roof too, just like in Singapore.

But with the “economic conservatives” now running the country, the chances of policy as radical as this aren’t even worth thinking about.

08 December 2007

Will bonuses be pegged to (sub-prime) performance?

Singapore bankers upbeat about fatter bonuses
Business Times Singapore, 8 December 2007
By Chow Penn Nee
(c) 2007 Singapore Press Holdings Limited

(SINGAPORE) Despite market volatility stemming from the sub-prime crisis in the United States, Singapore-based bankers are counting on higher bonuses this year, and are optimistic about next year as well.

So says a worldwide survey of 20,270 employees working in financial services, conducted by eFinancialCareers.com, a global financial careers website.

The study found that slightly over half of Singapore bankers expect to receive higher bonuses than last year, and only about 17 per cent expect their bonuses to be lower than the bumper payouts of 2006.

Sarah Butcher, editor of eFinancialCareers.com, said: 'The expectation of swelling bonuses may be linked to the fact that Singapore-based bankers are paid less than their global counterparts. She added that the survey revealed that the average Singapore banker received a bonus equivalent to 44 per cent of salary last year, compared with 76 per cent in Hong Kong and 58 per cent in the US.

Hong Kong bankers share similar optimism about bonuses, with also slightly more than half of them expecting to receive higher bonuses than last year, and only 14 per cent anticipating lower bonuses.

In contrast, 60 per cent of UK bankers believe bonus levels will be down next year.

Globally, the survey showed that equity capital markets and M&A bankers are the most optimistic when it comes to predicting this year's bonuses. A BT report said investment banks in Singapore earned over 45 per cent more in the year to date than in the corresponding period last year, driven by growth in fees in mergers and acquisitions, equity capital markets and debt capital markets. Due to sub-prime woes, debt capital markets and credit-focused bankers are the most pessimistic, said the survey.

Bonuses are not the only thing Singapore bankers are upbeat about, as 42 per cent expect business to improve in the coming year. Bankers from China and Hong Kong are similarly upbeat, with 56 per cent and 41 per cent respectively, forecasting a better 2008.


Asia Big Bonus Swindle

eFinancialCareer.hk, 3 December 2007

Asian bankers account for a growing proportion of bank's profit. But they are still short-changed at bonus time.

This year, the situation looks set to be worse than ever. Most US banks have lost packets through the US sub-prime crisis, meaning profitable local bankers are in danger of subsidising their struggling American colleagues.

Gary Lai, manager of front-office banking at recruiter Robert Walters Singapore, says Hong Kong and Singapore bankers employed at US and European houses are already prepared for the fact that their bonuses will be negatively affected as a result of the sub-prime fallout.

But is the situation really this dire? A recent study by international search firm Options Group found Asian bonuses are likely to rise by up to 5% this year. By comparison, payouts in the US and Europe are predicted to fall 10-15% and 5-10% respectively.

There are rumours that Asian bonus pools have been ring-fenced and won’t be reallocated to subsidise struggling divisions elsewhere. Nader Farahati, director at consultancy Oliver Wyman, told Financial News recently that Asian bonuses will not be reallocated.

John Jessen, the Singapore-based group CEO of headhunter Smith & Jessen, also doubts that Asian bankers will have to subsidise colleagues in the US and Europe.

Jessen says banks want to protect assets where they make the most money: “Asia is in such a build-out mode that no one wants to let their competition leave them behind.” He expects most hiring investments to flow eastwards in 2008, with trading floors in India set to double or even quadruple in size over the next two to three years.

The sentiments of bankers in other emerging Asian economies such as Indonesia, Thailand and Malaysia also remain positive, says Lai: “The general consensus seems to suggest that their bonuses will be healthier than previous years, as many of these economies started off from a low base and are experiencing strong domestic growth.”