Home » General » Govt Spot On On Salary Alignment

The salary structure alignment that has been announced by Government is commendable and was long overdue.

The move does not only ensure viability of state enterprises and the nation at large, which was bogged down by malfeasance, but also corrects the unfortunate situation where CEOs of state companies were benchmarking earnings with the private sector.

The role of the CEO in the public sector can be compared to a train operator who moves along a predetermined trackrailroad whereas that of the private sector CEO can be compared to a ship’s captain who should be equipped with thorough knowledge of the ships course and sea weather patterns.

A number of state enterprises and parastatals have, in the past, been in the habit of benchmarking their salaries against those of the private sector.

The parastatal bosses have tried to”clean” their conscience through the use of “independent” consultants and board approvals of such “surveys” to justify their huge perks. However, there are notable differences between state-run institutions and the private sector which make such surveys flawed.

The following are major differences between a private organisation and a government owned entity that even these consultancy companies also need to consider before coming up with their salary survey reports:

In terms of structure and control, a government institution, ownership starts with the people who vote the government into power. Government in turn creates entities through acts of parliament. Ministers are appointed by the President to run these ministries. The ministers appoint board members, board members set strategy in line with the law.

The board appoints a CEO who has the responsibility of ensuring that the strategies are being adhered to by drafting policies and procedures which are approved by the board. The CEO and management ensure policy implementation. The rest of the employees then operationalise the policies. In a private sector-the structure is less complicated. We have shareholders or owners of the business who appoint a board and the board appoints the CEO who then manages the organisation and the people through his management team.

The culture of the private institutions is mainly crafted around the founders of that institution to ensure loyalty and continuity of their legacy through their trusted personnel. In a public sector, however, the culture of the organisation should not indicate any culture, traits or beliefs of a single person or group of people.

Currently, however, the public institutions have even gone to the extent of borrowing the cultures, characteristics, models and traits of the private sector.

Take for example the issue of the secrecy of salaries and benefits. There is no law that supports the notion that the salaries and benefits for each individual should be secret! In fact, the law seeks to promote transparency.

That is why the Government had the liberty to publish the salaries of these parastatal chiefs to the public without fear of legal backlash! Income and expenditure in most government institutions is law. This means that the bosses do not crack their heads on how the institution would earn its income as it is mandatory, in most cases, that the public or other institutions make contributions towards these entities. The acts also give guidance on how the funds should be expended and management cannot therefore act outside the confines of the law.

The continued existence of most parastatals is guaranteed. A lot (if not all) of government institutions have been incurring successive losses but have still remained in existence. Such cannot be said about the private sector as the weak are forced out of business.

CEOs and management in the private sector are constantly asking themselves a lot of survival questions like: “which products can we introduce to the market?”, “how can we gain or maintain the market share?” “how do we comply with the indigenisation, competition and tariffs laws?” These are the sort of questions that parastatal bosses can never dream of asking themselves.

In the public sector, the scope of operations is mainly limited to Zimbabwe, they cannot extend their regulatory muscle to other countries. The scope of operations in many public entities is mainly thrust on ensuring that citizens are served through affordable service and employment creation.

The private sector, however, is mainly concerned with survival and their telescope even stretches to other regions and the world at large. Most public sector institutions exist as monopolies. It is, therefore, difficult to compare their performance and earnings against the private sector.

In the final analysis, Government should come up with a comprehensive policy or code of corporate governance for parastatals that leaves no opportunity for unjust enrichment or unfair aantage to any employee of the organisation.

Source : The Herald