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Ministerial pay vs talent
Rather than ask what they should be paid, ask what kind of ministers Singapore needs
04:45 AM Jan 16, 2012
by Mak Yuen Teen (His lampar much more objective and balanced than Master Por Lam Par Eugene Tan)
I have earlier highlighted the possibility of simplifying the salary formula for ministers and the importance of incorporating objective key performance indicators (KPIs) in determining the individual performance bonus ("A job well done but ...", Jan 5).
Purely subjective KPIs can create the perception of arbitrariness, unfairness or bias. However, we also cannot swing to the other extreme of having only objective KPIs when it comes to evaluating the performance of ministers. Governance and management is not only about quantifiable KPIs.
I also expressed the view that while the formula could be simplified by having fewer components, it would have been preferable to have some form of long-term bonus.
It is somewhat of a shame that in adopting a relatively complicated salary formula, the committee did not manage to build in an incentive component which recognises contributions and outcomes beyond one year. The formula seems excessively short-term to me. A leader, including a politician, who only thinks short-term cannot be good, whether for a company or country.
However, we must also be very careful about relying too much on pay structured around a mechanistic pay formula to recognise performance and contributions. Such an approach elsewhere has, in my view, been partly responsible for the global financial crisis. And it is even less suitable for ministerial pay where good KPIs are harder to define and there are many externalities which impact these KPIs - such as those included in the national bonus component.
If the European Union collapses, are the targets in the formula still realistic? We certainly do not want ministers to be spending their time managing the KPIs rather than governing the country.
I believe it is therefore important for the Prime Minister, who, using a corporate analogy, is the chief executive, to have some discretion in terms of how much to pay individual ministers, based on his assessment of their capabilities, responsibilities and performance - and, of course, also on the economic situation facing the country.
But it is also important that such discretion is exercised within a framework of checks and balances and transparency. This can be achieved by having a committee which includes independent members to approve discretionary adjustments to pay and publishing the actual pay, pay components and other adjustments.
Beyond the issue of ministerial pay is the issue of what is ministerial talent.
As has been pointed out repeatedly, we are a small country with limited resources and therefore we need to be smart in using talent. A top professional or a top earner may not necessarily be a good minister. By taking talent from the private sector, we may end up with the worst of both worlds: With the private sector losing a top talent and the Government not gaining the best talent.Of course, I acknowledge that political parties can have fairly rigorous processes for assessing the suitability of candidates and whether the talent is transferable.
There is a saying that the last thing a company should do is to make its best salesperson the sales manager. The company may lose the best salesperson and get a lousy sales manager. Organisations often face similar dilemmas. For example, there used to be a joke among some of my colleagues that those who cannot teach or do research end up in management, and they end up controlling and evaluating the best teachers and researchers.
A reaction to this may be to turn your best researchers or teachers into "managers" (administrators), and this often happens. The problem is that the university loses the best teachers from the classroom or the research output of the best researchers - and in turn, those best teachers and researchers may not make good administrators.
Although there are some who are good in all areas, from my experience, they are rare. And even if this person will make a good manager, is it a waste to make him one when the students get an inferior teacher in the classroom? It is a very difficult dilemma.
I think we need to move beyond the debate on ministerial pay to the issue of what is ministerial talent.
Importantly, like a company which may need different types of CEOs and board members at different phases of its life cycle and depending on the strategies it is pursuing, the right kind of talent to be ministers may also be dependent on the life cycle of our country.
Further, at which point should we take talent from the private sector into the public service arena? I am not convinced that the changing demographics of more young voters should necessarily mean more young Members of Parliament (MPs) and ministers. It may be better to leave them where they are first, to contribute where their talent will do the most good for the country as a whole (and not necessarily just in public service), to give them more time to learn life lessons and prove themselves. I doubt our young people are so naive as to base their voting decisions on the age of the MP or minister, and whether he or she can dance hip-hop. And we may be wasting talent by prematurely "retiring" good political talent.
Given the ageing population, widening income gap and the socio-economic issues we face, we should perhaps be tapping more on the third (voluntary) sector to identify talented people. I am sure there is good ministerial talent there too. There are more young people increasingly interested in volunteerism and social entrepreneurship who are not motivated purely by money.
I hope that rather than just asking how much ministers should be paid, we also ask what kind of ministers we need for Singapore today - and 10 or 20 years from now.
Mak Yuen Teen is an associate professor of accounting at the NUS Business School who specialises in corporate governance.
URL http://www.todayonline.com/Singapore/EDC120116-0000010/Ministerial-pay-vs-talent
Copyright 2012 MediaCorp Pte Ltd | All Rights Reserved
Rather than ask what they should be paid, ask what kind of ministers Singapore needs
04:45 AM Jan 16, 2012
by Mak Yuen Teen (His lampar much more objective and balanced than Master Por Lam Par Eugene Tan)
I have earlier highlighted the possibility of simplifying the salary formula for ministers and the importance of incorporating objective key performance indicators (KPIs) in determining the individual performance bonus ("A job well done but ...", Jan 5).
Purely subjective KPIs can create the perception of arbitrariness, unfairness or bias. However, we also cannot swing to the other extreme of having only objective KPIs when it comes to evaluating the performance of ministers. Governance and management is not only about quantifiable KPIs.
I also expressed the view that while the formula could be simplified by having fewer components, it would have been preferable to have some form of long-term bonus.
It is somewhat of a shame that in adopting a relatively complicated salary formula, the committee did not manage to build in an incentive component which recognises contributions and outcomes beyond one year. The formula seems excessively short-term to me. A leader, including a politician, who only thinks short-term cannot be good, whether for a company or country.
However, we must also be very careful about relying too much on pay structured around a mechanistic pay formula to recognise performance and contributions. Such an approach elsewhere has, in my view, been partly responsible for the global financial crisis. And it is even less suitable for ministerial pay where good KPIs are harder to define and there are many externalities which impact these KPIs - such as those included in the national bonus component.
If the European Union collapses, are the targets in the formula still realistic? We certainly do not want ministers to be spending their time managing the KPIs rather than governing the country.
I believe it is therefore important for the Prime Minister, who, using a corporate analogy, is the chief executive, to have some discretion in terms of how much to pay individual ministers, based on his assessment of their capabilities, responsibilities and performance - and, of course, also on the economic situation facing the country.
But it is also important that such discretion is exercised within a framework of checks and balances and transparency. This can be achieved by having a committee which includes independent members to approve discretionary adjustments to pay and publishing the actual pay, pay components and other adjustments.
Beyond the issue of ministerial pay is the issue of what is ministerial talent.
As has been pointed out repeatedly, we are a small country with limited resources and therefore we need to be smart in using talent. A top professional or a top earner may not necessarily be a good minister. By taking talent from the private sector, we may end up with the worst of both worlds: With the private sector losing a top talent and the Government not gaining the best talent.Of course, I acknowledge that political parties can have fairly rigorous processes for assessing the suitability of candidates and whether the talent is transferable.
There is a saying that the last thing a company should do is to make its best salesperson the sales manager. The company may lose the best salesperson and get a lousy sales manager. Organisations often face similar dilemmas. For example, there used to be a joke among some of my colleagues that those who cannot teach or do research end up in management, and they end up controlling and evaluating the best teachers and researchers.
A reaction to this may be to turn your best researchers or teachers into "managers" (administrators), and this often happens. The problem is that the university loses the best teachers from the classroom or the research output of the best researchers - and in turn, those best teachers and researchers may not make good administrators.
Although there are some who are good in all areas, from my experience, they are rare. And even if this person will make a good manager, is it a waste to make him one when the students get an inferior teacher in the classroom? It is a very difficult dilemma.
I think we need to move beyond the debate on ministerial pay to the issue of what is ministerial talent.
Importantly, like a company which may need different types of CEOs and board members at different phases of its life cycle and depending on the strategies it is pursuing, the right kind of talent to be ministers may also be dependent on the life cycle of our country.
Further, at which point should we take talent from the private sector into the public service arena? I am not convinced that the changing demographics of more young voters should necessarily mean more young Members of Parliament (MPs) and ministers. It may be better to leave them where they are first, to contribute where their talent will do the most good for the country as a whole (and not necessarily just in public service), to give them more time to learn life lessons and prove themselves. I doubt our young people are so naive as to base their voting decisions on the age of the MP or minister, and whether he or she can dance hip-hop. And we may be wasting talent by prematurely "retiring" good political talent.
Given the ageing population, widening income gap and the socio-economic issues we face, we should perhaps be tapping more on the third (voluntary) sector to identify talented people. I am sure there is good ministerial talent there too. There are more young people increasingly interested in volunteerism and social entrepreneurship who are not motivated purely by money.
I hope that rather than just asking how much ministers should be paid, we also ask what kind of ministers we need for Singapore today - and 10 or 20 years from now.
Mak Yuen Teen is an associate professor of accounting at the NUS Business School who specialises in corporate governance.
URL http://www.todayonline.com/Singapore/EDC120116-0000010/Ministerial-pay-vs-talent
Copyright 2012 MediaCorp Pte Ltd | All Rights Reserved
