Public servants are paid too little. Accurate figures are difficult to find in the public domain, but there’s enough information to conclude that private sector managers and leaders (particularly at CEO level) earn significant multiples (10 times or more) of what their counterparts in the public sector are paid.
CEOs of state-owned enterprises (SOEs) are paid about double what the CEOs (directors-general) of government departments receive, while ministers get less than either. Perks add about 30% to the basic salaries, but remuneration is fixed, regardless of performance. Teachers, medical practitioners and social workers are also paid less than they earn. But it’s not about the numbers. It’s about the value of the contribution and the structure of the reward.
Given the daunting tasks at hand — getting SAA planes to fly, Prasa trains back on the rails, fixing eThekwini, or solving the social development equation — the required qualities for these leaders are going to be as extensive as the missions themselves are seemingly impossible.
We’re looking for people who are experienced, competent, determined and resilient. People who can first of all recognise and then prioritise the problems, find the right mix of commercial and developmental mandates that need to coexist, and then actually get things done, fixed within a sustainable economic model.
People who can deal with political agendas and attempts at bullying and withstand (and defeat) interference from those unqualified to do so. People who can fundamentally change culture, and confidence, and hope.
We’re looking for superheroes here. You won’t find them swimming in the shallow pool of the fixed-term contracts on offer for these challenging positions.
By far the majority of private sector executives’ total remuneration is made up of outcome-dependent rewards. Typically, the basic pay package is a small fraction of what can be earned through performance bonuses and participation in increased shareholder value (by way of share options).
A deal is struck between the owners of capital and the executives tasked to manage it. Beyond an acceptable risk-adjusted return, the owners are prepared to share outperformance with those who made it happen. Simple, and yet I’ve never come across such incentive schemes or outcome-based remuneration structures in the public service.
Whatever other reward systems you think may work, such as loyalty, or a raw desire to serve the people, or the popularity promises that got you the job in the first place, and ignoring corruption, they won’t be enough. We know if it’s not working in practice; it never will.
What if incremental, measurable progress resulted in incremental, meaningful reward for those in government service who made it happen? You fix a pothole, you build a house, or a school, your class achieves outstanding pass rates, you electrify an informal settlement, you collect from outstanding debtors, you install flushing toilets — while at the same time meeting transformation imperatives and budget constraints — you get paid more! Of course you should.
Complete a capital project, get paid a completion bonus. Eliminate fruitless and wasteful expenditure — a percentage of that saving is yours, for you and the team, and your municipality’s coffers. The principle is not only obvious, it works. It changes behaviour and culture. It produces results. It ends up costing less (because it’s just a small piece of the total value add).
We have to create common cause and vested interest, which will build national pride and lower the cost of foreign capital. We’ve quite often been able to do this on our sports fields. Why not go beyond that? It’s not impossible, but we can’t even dream of addressing poverty, inequality and unemployment unless we have a commercially sound, if not thriving economy, and a functional state.
It starts and ends with being able to attract and retain the right people. We’ll never achieve that if mediocrity and outperformance are rewarded in equal measure. Surely that much is obvious?
• Barnes, an investment banker, has more than 35 years’ experience in various capacities in the financial sector.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.