THERE are continuing calls for across-the-board pay increases.
One cannot deny the need and wisdom for pay to at least keep pace with contextual changes in, for example, inflation, cost of living, productivity and profitability.
However, the science and practice of human resource management tell us that this is only a rudimentary and rather limited view of compensation management.
Pay architecture (structuring relativities, increases, decreases or status quo) can reflect much about an organisation’s policies and approaches towards its human resources; and therefore be instrumental in attracting, retaining, motivating, and developing employees with the sought-after competencies and attitudes, while discouraging the unwanted.

It is in this regard that I wish to draw attention to the complementary need for differentiated and performance-related pay increases (PRP); which, incidentally, have been the norm in expanding thriving organizations and companies overseas, and at least one case with which I am quite familiar in Guyana.

Trade unions typically baulk at differentiated and performance-related pay increases (PRP) for reasons obviously best known to themselves, but which I believe are largely based on their underlying historical ‘socialist’ origins, favouring egalitarian approaches and equality of membership as reflected, for example, in their uniform membership fee structure.

Also, I think most of us are more at ease with the ‘charade’ of ‘treating everyone alike’, rather than to make waves with pay being reflective of individual performance; although we recognize that some employees merely ‘come to work’, while others actually work — some harder, more effectively and productively than others.

Unfortunately, some trade unionists also see it as a dilution of their traditional ‘negotiating’ forte.

The escalating pace of globalization demands that we do not overlook shifting trends in the field of human resource management, including compensation and industrial relations. My review of the extensive professional literature and case studies, which argue both the pros and cons, shows a clear preference for PRP.

With added impetus emerging in the 1980s as the Holy Grail for motivating employees and developing performance-oriented cultures, PRP began supplanting — or at least supplementing — service-related increments and across-the-board pay progression. It soon became a lever for work-related attitudinal changes and/or behavioural reinforcement. It can certainly be used as a mechanism for encouraging adequate supply of appropriate or hard-to-get staff.

For example, an 8% across-the-board increase of civil servants’ and teachers’ pay would not encourage more Guyanese to rush into, or stay in, the teaching profession in the same way a differentiated pay increase would, (say 5% or equivalent of CPI change for civil servants but 15% for teachers; similarly, say across-the-board increases of 6% for general labourers but 20% for the scarce, critical cane cutters in GuySuCo). Of course, on top of this would be the annual performance-related merit increments for civil servants and teachers, or the existing incentive and production bonus schemes for sugar workers.

On the premise that human resource management involves investments in human capital from which it is normal to expect reasonable returns, it is appropriate to reward people differently and equitably in relation to their respective individual contribution, and in the practical context of the relevant ‘labour market’ imperatives.

It is recognized that these ideas might be at variance with the socialist mantra of “giving to each according to his need”, but they would be consistent with the pragmatic capitalist principle of “rewarding each according to his effort”, as well as the laws of the market.

Are we operating a welfare state, or managing a business-driven economy? What’s the point in ‘thinking out of the box’ if we are not prepared to change, to move out of all the inhibitions in which we box ourselves? These are some of the hard, over-riding questions that Government and Boards must ask and seek to answer, or have answered.

We must action the changes we think about; or, as the great Mahatma Gandhi Ji said, “We must be the change we want”.
PRP is not a simple, superficial formula of “incentive pay = improved job performance”. Any attempt to implement it at this robotic level is doomed to failure. PRP is rooted in the theory of equity, which emphasizes employees’ perception of fairness. Without integrity, PRP, like any other system, is doomed to failure. Trade unionists and others who are against or indifferent to PRP typically favour seniority-based or so-called egalitarian, equality-driven, across-the-board increases, because they are less subject to whims, biases, prejudices, subjectivities, and other forms of human frailties.

But isn’t the essence of civilization and good governance the willingness and ability to rise above these base instincts?
Traditional PRP systems such as piece-work and measured day work were based on superficial, verifiable, quantitative evaluations of employees’ performances. They were also normally subject to collective bargaining, and were therefore integral to the established industrial relations system.

Therefore, the introduction of any new, formal PRP system must be carefully pursued with much patient, open and sincere discussion involving all stakeholders, including managers, supervisors and employees individually and collectively, and with recognized representatives of trade unions, where unions are recognized. There should be no hidden agenda, and every effort must be made to involve relevant stakeholders in the design and introduction of the new systems.

The way PRP is implemented is potentially more important than its structure. Experience has taught us that ‘the design features’ of a reward strategy are less important than the way it is implemented, and the values which underpin it.