22/10/2009 - 00:00

Value for money a matter of perspective

22/10/2009 - 00:00

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Why should some people’s pay packets be public property while others are allowed to keep theirs private?

WHAT people are ‘worth’ is a question fraught with difficulty.

Throughout our very isolated community, people are paid vastly different sums for doing things that may or may not be important to our society. Sometimes this seems unfair, out of whack, or simply outrageous.

Life-saving nurses, scientists making breakthroughs and teachers equipping our leaders of tomorrow are all among those considered underpaid for what they do.

CEOs walking away with golden handshakes, directors fiddling while Rome burns, and so-called fat cat public servants spending big on the public purse, while they mismanage a bloated bureaucracy are often thought to be the other side of the coin.

While not my view of the world, these cliched descriptions would fit well with the perceptions of the general public. The global financial crisis has honed these perceptions into much more strongly held views than before.

I am very cautious about criticising pay packets. Firstly, I think it’s unfair that leaders and executives have to reveal their earnings when so many others do not. That is not just the nurse, scientist or teacher, but many others who do quite well without being public about it. Think lawyer, doctor or supermarket owner.

Unfortunately there is a small group of people whose performance is judged against their pay packet when the rest of us get limited exposure in that regard.

I reckon there is something wrong with criticising someone’s pay packet when you are not prepared to reveal your own.

While I understand the publication of executive pay has arisen from abuses in the past, I do wonder at the merits of this system of selectively exposing a few. Recent history shows that shedding light on CEO salaries has done nothing to dampen the enthusiasm with which they are paid. Quite the opposite, I’d argue. By publishing such figures, the market has accepted a benchmarking system that never seems to go into retreat.

However, as a business writer I understand there is massive fascination about the remuneration of leaders and the performance related to that.

So it was with some trepidation that last week I ventured into territory that I find mildly distasteful. That was in speculating about the energy retailer Synergy paying one of its management team an undisclosed pay packet that is thought to rival the top bureaucrats in Western Australia.

Synergy business transformation director Stephan Sauerwein is understood to have earned about $500,000 a year for the past two years, an alleged pay packet that would have him WA’s third highest-paid public servant, if he was one.

Synergy did not disclose the confidential remuneration and only admitted it was very high and based on a tendering process. It said that he was paid well for his role in driving a $50 million cost reduction program, which required skills they didn’t have and would have cost far more if consultants had been hired instead.

There is no doubt that the history of such programs – especially this one with a high technology component – is not good. All manner of consultants and experts have bungled such programs in government, not for profits and the commercial world, that a degree of caution is understandable.

So Synergy has a good argument for taking on a contractor as it did; a decision it clearly believes was real value for money.

However, from the outsider’s point of view there is a real issue with failing to be entirely transparent about that. When the other top-paid members of the management team have to have their pay packets disclosed, it seems wrong to have someone who is potentially better-remunerated left out.

If indeed Mr Sauerwein was a contractor perhaps he ought not be portrayed as if he was an employee? If he is a contractor, why isn’t that public elsewhere?

That the public service can pay well for performance should be celebrated, not swept under the carpet. In my view, that is why public servants’ pay packets are disclosed; so we can understand what value we get from them.

It is also worth remembering that, for the past few years, WA’s bureaucracy has been under assault from industry. Firstly they poached the public servants, then they complained the government was poorly managed.

One of the issues was the amounts industry could pay were well above the state.

The state eventually responded by offering allowances to experienced specialists at risk of being lured to industry.

There has been some respite in that but, as the economy swings back to boom-like mode, there is every likelihood the commercial sector will again start looking for new blood in the bureaucracy.

We should be doing everything we can to keep those bureaucrats we value – including paying the very best, very well – in place as the state readies itself for another shuddering leap forward.

In my view, we are about to discover that what we thought someone was worth yesterday will have changed by tomorrow.

Look overseas

IN the same breath it is worth noting that, in the midst of global doom and gloom, WA has the best-ever opportunity to bring in talent from overseas.

By showing that we have great pay and conditions, not to mention real jobs and wonderful lifestyle, we have the chance to add real skills to our state.

This should be on offer to those who perform.

However, the federal government appears to have missed the skills issue, which is already being flagged by economists as returning to levels of a couple of years ago.

Already there is strong anecdotal evidence that the federal immigration authorities have started to make life difficult for employers who want to bring in offshore talent as well as those already here.

This is regrettable as it sends the worst possible signal to the outside world just when we need them the most.

It is a pity Canberra can’t think like Synergy did – that importing talent is a cost-effective solution to a problem we can’t possibly solve with our existing workforce, even if we wanted to.

The difference is we should be trying to make our highly paid skilled immigrants permanent fixtures.

 

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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