The message is getting out that public agencies have to take a hard look at bonuses for executives. sa国际传媒 Hydro is the latest Crown corporation to chop bonuses, cancelling extra pay for more than 2,000 senior staff members. Only the hot-shot traders at Powerex, who market and sell surplus electricity, get to keep their bonus packages.
Hydro didn鈥檛 see the light on its own; former finance minister Kevin Falcon opened its eyes last year, when he released a plan to phase out bonuses at all commercial Crown corporations.
Bonuses in the private sector are an accepted strategy, and it鈥檚 up to directors and shareholders to decide whether the company gets better results when executives are paid extra to hit targets. Those targets are usually related to money coming in, so it鈥檚 easy to keep track of them and they show up on the corporation鈥檚 bottom line.
Pay linked to performance has also become common in public agencies. One study found that 80 per cent of OECD governments have instituted programs to link civil service pay to results. However, government departments and Crown corporations are not like private companies. They are set up to serve a public good that is perceived as being something other than profits.
Officials at Community Living sa国际传媒, which provides services to adults with developmental disabilities, got bonuses in 2011 when they were closing down group homes and cutting services.
In promising to change the system, then-minister of social development Stephanie Cadieux said: 鈥淚n a people-first organization like CLBC, an incentive plan performance based on targets and measures is, quite simply, not appropriate.鈥�
Officials of Crown corporations are seen as public servants, who should be treated the same as those who work in regular government departments.
Falcon recognized this when he noted last July that executives of commercial Crown corporations took home average bonuses of $51,000.
鈥淲e are in extraordinary times, and I think during these extraordinary times the public expects that there will be shared sacrifice,鈥� Falcon said.
Unfortunately, the phasing out of bonuses doesn鈥檛 mean that executives will earn less money. Their pay will be increased by the average amount of their bonuses over the last four years. Then, as much as 20 per cent of their pay will be held back. They will get it only if they meet targets.
To help reduce the proliferation of executive salaries, Falcon鈥檚 policy also limits Crown corporations to six organizational layers and they cannot have more than seven vice-presidents without ministerial approval.
Most taxpayers, based on their own work experience, expect to get paid for doing their jobs. They don鈥檛 expect someone to get bonus pay for something that should be a normal job requirement.
Bonuses should be for doing something extraordinary. Boosting profits significantly in a private company rates as extraordinary.
Rolling former bonuses into the executives鈥� pay entrenches the extra compensation, and that doesn鈥檛 make sense to taxpayers who see services being cut or to civil servants who see their jobs being axed.
Public agencies have to compete for good staff, so the temptation to offer bonuses and pay hikes to keep employees is obvious. Lynda Cranston, president and CEO of the Provincial Health Services Authority, succumbed to that temptation and gave pay increases to 118 of her senior managers, in spite of instructions to freeze wages.
On Friday, that decision cost her her job.
Such clear signals will make the Crown corporation bosses pay attention. Provincial spending has been squeezed for a decade.
The pain has to be shared through all pay grades and through every public agency, whether line department or Crown corporation.
