From the website, Management Issues:
The clue ought to be in the name. Performance-related pay is pay for performance, and the better performance you turn in and the harder you work the more you will get to take home. Except, academics are now suggesting, more often than not the opposite may be the case.
New research by the London School of Economics has argued that, far from encouraging people to strive to reach the heights, performance-related pay often does the opposite and encourages people to work less hard.
An analysis of 51 separate experimental studies of financial incentives in employment relations found what the school has described as “overwhelming evidence” that these incentives could reduce an employee’s natural inclination to complete a task and derive pleasure from doing so.
Read the full article here.
already heard this over the BBC some weeks ago…
i wonder what is our esteemed leaders’ reply to that???
Regardless of performance, PAP will reward themselves well simply because there’s no alternatives.
Not entirely unexpected, given the way some companies give performance-related pay. Set the bar high enough, and no one would bother trying to hit those targets. Set the rewards low enough, then even a very high performance wouldn’t become so expensive for the company.
“i wonder what is our esteemed leaders’ reply to that???”
Trust me, they will just act blur
I wonder about that guy at the TownCouncil who got 8 months bonus?
How Ha???
Everyone knows that there is more to work than just working for money. The trouble is we’re so skewered to US short-term management thinking for the last umteen years that we got all carried away. Like most things, the ideas started well but got twisted as time goes by.
No wonder we got lost with our Town Councils and discovered it only 20 years later.
lawl. interesting study. more income = slack more. think of it, its true! :D
Do we even need such a research?
Firstly, I believe this reseach is addressing private businesses who face stiff competition day in and day out. These businesses need to find a way to compete, to give the best shot. Our dear PAPies don’t even have competition!
Secondly, private businesses do not like their employees to be connected by relations esp if it obscures accountability. For the PAPies, paying the son or father or the wife top money of course does not mean that it will encourage performance, even an idiot knows that.
Thirdly, paying top money can also be a form of ‘buying-over’ rather than encouraging performance if the orgn can afford it (many businesses can’t). In SG Govt case, its easy.
Good, finally someone showing the obvious. Incentives driven working attitude doesn’t promotes better performance, it only creates chances for people to abuse that system.
Hats off to the PAP who managed to get 50% walkovers from opposition, 66% mandate from the electorate, and through their GRC design + … , 98% seats at every election.
These alone speaks volumes about their skills and talent. They really deserve their million dollar salaries for it. Unfortunately or fortunately these talents and skills can only apply in Singapore, not elsewhere. Otherwise even President Obama would have learnt from PAP and paid himself millions.
“Performance-related pay doesn’t encourage performance”
Of course in initial stage it do, however there is always a law of diminishing return because there is a limit to how hard and how long one can work to sustain it.
Case in point. One work damn bloody hard to get promoted to manager within a year to get $10,000 per month. Once that achieved, why should one work that amount of hardness anymore knowing that they still get the same salary every month now ?
To: Angelina Post #7;
well said !
It is who You know and not what You know(competency)
that matters.
Another common saying is work smart
and not work hard to be appreciated.
Speaks well, speaks good(adulate), be pet
and will be well rewarded.
Who needs competency, professionalism and
integrity ???
patriot
I thought it was already clear since sometime back the policy makers were not talking about pay for performance.
In this same site, under ‘PM Lee on Temasek, GIC and ministers’ salaries
Friday, 20 March 2009, 11:42 am’, the article read :
‘……………..
BBC: Finally Prime Minister, I read that you’re apparently the highest-paid head of government in the world. Your salary is about four, five times what President Obama gets. Are you worth all that money?
LHL: (Laughs) I’m not comparing myself and I don’t look at these rankings. We go on a system which is open, honest, transparent. What is the job worth, what is the quality of person whom you want. You need the best people for the job and these are jobs where you make decisions which are worth billions of dollars. And you cannot do that if you’re pretending and you just say, well, we’re all in it for the love of king and country. We wanted to be honest, we want people not to come in for the money but at the same time, their sacrifice cannot be too great. And at times like these, you want the best possible government you can have.’
Folkd, take a hard look, the word ‘performance’ is not inside……the wavelengths are not the same.
lots of staff in the private sector sacrifice family life just to keep job….
aiyoyo
take more $, do less work/non productive,
take less $, work like cow?
alamak what logic huh? 22nd century logic;
is it to show we more advanced than all other countries?
blur leh…
aiyoyo
I don’t think the article is based is Singapore, is it?
“take more $, do less work/non productive,
take less $, work like cow?
alamak what logic huh? 22nd century logic; ”
funny 1st world capitalistic system where people of influence with dirty dog runners doing the dirty enforcement work to make it look like certain rent-seeking unproductive work is more valuable than those down-to-earth hard working laborious work.
The research result on its on is informative, but it is unfortunately used as an indirect hidden sarcasm at the the government policies. So what if the research results are true? Abolish pay rise for people who perform well?
Most people who agree that pay rise motivates some workers to some extend in some case but not others. And pay rise alone is not going to increase productivity beyond some point. So what is the point of this article?
the pt is, to keep people…incorruptible?
8) randomnessinmind on June 30th, 2009 8.20 pm
“Good, finally someone showing the obvious. Incentives driven working attitude doesn’t promotes better performance, it only creates chances for people to abuse that system.”
Our govt knew this long long time ago. Why do they think they keep driving the cost of living up? so that the ‘average’ Singaporean is forever not enough money, and will continue to work hard. You might say that they are also ‘abusing’ the system.
In the end, it is like what (10) Daniel said. There is simply a diminishing rate of return. At the level of ministers and public servants, they have already passed beyond that level, while the average Singapore is ladled with debts from HDB, etc, thus never reaching that point. Seeing no ‘future’, they become disinclined to work hard also.
we are on the way of making this place a play ground for the rich hence, the need to raise the cost of living and elites compensation for their unique and indispensable sacrifices and talents.
in a trickle down economy, the rich amongst will have greater rights because, they are our savior!
therefore, we need to manufacture more rich people(paying them more is one way of achieving more millionaires) and opening our doors to rich folks ….for our economical and POLITICAL survival.
so bless the rich and hence bless our land? good solution.
“Most people who agree that pay rise motivates some workers to some extend in some case but not others. And pay rise alone is not going to increase productivity beyond some point. So what is the point of this article?”
what is there to know about almost everything is probably already out there in the open. however, sometimes it needs to be brought up nearer to those who may not happen to come across it and this may provoke deep thinking.
Of course, there will be some people who feel it is a waste of time bordering on mischief. On the other hand, there will also be people who feel that such matter is very pertinent in the context of our country, more so after what has happened in the recent financial crisis where real value has been wiped out due to the decisions by the very people (with high pay compensation) that are entrusted to protect it.
So what is the point of this article? it is also like asking – what is your point of having to state the obvious.
when a body builder takes steroid it can beef up his muscles.
when he takes too much, there is no more boost.
can be deadly also due to overdose.
PAP government will scrap off this and use other publication or research to their advantage. That’s alwalys the case. ST will then publish through their tighted-control media network and praise that the performance-related pay structure motivate staff to do more and such …
5) I wonder on June 30th, 2009 6.42 pm
;;I wonder about that guy at the TownCouncil who got 8 months bonus? ;;
wow, Town Council rewarding like private sector where competition and work performance demand is extremely high. Can even say much higher than many private sector companies which cannot pay so much also.
I wonder who is their competitor? Who is their customer? What demands have their customers placed on them?
faster, cheaper, better for private sector jobs.
faster?, top dollar (“up” market), is “better” for public sector jobs.
elites’ pay peg to top private sector posts, performance ler?
This article is pretty confusing.
The first paragraph states one stand:
New research by the London School of Economics has argued that, far from encouraging people to strive to reach the heights, performance-related pay often does the opposite and encourages people to work less hard.
“Damn those PAP dogs! Will someone please go regulate their pay?”, the blood-thirsty mobs scream.
Then halfway down the article, we find the following:
“It would be highly unfortunate if, as now seems possible, massive amounts of regulation and active government intervention were to be the dominant forces determining how American executives are compensated,” he suggested.
Initiatives such as caps on pay, shareholder “say on pay” and ceilings on ratios of CEO pay to worker pay, appointment of a “federal compensation Tsar” and labelling of incentive pay as pay that causes excessive risk all simply reduced innovation and hurt shareholders, he argued.
“Governmental and shareholder second-guessing on pay would create an environment of fear in which no board would dare try an approach that’s different from the herd’s or that is tailored to the company’s particular strategy,” said Narayanan.
“While compensation reform is needed, it must come from within–from executives and boards, acting in the company’s best interests,” he added.
And this comes from the same article. Of course, we can take the populist measure (first paragraph) and ignore the recommendations of this article (the subsequent parts).
Kudos to “personal censorship”. The art of closing your eyes and ears to the unpalatable parts of life and screaming “LIES LIES ALL LIES!”
24) sadoh on July 1st, 2009 2.38 pm
I think how ST operates, performs, behaves depends on the leadership team there. So, what are their BACKGROUNDs, i wonder?
What is so confusing leh.
The first part (Dr Bernd Irlenbusch of LSE) effectively says (in short) “provision of incentives can result in a negative impact on overall performance” without too much elaboration and period.
The subsequent part (V G Narayanan of HBS) effectively says it is not about “asking how much should chief executives be paid but how they should be paid”.
With much elaboration on Narayanan’s part and to summarise, “pay must be structured to attract the right executives and give executives effective incentives to lead their companies to great performance.”
In short, incentives must not be in such that executives can game the system for their personal benefits at the expense of the whole company (drowning all the other important stakeholders).
“Kudos to “personal censorship”. The art of closing your eyes and ears to the unpalatable parts of life and screaming “LIES LIES ALL LIES!””
and closing your mouth too = monkey
If a million-monthly-salary talent is paid 20 times more a month, will his performance shoot up by 20 times in a scientifically provable and measurable way?
The answer is a no-brainer.
I rest my case, your honorable mere mortalites.
“If a million-monthly-salary talent is paid 20 times more a month, will his performance shoot up by 20 times in a scientifically provable and measurable way?”
It actually do as exemplified by our expensive clowns. The performance actually become so extraordinary and out of this world that it reach a level that totally devoid of accountability, transparency and responsibility.
I would take a non-technical news review on an (somewhat) academic article with a huge grain of salt. The results of the findings are often parsed in technical (statistics) jargon which may be glossed over by the uninitiated. The conclusions are more likely to be along the lines of “Given X assumptions and Y models, we found a statistically significant correlation between A & B variables. Estimated error is C% etc….”.
As you can see, the wording is highly precise and nuanced. Briefly, I feel it is easy to manipulate (by ignoring the caveats of the claims) such technical findings to lend credence to a certain point of view.
And as with most social science papers where definitive empirical/reproducible data is elusive, I am sure the arguments in the paper itself are heavily contested.
Off the record, I disagree with the size of the pay package of the SG leaders, which I believe is the drift of this TOC article. But not for the reasons cited.
I feel it is more of a principal-agent problem, where pay is a part of an incentive system to align the interests of the principal (citizens) with the agents (leaders). The high pay fails to address this issue, as the interests of the citizens (especially the mid-lower class) in recent years have been glossed aside in the name of GDP growth.
The bubbles of each crisis told the world something important.
This current burst bubble was said to be due to fake growth.
There was no real growth the same as reported (i mean this world crisis).
So, what else is fake?
Some wallstreet top management jacked up their pay to match the fake growth.
This created a false corporate performance. Could this not have contributed to the staggering CEO salaries worldwide?
Who knows the truth of all corporations?
if no one knows then who is to say only a few faked the growth?
So, what is a suitable CEO salary?
I feel that we should follow the world’s mightiest nation’s standard.
USA top talent, that one you know very well, is HAPPY to ACCEPT a salary much less than the other ‘CEO’s from somewhere in asia despite the fact that he has one of the world’s most difficult jobs.
I think its about CONTENTMENT, GREED and Accountability.
If one is not Content with high salary, he will ask for more even when it is already way way more than enough compensation to do a job.
if one is GReedy, no amount will satisfy him.
If one is not accountable but continues to justify higher and higher salaries using whatever nonsense reasons, he will never be satisfied and could even do a madoffi.
32) Daniel
“The performance actually become so extraordinary and out of this world that it reach a level that totally devoid of accountability, transparency and responsibility.”
I think their performance has pass the tipping point
19) lobo76 on July 1st, 2009 1.20 pm ,
i concur with you guy.
Go read this doc on the argument for their pay hike.
http://www.pmo.gov.sg/News/Speeches/Prime+Minister/Speech+by+Prime+Minister+Lee+Hsien+Loong+at+the+Parliamentary+Debate+on+Civil+Service+Salary+Revisio.htm
They go through great length of putting up such strong academic argument to hike their own pay and those who can be bought in to support them.
It is foreseeable that within the near certain with another win in the next GE, they will be back to ask for me. Someone once said to me: “Human greed has no boundary”. Nothing endures but change.
“Someone once said to me: “Human greed has no boundary”. Nothing endures but change.”
It is in the nature of human beings henceforth from time immemorial validates the tenet of darwin on the survival of the fittest where there is constant push and pull among different species and even within a singular species for the space (be it physical or mental challenges, etc) to survive.
That is the reason why good system must be calibrated regularly by delibrate design to balance out the different competing needs so as to prevent any destructive outcome.
It’s about ROI.
Employess will go thru their learning curve and soon discover the breakeven point whereby beyond it the reward they get in performance bonuses (the return) will not justify their additional effort to perform better (their investment)
Then they will do just enough to justify keeping their job, and the performance relted pay will ceased to be effective.
High pay only serves to perpetuate greed even though its main justificaton is to stamp out corruption. If the man in power is greedy even $10 million salary a year won’t satisfy him, instead he will be forced to falsify accounts, create wealth out of thin air through some high risk HYIP investment, slave trade, sex trafficking and other unscrupulous methods to boost profits for the company. So giving CEO, directors and other managing executives high pay doesn’t to high performance.
If a person is earning 10million a month, his lifestyle would be this level.
So, he will spend more than someone earning less.
This means, he will never be contented and to have more money, he may be corrupt one day. Maybe = maybe not.
42) Steven Paliaton
agree. a high pay does not eliminate the possibilty of corruption.
a uncorruptable person, if we do find one : ), will not accept corrupt gifts and money even if he is paid a meagre sum of S1 per month.
There are alot of highly paid executives that doesn’t do much work at all in most companies. U mean they are the star performers??? Maybe, loyalty should be appreciated instead. E.g. some companies gave out vouchers or cash rewards when the employee serve at least for 5 yrs.
Even if we were to agree that performance-related pay encourages performance, we still have a problem, in the case of the Singapore civil service and political office bearers, of how to assess performance.
There is every incentive for every superior in the civil service to, as much as possible, assess his subordinates’ performance positively, as this would reflect well on himself. If his subordinates are doing well, then it must be due to his “leadership”. It is also a way for senior civil servants to “buy” loyalty from his subordinates, albeit using other people’s (ie the people of Singapore) funds; he “buys” loyalty by promoting his subordinates.
Yet another benefit of promoting your subordinates is that if your subordinates’ salaries rise, what happens to your own ? Obviously it has to go up further, in order to maintain the differential. This is one of the tricks that some bosses employ, and this works very well in our civil service, because it works will little budgetary constraints. Everyone gets more bonuses, and everyone (in the civil service) is happy.
In conclusion, performance-related pay (especially in the civil service) is just an excuse to pay yourself more money.