PERFORMANCE-BASED incentive programs are eroding the effectiveness of government programs because workers are focused on meeting raw output targets, a governance official in charge of state firms said.
“One of the major challenges when we do performance-based incentives is that it’s tied to a performance-evaluation system (which) tends to focus more on outcomes of these government corporations,” Johann Carlos S. Barcena, Director IV of the Governance Commission for Government-owned and Controlled Corporations (GOCCs) said at a forum in Manila attended by Asian delegates. The forum participants were discussing ways to improve state-owned firms’ performance.
Mr. Barcena said the commission measures the “effectivity” of government corporations and not just the efficiency of execution.
“If you’re a government corporation engaged in housing, government corporations would measure their performance by the number of houses built. But with (the commission) … we measure their performance based on the number of occupied houses,” Mr. Barcena said.
Executive Order (EO) 80 in 2012 required that government employees’ compensation or incentives be based on a “performance scorecard.”
Development Academy of the Philippines (DAP) President and CEO Engelbert C. Caronan Jr. said the compensation system has prompted employees to focus more on their own scorecards to meet the norms for incentives.
“Some perceive the process as a mere compliance exercise, focusing on individual scorecards and outputs,” Mr. Caronan said in his presentation during the same event.
Under EO 80, compensation was categorized into performance-based bonuses (PBB), a top-up bonus for employees based on their performance and the productivity enhancement incentive (PEI) which is an annual incentive given based on the savings realized by the government.
Adiministrative Order (AO) No. 25, meanwhile, established an interagency monitoring system which created an accessible organizational performance information system to be used as basis in determining the performance-based incentives or compensation for government personnel.
Mr. Barcena said: “One of the problems in the Philippines is that whenever you compensate executives in government, there’s always a public backlash… as a governance commission, the standard is we must also benchmark (with) the private sector,” he said.
Delegates gather every year to discuss policy making and challenges in corporate governance of GOCCs.
Mr. Barcena said that dividends remitted by state-owned firms to the national government doubled since the creation of the commission in 2011.
He reported that the national government received total dividends of $567 million in 2012-2018, significantly higher than the $271 million worth of dividends paid from 2006 to 2011.
The average number of GOCCs remitting dividends to the national government likewise increased to 53 corporations in the 2012 to 2018 period, from the 23 average in 2006-2011.
“Not only must they (GOCCs) be financially viable, but they must also be responsive to the needs of the public,” he added.
The Organization for Economic Co-operation and Development (OECD) along with the commission and the Asian Development Bank organized the two-day meeting this year. — Beatrice M. Laforga
