Rising wage cost big concern for Lankan firms
Three of the country’s top CEOs this week urged the government and the private sector to give greater attention to the skills drain which according to them is becoming a impediment for business growth.
Participating at the CEO Forum at the National HR Conference 2008 organized by the Institute of Personnel Management (IPM) at the BMICH titled “People Drive Business”, Commercial Bank CEO Amitha Goonarathna, WNS Global Services Sri Lanka CEO Dushan Soza and Browns CEO Murali Prakash highlighted some of the key challenges faced by the private sector.
The session was moderated by Dinesh Weerakkody Cornucopia Sri Lanka Managing Director, who opened the discussion by highlighting the results of a survey carried out in Colombo in March 2008.
According to it, the overwhelming majority of CEOs felt that their main concern was cost escalation and the skills drain that has today become a major impediment for the growth of their companies.
Responding to a question on employee engagement, Mr. Prakash said there are clear links between the levels of staff engagement, their focus on customers, and aspects of the company’s financial and operational performance. He pointed out that building employee engagement is a process that never ends and it rests on the foundation of a meaningful and emotionally enriching work experience. Responding to a question on the importance of salary, he said if salary is at the top then that means ‘we are not doing our job.’ It is easy to get the right people in to the company but the challenge is in retaining them. Salary should not be the be all and end all of things, he said.
Responding to a question whether performance appraisals is a waste of time Mr. Soza and Mr Prakash both pointed out that managers had a habit of putting good appraisals on files of people under them. Mr. Soza noted that it is necessary to have an honest appraisal or a performance management scheme so that people who are performing and not performing are recognized. Those who not performing should be either given more training or moved to different functions. “So it is not about the process that we need to challenge it is how it should be done that we need to discuss,” Mr. Soza said.
He also pointed out that objectives of individuals should be in line with company objectives so that at the end of the year ‘we do not have to hear the employees grumbling we have achieved our objectives but where is our reward.’
Moving along the same lines, Mr. Goonarathna revealed the new performance based salary scheme introduced and being followed currently by Commercial Bank gives 1/3 on a fixed basis and the rest on performance. Outlining a procedure that is being followed at Commercial Bank, he remarked that the formation of a bonus pool calculated on profits gives extremely attractive incentives to staff and that has motivated them to work smarter.
While this pool gives something to everyone there were still the top performers who pull ahead of the pack because they are sometimes given bonuses larger than an entire year’s salary. In general, he said around 40% is fixed compensation and around 60% is variable compensation. This year in particular top performers got 14 months salary by way of a bonus.
The three CEOs agreed with the proposition that the HR Heads should be given their due recognition due to the growing importance of the role. Mr. Soza in particular stressed that it is a position that must be ‘earned’ by their delivery and also that the person should be well versed in other areas of the business so that he could make useful contribution to line leaders and to the business in general. In conclusion all three CEOs agreed with Mr. Weerakkody that it was a great time to be in HR because of the importance being given to the profession by business leaders.