New Delhi: The Standing Conference of Public Enterprises (Scope), a representative body of state-run firms, on Wednesday demanded that the government give more autonomy to Board of Directors to fix wages for employees to check attrition. Scope has presented a report on ‘Compensation Management Practices in Public Sector Enterprises’ to the Second Pay Revision Committee on July 24, Scope Chairman Sarthak Behuria told reporters here.
“The board of directors of an organisation has immense power in all matters, like investment, expansion, production, distribution; but no power at all regarding pay scales,” he said, demanding that the PSU Boards be given more power and autonomy to fix wages for their staff.
“Empowered boards will help in retaining talent and fighting growing attrition by introducing performance based compensations among employees, which is alarming at the management level and in employees engaged in core and critical functions to businesses of PSUs,” he said.
Strongly recommending to de-link the salary of public sector executives from those applicable to employees of the government or civil services, Scope has suggested that the salary level of PSEs be based on factors such as capacity to pay of each individual PSE, relevant market benchmark for pay and benefits and team and individual performances. The rate of progression of salaries in PSUs is gradual and the ratio between the entry-level executives salary and that of the CEO is about 1:4. Scope has recommended the need for differential salary compensation linked to the employees role and responsibility, particularly for employees with technical expertise.
Accordingly, starting executive salary levels for the Navratnas, Miniratnas, profit making PSEs and loss making PSEs have been recommended along with internal relativities between the starting salary and that of the executive directors. Two other important measures that Scope suggested are — merger of 50 per cent DA into basic pay and extending the retiring age to 62 years. Recommending periodic pay reviews in three years, Scope Director General S M Dewan said, “The practice of revising wages once in ten years is without a linkage to affordability, business needs or pay practices prevailing in the market.”
Dewan said the Scope study had found that there was a wide disparity between compensation given by private and public sector companies.
“We are not competing with private sectors,” Behuria added, “but if the commission accepts most of our recommendations, then the difference will get narrowed.”
Scope has also recommended PSEs should have the autonomy to introduce stock options and retirement benefits that will enhance the ability of the companies to attract and retain talent. Behuria, who is also Chairman of Indian Oil Corp, said that Scope would ask for an interim report from the pay commission in January 2008.
When asked about the chances of accepting the Scope recommendations by the pay commission, Dewan said, “CPSEs have given Rs 70,000 crore profit to the exchequer in 2005-06 and if employees continue to leave, the work of the organisations will suffer, which no government can afford, so they have to accept.”— PTI