A recent instalment of FSS titled “Five Ways to Bank Sustainability” suggested that one way is to adopt sustainable remuneration practices.
Financial Sector Spotlight with Omen Muza
Inevitably, it sparked debate and part of the discourse was with Brett Chulu (BC) a seasoned Human Resources Practitioner with keen interest in remuneration practices. In this instalment Omen N. Muza (ONM) asks him a few questions on what needs to be done in Zimbabwe in order to accelerate the growth of sustainable remuneration practices in the banking sector in particular.
ONM: During our recent discussions, you indicated that remuneration practices have evolved into quite a sophisticated discipline in its own right outside Zimbabwe. In which countries has this happened and who is pushing the agenda there? BC: Yes, that’s very correct. We do not have to look any further than our neighbour South Africa where, at the institutional level, there is the South African Rewards Association (SARA). You may also be interested to know that SARA awards bursaries to support doctoral students who take up theses on remuneration and performance management. There are now quite a number of PhD holders in South Africa on remuneration as a result of SARA’s visionary efforts.
South Africa boasts several highly-respected indigenous consultancy firms that are dedicated solely to remuneration and performance management. These are the de facto think-tanks where innovations are being brewed. The practice of total guaranteed package or cost to company was incubated in South Africa in answer to discriminatory pay practices that differentiated pay along gender lines. Due to the historical ties, SA has, with Namibia and SA’s strong economic and investment ties with Botswana, cutting-edge remuneration practices are more widespread in these three countries than in Zimbabwe. You may also want to know that SARA lobbied the King III Committee on Corporate Governance to incorporate Generally Accepted Reward Practices (GARP), a first in the world. Speaking to the sophistication question you raise, for instance, a consultancy firm I worked for in one of these countries recommended that several employees of a newly-established subsidiary earn more than the chief executive of the group. The board of the group adopted these recommendations wholesale, just like that. In Zimbabwe, that would be a non-starter!
ONM: Who needs to be doing what in Zimbabwe in order for us to achieve comparable results? BC: A good starting point would be for highly credible business groups such as Confederation of Zimbabwe Industries (CZI), Bankers Association of Zimbabwe (BAZ), among others, to midwife a remuneration body in the mould of SARA. Once this baby has been breast-fed enough, it will have to be weaned. We could borrow talent from SARA to baby-sit us until we are ready to run. My ties with three of the former presidents of SARA would put me in good stead to facilitate such a process. Additionally, it is not too late to influence the Institute of Directors Zimbabwe (IODZ) to incorporate a team to come up with Generally Accepted Reward Practices that speak to Zimbabwe’s historic and forecasted challenges.
ONM: Why, in your view, is this trend still to catch on in the Zimbabwean banking sector in particular? BC: Sheer ignorance around sound remuneration practices is a major contributing factor. For instance, something as simple as classification of remuneration components is a problem in Zimbabwe; some components of remuneration are reported as administrative expenses. We do not have uniform national standards to allocate personal and business vehicle usage costs. We do not have uniform standards to calculate total company car costs. As a result we do not have comparable remuneration benchmarks.
ONM: Can you outline the various ways in which banks in Zimbabwe can begin to adopt sustainable remuneration practices? BC: Perhaps, the single biggest move Zimbabwean banks can make is to adopt a voluntary Code of Remuneration Best Practice. Detailed remuneration reports (not aspirations) must be required by the Code. This prospective Code could also encourage banks to subject remuneration plans to a non-binding shareholder vote. It’s embarrassing for executive directors to implement remuneration plans that were given a shareholder thumbs-down and could be especially damaging to personal brands if the media bares this.
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Brett Chulu is contactable through [email protected] Feedback: [email protected]. Omen N. Muza writes in his personal capacity. You can view his LinkedIn profile at zw.linkedin.com/pub/omen-n-muza/30/641/3b8
