OVER half of Zimbabwean companies pay their executives a guaranteed 13th cheque regardless of performance amid fears that they are rewarding incompetence, a new report by a leading human resources consultancy firm has shown.
In the Executive Remuneration Survey Report 2014, Industrial Psychology Consultants (IPC) said 52,6% of Zimbabwean companies pay a guaranteed 13th cheque to executives which it raised concern as it was not premised on performance.
“Organisations that continue to pay their executives basic salaries, benefits and allowances and a guaranteed 13th cheque – with no performance-related component whatsoever in their remuneration structure – are creating a serious problem for themselves,” IPC said.
“Many executives continue to underperform and exercise rent-seeking and free-rider behaviour with no consequence. These executives do not take performance seriously because they know that whether they perform or not, they will still be paid.”
IPC said there was need to embrace transparency saying the culture in which pay structures were treated as highly confidential should come to an end. “If people are being paid for what they deliver (performance), there is no need to hide pay structures,” it said.
IPC said companies listed on the Zimbabwe Stock Exchange should be encouraged to be more transparent about what they pay their executives like in South Africa where companies produce an executive remuneration report that details explicitly what each director earns. There was an outcry last year when it emerged that some executives in parastatals and government agencies were earning fat salaries at a time the companies they superintended were failing on service delivery.