TNAG-2278-FCO40-3278-Future-of-Hong-Kong-Radio-Television-Hong-Kong-Board-of-Gove-1991 — Page 155

ADDITIONAL ELEMENTS

FOR HIGHER-LEVEL STAFF

3.4

For Grades 5 through 8, housing allowances and performance bonuses should be used to provide additional rewards and incentives commensurate with the importance of these positions in shaping RTHKC performance. Housing allowances carry a prestige factor and may provide tax advantages. Eligible employees that do not have housing expenses should be free to take the allowance in cash. Because the housing allowance is a close cash equivalent, including it in the package increases employees' flexibility.

3.5

To provide a strong incentive, performance bonuses should account for a significant part (i.e., more than 10 percent) of middle and senior management compensation. In general, bonus as a proportion of salary increases as one progresses to more senior grades to reflect the greater impact senior staff exert on RTHKC and their higher variability in performance. The Director of Marketing, in particular, should have a very high proportion of his compensation (up to 40% of base salary) as performance-based bonus given his pivotal role in generating uncertain revenue. The recommended percentages shown in Exhibit 8 are for average performers; the actual amount awarded an individual may be 5 to 10 percentage points below or above the average. Determining bonuses requires an effective performance evaluation system, explained in Chapter 4.

GRATUITY DEEMED INEFFECTIVE

AND INAPPROPRIATE

3.6 The team assessed the value of including an end-of-contract gratuity as part of the package, but concluded that such payments are not only largely ineffective but also inappropriate for RTHKC. While gratuity may be viewed as a tool for retaining staff, its usefulness is limited to the term of the contract. An attractive overall compensation level and a stimulating and stable working environment are more positive and lasting incentives to keep good people. Moreover, lack of gratuity does not preclude the use of contracts for key creative and management staff if necessary.

3.7

Providing gratuity as part of RTHKC's compensation package presents a number of difficulties. First, it limits RTHKC's flexibility to alter the staffing mix or motivate mediocre staff during the gratuity contract period.

McKinsey & Company, Inc.