10
3.8
Second, allocating a large part of compensation to gratuity depresses take-home pay, while keeping the share low results in a arrangement very similar to the proposed superannuation scheme, but with less flexibility.
3.9 Third, if a high proportion of RTHKC staff are on gratuity contracts, significant practical issues may arise when the contracts are due for renewal, say, two and a half years after RTHKC's corporatisation. Should a large number then choose to leave, it may be tough to find qualified replacements all at once, thus giving existing staff greater bargaining power to demand higher compensation. The requirement to give advance notice of renewal creates an additional administrative burden and is demoralising for all staff - not just those whose contracts are expiring.
4 - ADJUST COMPENSATION AND ALLOCATE BONUSES
IN LINE WITH PERFORMANCE AND MARKET CONDITIONS
4.1 RTHKC will need to adjust compensation packages annually, both to maintain market-competitive rates and to reflect individuals' current skill levels. In addition, RTHKC will need to determine bonuses for senior staff based on their performance in the past year. Specifically, we recommend that, on an annual basis, RTHKC adjust overall compensation in light of inflation (recalibrating to market trends on a periodic but less frequent basis), and conduct performance evaluations to determine bonuses and
increments.
ADJUST FOR INFLATION
AND MARKET TRENDS
4.2 In line with commercial and Government practices, RTHKC should revise overall compensation levels annually to reflect market trends, inflation in particular. An external compensation survey would be the most accurate way to monitor pay trends, but this is likely to be too cumbersome to undertake each year. Instead, for ease of administration, RTHKC may peg its annual inflation adjustments to the civil service cost-of-living increases, which are fairly indicative of market conditions.
McKinsey & Company, Inc.
No comments yet.
Private notes are available after approval.