Thursday, January 27, 2011

Higher premiums in the public service in Quebec

(Montreal) According to a survey by the Institute for Research and Socio-Economic Information System (IRIS), the bonus granted to public sector employees increased by 15% in 4 years and exceeded 105 million in 2008-2009, and without proof that these bonuses improve the performance of the beneficiaries.
For this study, we reviewed the practices in the health system, Hydro-Quebec, Loto-Québec, the Société de l'assurance automobile du Québec, the Liquor and the Legal Services Board.
The majority of premium performance, noted the study authors, is concentrated in the health system and Hydro-Quebec. The Crown corporation also won the award in the category of contacts most resistant to transmit any data whatsoever to researchers, who had to fall back on the board of energy.
Excluding Hydro-Quebec and the health system, where bonuses have long been performance, the proportion taken by the bonus payroll "has doubled in seven years in other organizations studied.
At a press conference, Dr Simon Tremblay-Pepin gave the example of Loto-Quebec, where the average bonus increased from $ 25 000 in the early 2000s to $ 50 000 at the end of the decade. At the Society of Automobile Insurance in Quebec, the executive received a bonus of typically $ 10 000 in the early 2000s. Ten years later, he receives $ 25 000.
These bonuses do they give positive results? Hydro-Québec and Loto-Quebec refused to provide the authors of the study that could investigate any link between bonuses and performance of the individuals involved. Elsewhere, it was said that no study had been conducted to find out.
Laura Handal, co-author, said that the bonus may have the perverse effect of lead managers to focus more on aspects of the work covered by the premiums, "for example on budget or time, to the detriment of other most essential aspects of work such as customer service. "
Ms. Handal note that reward systems are far more effective abroad. In Indiana, including a group of researchers concluded that the bonus programs have worked in only 20% of cases among unionized employees, and in 14% of cases among executives. "Two of the causes of the failure of these programs is that employees see little connection between effort and reward, and the fact that the bonus amounts are too small to be convincing," says Handal.
A risk premium?
Reacting to the study, Luc Vallerand, director general of the Quebec Association of Retired and semi-public sectors, is not opposed to bonuses, but he believes they should be paid to both employees and executives. Mr. Vallerand believes that bonuses should never encourage managers to take undue risks.
In this regard, Mr. Vallerand cites the case of the Caisse de depot et placement, the stampede, he says, is partly explained by the race for the bonus. In 2009, La Presse wrote that the de facto method of allocating premiums to the Pension Fund is one of the factors that have encouraged the purchase of the famous non-bank ABCP.
Nicolas Marceau, spokesman of the opposition Parti Québécois finance critic, complains that the bonuses paid in 2008-2009 "occupy nearly double the share of payroll that they were devoted to the arrival of the Charest government in 2003, without any assessment is made as to the impact of this policy of increased subsidy.
IRIS, which conducted the study released yesterday, is an independent nonprofit. Employees Union of shops and offices of the Quebec Liquor but helped fund the survey.

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