BusinessWorld is publishing the following letter from the Governance Commission for Government-Owned and -Controlled Corporations (GOCCs) in response to a Sept. 4 item published in this newspaper. The letter has been lightly edited due to space considerations:
MR. ROBY A. ALAMPAY Editor-in-Chief
MS. BEATRICE M. LAFORGA Reporter
Dear Mr. Alampay and Ms.Laforga,
This is in reference to the news article of Ms. Beatrice M. Laforga entitled “GOCCs seen losing sight of program effectiveness” published in BusinessWorld on 04 September 2019. While we appreciate the media bringing to light some of the challenges faced by our GOCC sector in the knowledge-sharing forum held on September 4 and 5, the Governance Commission would like to clarify three points in the news article.
First, in the lead of the article, the statement that performance-based incentive programs are “eroding the effectiveness of government corporations” are attributed to Director Barcena which he did not say. This statement is followed by Director Barcena’s reply to the question about the challenges faced by GCG.
A more accurate response which he explained on the forum was that GOCCs want to get their bonus so they prefer to be measured based on what is completely within their control, which are their outputs, and not on what is only within their influence, which are the desired outcomes of the outputs. Hence, getting GOCCs to shift the measurement of their performance from output to outcome is challenging.
Performance incentives do not erode GOCC effectiveness. On the contrary, a performance-based incentive system tied to an outcome-focused performance evaluation system tied to an outcome-focused performance evaluation system is what pushes GOCCs to be effective, as well as efficient. In the afternoon session, the speaker from India even echoed that India similarly undertook the challenge to shift from output to outcome-based performance.
Second, Director Barcena’s statement which says “One of the problems in the Philippines is that whenever you compensate executives in government, there’s always a public backlash” is incomplete. The statement omitted the rest of Director Barcena’s explanation stressing that this is the reason why it is important to communicate to the public that unlike before, whatever bonus granted now is based on the good performance of the GOCC. The need for such communication was in fact affirmed by the moderator of the session.
Third, in the very same discussion, Director Barcena said that “as a governance commission, the standard is we must also benchmark with the private sector.” It is important to note that following this statement, Director Barcena added that the purpose of this was to attract and retain the best and brightest in the industry.
We entreat that the author of the article to treat this matter with utmost caution as while we value our working relations with our GOCCs, the Governance Commission fulfills its mandate fully and with due vigilance.
We hope these points clarifies some misconceptions in the said article.
Very truly yours,
IRVING V. OCCEÑA
Director III/Chief of Staff,
Office of the Chairman