TermPaper_Rabino

Master of Management ProgramCollege of Arts and Sciences

University of the Philippines Manila

THE IMPLICATIONS OF REMUNERATION ON THE BEHAVIOROF PHILIPPINE LOCAL GOVERNMENT EMPLOYEES

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A Term Paper Submitted by

Cristobal N. Rabino, CPA

Bachelor of Science in Accountancy (Magna Cum Laude), 2011Polytechnic University of the Philippines

Post Baccalaureate Degree in Information Technology, 2013Polytechnic University of the Philippines – Open University

in partial fulfillment of the requirements inMGT 202 Human Behavior in Organization

for theMaster in Management major in Business Management Program

of theUniversity of the Philippines Manila

Dr. Lourdes E. AbadingoCourse Specialist

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THE IMPLICATIONS OF REMUNERATION ON THE BEHAVIOROF PHILIPPINE LOCAL GOVERNMENT EMPLOYEES

Cristobal N. Rabino, CPA*

Inasmuch as the human resource is a company’s most valuable asset, any organization must address the basic needs of their workforce to minimize employee turnover leading to optimized efficiency through reduced costs and improved output.

In order to achieve this, employers must take into account what motivates their workforce and take measures on how to attend to those factors. It can be in form of competitive salary package, increased benefits, additional perks and privileges or whatever incentive scheme the organization may deem appropriate.

This paper seeks to illuminate the link between remuneration and behavior of the employees, particularly in the Philippine Local Government context.

This paper is empirical in nature, basing the conclusions from observations and experiences in relation to established theories and conceptual frameworks, which are delineated in subsequent sections.

INTRODUCTION

plifting the economic milieu is one of the pillars on which every economy is founded. As such, people find ways on how to elevate their way of living to cope up with the fast-paced change the world undergoes every now and then. In this world of uncertainties and contingencies, high

paying temporary jobs are of lesser priority than average paying jobs with security of tenure and relative stability. People tend to be averse in handling the risks that cloud the future than be seeking risks and taking greater stakes.

UGiven the mentioned tenets and circumstances, civil service is getting more attractive because of the benefits appurtenant thereto, the stable salary package relative to private firms, and other remunerations attached to government service.

*Accountant III at the City Treasurer’s Office, City Government of Muntinlupa

Over the past years, the number of government employees grew at a faster rate than did the population. Philippine population grew 160% from 1960 to 1997 but total government personnel more than doubled in size from the 360,000 employed in 1960.1 In the immediately preceding years, the increase in government expenditures in personal services is accounted for by the implementation of the Fourth Tranche of the Salary Standardization Law.2 Statistically speaking, civil servants accounts for the 1,409,660 of the total workforce.3

This paper examines the incentives structures ingrained in the Philippine Government Service, as based on the Salary Standardization Law and pertinent issuances by governing agencies, and correlate it to whether or not these have affected employee behavior, particularly performance. Literatures cited on this paper include:

o Maslow’s Hierarchy of Needs. to establish the fact that employees need economic benefits, in form of salaries and wages and other remunerations to achieve various needs;

o Motivation;o Distinguishing features of Government Bureaucracies;o Behavioral Consequences; ando Compensation Package of the Philippine Government.

Next section tackles the analysis of related literature and conceptual framework. Conclusions and recommendation for further studies are discussed on the subsequent sections.

1Civil Service Commission, 20102Republic Act 67583Inventory of Government Personnel, Civil Service Commission, 2010

LITERATURE REVIEW

This section focuses primarily on scholarly papers and academic works anent to the topic of this research paper.

Maslow’s Hierarchy of Needs and Its Implication to Employee MotivationIn his paper “A Theory of Human Motivation”, Abraham Maslow4 posited a hierarchy of human needs. His paper concludes:

1. There are at least five sets of goals, which we may call basic needs. These are briefly physiological, safety, love, 'esteem, and self -actualization. In addition, we are motivated by the desire to achieve or maintain the various conditions upon which these basic satisfactions rest and by certain more intellectual desires.

2. These basic goals are related to each other, being arranged in a hierarchy of prepotency. This means that the most prepotent goal will monopolize consciousness and will tend of itself to organize the recruitment of the various capacities of the organism.

The less prepotent needs are minimized, even forgotten or denied. But when a need is fairly well satisfied, the next prepotent ('higher') need emerges, in turn to dominate the conscious life and to serve as the center of organization of behavior, since gratified needs are not active motivators.

Thus man is a perpetually wanting animal. Ordinarily the satisfaction of these wants is not altogether mutually exclusive, but only tends to be. The average member of our society is most often partially satisfied and partially unsatisfied in all of his wants. The hierarchy principle is usually empirically observed in terms of increasing percentages of non -satisfaction as we go up the hierarchy. Reversals of the average order of the hierarchy are sometimes observed. Also it has been observed that an individual may permanently lose the higher wants in the hierarchy under special conditions. There are not only ordinarily multiple motivations for usual behavior, but in addition many determinants other than motives.

3. Any thwarting or possibility of thwarting of these basic human goals, or danger to the defenses which protect them, or to the conditions upon which they rest, is considered to be a psychological threat. With a few exceptions, all psychopathology may be partially traced to such threats. A basically thwarted man may actually be defined as a 'sick' man, if we wish.

4. It is such basic threats which bring about the general emergency reactions.

5. Certain other basic problems have not been dealt with because of limitations of space. Among these are:

(a) the problem of values in any definitive motivation theory,(b) the relation between appetites, desires, needs and what is 'good' for the organism,(c) the etiology of the basic needs and their possible derivation in early childhood,(d) redefinition of motivational concepts, i. e., drive, desire, wish, need, goal,(e) implication of our theory for hedonistic theory,(f) the nature of the uncompleted act, of success and failure, and of aspiration-level,(g) the role of association, habit and conditioning,

4 Theory of Human Motivation, Abraham Maslow, 1943

(h) relation to the theory of inter-personal relations,(i) implications for psychotherapy,(j) implication for theory of society,(k) the theory of selfishness,(l) the relation between needs and cultural patterns, and(m) the relation between this theory and Alport's theory of functional autonomy.

These as well as certain other less important questions must be considered as motivation theory attempts to become definitive (Maslow, 1943).

He pointed out that when we ask what man wants of life, we deal with his very essence (Maslow, 1943). His theory has been a hallmark in the study of what motivates an individual and its various implications in the study of other disciplines relative to human needs.

One of the arguments of this theory is that the need for self-actualization is insatiable. Man is always wanting and therefore it is only the need that is not fulfilled that can motivate individual behavior and the prevailing need is the one that makes an individual to act in a particular way to satisfy it.

Figure 1. Maslow’s Hierarchy of Needs(Source: Google Images)

The hierarchy of needs attempts to capture the different levels of human motivation. It depicts the idea that human beings are fueled into action by different motivators at different times. This serves as a guide to managers, both in private and public organization, in dealing with employee motivation and how to address those factors that motivate them.

Motivation, on the other hand, is of equal importance. Motivated employees make or break an organization according to their level of satisfaction. Even people with adept skills, knowledge and abilities will underperform if they are not motivated to devote their time and every effort to work for the organization.

Opu Stella (2008)5 linked Maslow’s Hierarchy of Needs to Management style in dealing with employee motivators. Her paper, “Motivation and Work Performance: Complexities in Achieving Good Performance Outcomes: A Study Focusing on Motivation Measures and Improving Workers Performance in Kitgum District Local Government”, cites the following reactions of management to address employee needs taking into account the hierarchy of needs proposed by Maslow:

In order to be able to provide physiological motivation an organization should ensure that it provides for example sufficient lunch breaks and offer salaries that enable the workers to be able to meet basic needs.

Safety needs can be provided through the creation of a conducive environment which is safe, provision of job security and a feeling that workers are safe from any threat.

Social needs require an organization to create a feeling of acceptance, belonging, and the spirit of communal living by encouraging team spirit among the workers.

Esteem motivators are provided through the recognition given to workers achievements, attaching value to their views, assigning important projects to hard working employees and provision of status to make them feel valued and appreciated by the organization.

In order to enable a worker to achieve the need of self actualization it requires provision of challenging tasks, important work assignments which help to stimulate motivation, creativity, and progress in accordance to long term organizational goals (Stella, 2008).

It is, therefore, imperative to managers to create an environment that addresses these motivational factors of the entire workforce. When workers lack the drive, they tend to manifest behaviors such as gross negligence of duty, constant late, absenteeism, which in turn could translate to poor performance and timid execution of the assigned jobs.

The management should exert effort on ensuring that ample performance rewards are in place to ensure optimum performance, increased employee satisfaction and reduced employee turnover.

Distinguishing Features of Government Bureaucracies and its Behavioral Consequences6

The government bureaucracy has been long compared to the private sector. The similarities and significant differences between the two have been established, in various papers and research works.Cited subsequently are the distinguishing features of the typical government structure, gleaned from the work, “The Philippine Bureaucracy: Incentive structures and implications for performance”, of Toby Monsod (2009):

5 Motivation and Work Performance: Complexities in Achieving Good Performance Outcomes: A Study Focusing on Motivation Measures and Improving Workers Performance in Kitgum District Local Government, Opu Stella, 20086 This portion is drawn heavily on “The Philippine Bureaucracy: Incentive structures and implications for performance” by Toby Monsod, 2009

1. Clarity of primary goals. The primary goals of public sector organizations are often ambiguous, difficult to interpret in precise operational terms, and even more difficult to monitor or measure. For instance, mandates can read as broadly as “to promote long-range security…”, “to foster and promote the welfare of wage earners...”, “to educate youth…”, “to preserve and enhance culture…”, phrases that reasonable people are likely to disagree on as to interpretation and, even if there was an agreement, on how these are best operationalized and attained. In contrast, private sector organizations, even if they do start off with ambiguously worded primary goals, are usually able to clarify operational tasks through a process of trial and error and internal negotiation which is tested by competitive natural selection. Government agencies do not have the luxury of such a test.

2. Supervision over factors of production. Unlike their private sector counterparts, government bureaucracies rarely have control over revenues, productive factors, or the definition and prioritization of specific agency tasks. Rather, control is political, with supervision vested in external entities such as congress, the courts, politicians, and interest groups. To illustrate, only by exception are agencies able to retain earnings, much less devote earnings to the private benefit of staff, thereby weakening links between money wages and observed performance. Further, while few agencies may have financial “bottom lines” (such as the Bureau of Internal Revenue), the hiring, purchasing, contracting and budgeting of productive factors remain governed by political and not bureaucratic rules. Even the definition and prioritization of tasks may be prescribed in laws that promulgate government programs and budgets, leaving agencies little room to maneuver as regards strategy, programs or targets.

3. Political constraints or “contextual goals”. The multiplicity of ‘principals’ hovering over government agencies leads to a proliferation of contextual goals. Contextual goals define the parameters within which primary goals can be sought and are usually explicitly or implicitly defined and enforced by powerful interests, such as congressional committees. For instance, budget realignments by a congressional committee to service some local constituent interests represent contextual goals. Contextual goals are also embedded in generic rules and procedures, such as in procurement rules, which seek to not only level the playing field (“hold hearings”, “give notices”) but also, at times, tilt it (“buy Filipino”) at the expense of efficiency (Monsod, 2009).

These distinguishing features of the government bureaucracy has been translated into behavioral consequences by the employees in the roster of public service. Monsod (2009) further discussed the behavioral implications in the same paper.

A bureaucracy without a capacity to think or passion to perform may be explained by the above. For one, political supervision over factors of production creates strong incentives for rational civil servants to worry about constraints versus tasks, rules versus outcomes, or the “top-line” versus the “bottom-line” -- in other words, achieving conformity to the contextual goals within which the agency is enmeshed rather than progress towards primary goals. Indeed, it makes more sense for civil servants to be more concerned for adhering to processes, which are known, immediate, defined by rules and more easily defensible, rather than achieving outcomes, which are uncertain, delayed and controversial. The greater the cost of non-compliance, the more important the constraint. That government managers tend to be exasperatingly risk-averse is also explicable.

Multiple constraints weaken agency boundaries and allow potential interveners greater access. Particularly, the more the rules, the greater the power third party enforcers have over

bureaucratic processes. In the Philippine context for instance, this translates to the increased chance of being subject to the Commission on Audit (or “COA-d”), to the Ombudsman, or to Congressional hearings. The more numerous the constraints, the more risk-averse the managers.

Multiple constraints also help explain the red tape and top-heavy/redundant management structures prevalent in government. First, more constraints require more SOPs to reduce the chance that any one of them is violated. Second, more constraints also require more managers to oversee them. Thus one finds more managers performing similar tasks in government than in the private sector.

Finally, a timid rank & file. The more contextual goals and constraints that must be served, the more discretionary authority in an agency is pushed to the top. How does one motivate staff in such an environment? There is no one formula except to keep in mind that when the marginal effects of monetary incentives decrease, the relative importance of non-monetary incentives increase. A sense of mission - fashioned from a sense of purpose, status and solidarity – is a key source of non-pecuniary incentives and the chief way by which problems of shirking may be overcome. Professional reputation and/or ideology are other sources of non-pecuniary incentives. Disincentives in turn are actions that undermine the sense of mission, which discourage or ignore professional status, or violate ideology.

Further, the degree to which motivation is a challenge (that is, the degree to which the above behavior is manifested) depends on the type of agency, defined according to whether agency outputs(the work the agency does on a day-to-day basis) and outcomes(how the world changes as a result of outputs) are more or less observable. In production and craft agencies where outcomes are more observable, workers can be rewarded based on their contribution to efficiency or on the results they achieve. When outcomes are less observable, agencies become procedural (if outputs are more observable) or, worse, coping (outputs are less observable) agencies. Effective management is, in fact, “nearly impossible” in the latter, as demonstrated by public school systems where teachers work on their own on a daily basis, education outcomes are difficult to attribute directly to teacher input, and schools have little control over resources. In coping agencies, management tends to focus only on the most easily measured or controlled activities, making the likelihood of conflict with staff high and the challenge of motivation greater still (Monsod, 2009).

He pointed out several behavioral idiosyncrasies that had emanated as a result of the government bureaucracy. Adherence to procedures and policies which are routine, by nature, and ministerial are more given concern than achievement of goals that are uncertain, controversial and delayed. This mentality has contributed to the government that had lost its capacity to think and passion to perform. Culture of dualism and mediocrity has been a long-time practice as a result of these.

Compensation Structure in the Philippine Government7

The Compensation Plan (CP) under Republic Act No. 6758 is an orderly scheme for determining rates of compensation of government personnel. It was crafted to attract, motivate and retain good and qualified people to accomplish the Philippine Government’s mission and mandates, to encourage personal and career growth, and to reward good performance and length of service. To achieve these goals, the CP has a mix of compensation components, namely: basic pay or salaries, fringe benefits, incentives and non

7 Discussion is based on Republic Act 6758 otherwise known as the Salary Standardization Law (SSL)

financial rewards which provide reasonable levels of compensation packages within existing government resources, and are administered equitably and fairly (Civil Service Commission, 1994).8

Figure 2. Total Compensation Framework of RA 6758(Source: Manual on Position Classification and Compensation System, CSC)

Governing Principles of Compensation PlanPursuant to RA No. 6758, the CP is based on the following principles:

o All government personnel shall be paid just and equitable salaries and wages.o The basic pay for all personnel in the government shall generally be comparable with those in the

private sector. o The total compensation program of government personnel shall be maintained at a reasonable

level in proportion to the national budget. o Government compensation rates shall be reviewed periodically taking into account possible

erosion in purchasing power due to inflation and other economic factors.8

Salary GradesUpon passage of the SSL, salaries and wages for all government officials and employees have been prescribed and standardized in the form of salary grades. Salary grades represent the level of difficulty and responsibility of the work assigned.8 The existing salary schedule has 33 grades. Each of Salary Grades 1 to 32 consists of 8 salary steps which are used to provide incentives for length of service in the position. Salary Grade 33 has only 1 salary step. The 1st salary step is the minimum or hiring rate. The 2nd

8 Manual on Position Classification and Compensation System, Civil Service Commission, 1994

to 7th salary steps are the intermediate salary rates. The 8th step is the maximum salary rate. All rates in the Salary Schedule represent full compensation for full-time employment in a 40-hour workweek regardless of where the work is performed. The daily wage represents full compensation for full-time employment in an 8-hour work day regardless of where the work is performed. The daily rate shall be computed based on the authorized/actual monthly rate for the position divided by 22 days (Civil Service Commission, 1994).

Figure 3. Monthly Salary Schedule for Civilian Personnel of the Philippine Government(Source: Executive Order 76, Series of 20129)

9 Executive Order 76, series of 2012 pertains to the Implementation of the Fourth Tranche of the Modified Salary Schedule for Civilian Personnel and Base Pay Schedule for Military and Uniformed Personnel in the Government and was signed by President Benigno Simeon Cojuangco Aquino III on 30 April 2012.

Other Compensation, Allowances and Benefits ( as per Manual on Position Classification and Compensation System )

o Step Increment Step increment is the increase in salary from step to step within the salary grade of a position. The grant of step increments to government personnel based on their lengths of service is pursuant to Item 8 of Joint Senate-House of Representatives Resolution No. 1, s. 1994, as adopted under Executive Order No. 164 (Adopting a Revised Compensation and Classification System in the Government), dated March 8, 1994.

o Personnel Economic Relief Allowance The Personnel Economic Relief Allowance (PERA) is a P500 monthly allowance authorized under the pertinent general provision in the annual General Appropriations Act (GAA). It is granted to augment a government employee's pay due to the rising cost of living.

o Uniform/Clothing Allowance The Uniform/Clothing Allowance (UCA) authorized under the pertinent general provision of the annual GAA is granted to cover the cost of uniform/clothing of government employees to identify them with their mother agency/office.

o Representation and Transportation Allowances The pertinent general provisions of the General Appropriations Acts (GAAs) prior to FY 1993 and in the FY 1999 GAA provided that the officials listed therein and those of equivalent ranks as may be determined by the Department of Budget and Management (DBM) are to be granted monthly commutable RATA. Hence, prior to FY 1993 and in FY 1999, RATA were allowances attached to the position. The pertinent general provisions of the FYs 1993 to 1998 GAAs and in the FY 2000 GAA provided that the officials listed therein and those of equivalent ranks as may be determined by the DBM while in the actual performance of their respective functions are to be granted monthly commutable RATA. This provision was reiterated in the pertinent general provisions of subsequent GAAs. Hence, in FYs 1993 to 1998 and beginning FY 2000 and up to the present, the actual performance of an official’s duties and responsibilities was a pre-requisite to the grant of RATA. The rationale behind the qualifying phrase, “while in the actual performance of their respective functions,” is to provide the official concerned with additional funds to meet necessary expenses incidental to and connected with the exercise or the discharge of the functions of the office. Thus, if the official is out of office, whether voluntary or involuntary, the official does not and is not supposed to incur expenses. There being no expenses incurred, there is nothing to reimburse. Since RATA are privileges or benefits in the form of reimbursement of expenses, they are not salaries or part of basic salaries. Forfeiture or non-grant of the RATA does not constitute diminution in pay. RATA may be spent in variable amounts per work day depending on the situation. Entitlement thereto should not be proportionate to the number of work days in a month, inclusive of regular and special holidays falling on work days.

o Year-End Bonus and Cash Gift The Year-End Bonus and Cash Gift are intended as year-end premiums to government personnel for satisfactory and dedicated service. They are collectively referred to as the Year-end Benefit (YEB), authorized under Republic Act (RA) No. 6686, as amended by RA No. 8441. The liberalization of the grant thereof is authorized pursuant to the pertinent general provision in the annual GAA.

o Productivity Incentive Benefit The Productivity Incentive Benefit (PIB) is a cash award authorized under Administrative Order (AO) No. 161, dated December 6, 1994, to recognize individual personnel productivity and performance which contributed to attainment of agency goals and targets. Performance includes conduct and behavior in the discharge of the duties of a public office.

o Overtime Pay Government employees are required to render 40 hours of work in a week, subject to the work schedule adopted by the agencies concerned. Through adequate planning of work activities, overtime work could be avoided. Hence, overtime work should not be resorted to in the performance of regular work, except in cases when unforeseen events and emergency situations will result in any of the following:

Cause financial loss to the government or its instrumentalities; Embarrass the government due to its inability to meet is commitments; or Negate the purposes for which the work or activity was conceived.

Should the need to render overtime services become very necessary, overtime pay may be paid pursuant to Section 63, Chapter 7, Book VI of Executive Order No. 292 (Administrative Code of 1987), dated July 25, 1987, as implemented by Budget Circular No. 10, dated March 29, 1996.

o Compensatory Time-Off Section 1 (d) of Administrative Order No. 103 (Directing the Continued Adoption of Austerity Measures in the Government) dated August 31, 2004, provides for the adoption of a scheme that will allow employees to be compensated through time/days off in lieu of overtime pay. Thus, Civil Service Commission and DBM Joint Circular No. 2, s. 2004, was issued to implement said provision.Said Joint Circular refers to the Compensatory time-Off (CTO) as the number of hours or days an employee is excused from reporting for work with full pay and benefits. It is a non-monetary benefit provided to an employee in lieu of overtime pay.

o Per Diem Per diem is a compensation granted to a chairperson, vice-chairperson or member of a collegial body created by law for attendance in collegial meetings with quorum. The guidelines on per diems granted to members of collegial bodies and members of the Board of Trustees of State Universities and Colleges (SUCs) are provided under Budget Circular (BC) No. 2003-6, dated September 29, 2003.

o Honoraria Honoraria are token payments in recognition of incidental services rendered. Since FY 2003, the grant of honoraria is limited only to the government personnel enumerated under Section 42, General Provisions, RA No. 9206, the FY 2003 GAA.

o Honoraria for Government Personnel Involved in Government Procurement Honoraria are granted to government personnel involved in government procurement pursuant to Section 15, RA No. 9184 (Government Procurement Reform Act), and the Implementing Rules and Regulations (IRR), Part A, for fully domestically-funded procurement projects, which took effect on October 8, 2003.

o Night-Shift Differential Pay

Night-Shift Differential Pay is a compensation premium granted to government personnel whose regular work hours fall wholly or partly within 6:00 PM to 6:00 AM of the following day. Its grant was standardized and rationalized pursuant to Budget Circular No. 8, s. 1995.

o Hazard Duty Pay The hazard duty pay (HDP) authorized under Section 54, General Provisions of Republic Act No. 9336 (FY 2005 General Appropriations Act) is a compensation premium granted to each official and employee actually assigned to, and performing duties in, strife-torn or embattled areas.

o Subsistence AllowanceSubsistence Allowance is allowance for meal or sustenance of government personnel who, by the nature of their duties and responsibilities, have to make their services available in their places of work even during mealtimes. The grant thereof is pursuant to Section 69, Chapter 7, Book VI of Executive Order No. 292 (Administrative Code of 1987).

o Laundry Allowance The Laundry Allowance is intended to defray the laundry cost incurred for uniforms of specific government personnel pursuant to Section 67, Chapter 7, Book VI of Executive Order No. 292 (Administrative Code of 1987).

o Free Quarters for Certain Government OfficialsFree quarters for government officials refer to the free use of government-owned or leased place of lodgings which may include telephone, water and electricity for basic needs.

o Free Quarters Privileges in Hospitals Free quarters privileges refer to the free use of government hospital-owned place of lodging authorized under the pertinent general provision in the annual GAA.

o Special Counsel Allowance The Special Counsel Allowance authorized under the pertinent general provision in the annual GAA is granted to lawyer personnel, including those designated to assume the duties of a legal officer and those deputized by the Office of the Solicitor General in the legal staff of departments, bureaus or offices of the national government to appear in court as special counsel in collaboration with the Solicitor General or prosecutors concerned.

o Anniversary Bonus The Anniversary Bonus (AB) is a financial incentive authorized under Administrative Order No. 263 dated March 28, 1996, to be granted to government employees on the occasion of their agencies’ milestone years.

o Collective Negotiation Agreement (CNA) Incentive The CNA Incentive is a cash incentive in whatever form provided for in CNAs and supplements thereto, which were granted pursuant to PSLMC Resolution No. 04, s. 2002 or PSLMC Resolution No. 02, s. 2003, or the rationalized cash incentive granted on or after the effectivity of Budget Circular No. 2006-1 dated February 1, 2006, to the government employees concerned who have contributed either in productivity or cost savings in an agency, in fulfillment of the commitments in the CNAs or supplements thereto. It excludes such other items that are negotiable, in cash or in kind, listed under Section 2, Rule XII, PSLMC Resolution No. 02, s. 2004, and non-negotiable concerns specified in PSLMC Resolution No. 04, s. 2002 and PSLMC Resolution No. 02, s. 2003.

o Travel ExpensesTravel Expenses constitute the amounts authorized under Executive Order (EO) No. 248, dated May 29, 1995 and EO No. 248-A, dated August 14, 1995, as amended by EO No. 298, dated March 23, 2004, as recommended by the Travel Rates Committee created under Section 72, Book VI of Executive Order No. 292, the Administrative Code of 1987, to cover hotel/lodging rate, meals and incidental travel expenses excluding transportation expenses going to and from the destination.

o Terminal Leave Benefit and Monetization of Leave Credits The Terminal Leave Benefit (TLB) refers to the money value of the total accumulated vacation and sick leave credits of an employee based on the highest salary received prior to or upon retirement or voluntary separation from government service. Monetization of Leave Credits (MLC) refers to the payment in advance under prescribed limits and subject to specified terms and conditions of the money value of the vacation and sick leave credits of an employee upon his/her request, without actually going on leave. Budget Circular No. 2002-1 dated January 14, 2002, prescribed the guidelines relative to the computation of the TLB and MLC in accordance with Memorandum Circular (MC) No. 14, s. 1999, issued by the Civil Service Commission (CSC).

The Compensation Plan should provide compensation which can stand comparison with those in private industries and which can provide maximum benefit to the service so that the Philippine Government could retain its core of public servants. Thus, the Compensation Plan was established with maintenance mechanisms such that compensation issues brought about by changes in economic conditions, employment conditions, policy decisions, administrative reforms, etc., could readily be addressed without disrupting the relationship between the Position Classification Plan and the Compensation Plan (Civil Service Commission).

CONCEPTUAL FRAMEWORK

Gleaned from the related literature cited in the preceding section, the author deemed it appropriate to use the following conceptual framework in the formulation of findings in this paper:

Figure 4. Conceptual Framework

The conceptual framework focuses on the employee behavior and how it is influenced by intrinsic and extrinsic motivators, in form of salaries, wages, and other non-monetary benefits, and how it is being shaped by the culture prevalent in bureaucracy, as discussed in the review of related literature and studies.

DISCUSSION OF FINDINGS

This study had its focus on the implications of remunerations to the behavior of the Philippine Local Government Employees. In this section, we seek to clarify the benefits derived from Philippine civil service and provide remarks on as to how these stimuli triggers reaction to employees. Since this is an empirical study, findings are derived primarily on observation and experiences anchored on established thoughts and principles. Interviews were also conducted to random employees in the City Government of Muntinlupa.

Base PayIt can be recalled, that one of the basic principles of the Government Compensation Plan is to provide basic pay for all personnel in the government that is generally comparable with those in the private sector.

This is very evident based on actual cases, wherein the salary levels of government employees are almost at par, or sometimes exceeds, with those on private employment.

Let’s take for example, accountants. In order to be hired in private firms and public organizations, an accountant must be licensed by the Professional Regulation Commission, in order to get a good bargain on salary. At an entry level, Accountant will be usually given an Accountant I position, with a salary grade of 12 or ₱ 19, 940.00 per month. While in private firms, Accountants at an entry level, will be given an audit associate position or a finance analyst position, with an average monthly salary of ₱ 15, 720.0010 across all industries.

Also, an industry average data10 become available to us for use.

Table 1. Salary Comparison by Company Type(Source: Salary Explorer Philippines)

Given this scenario, we can infer that the base pay of people in government service is at par, or sometimes, exceeds those of private employees.

On the other hand, steps on raising the standard salaries for all civil servants are currently making its way to the Senate, as proposed by Senator Antonio Trillanes IV. Senate Bill 1689 11 aims to revise the then existing Compensation and Position Classification System for civilian personnel and base pay of military and uniformed personnel, to make it more responsive to the economic needs of government personnel, to provide adequate incentives to public servants and to improve the quality of public services. Under this proposed law, Salary Grade 1-1 would be receiving a monthly salary of ₱ 16,000.00 instead of ₱ 9,000.00 That would comprise a 43.75% increase in salary of those positions assigned a Salary Grade of 1-1.

10 Figure is based on Salary Explorer (Philippines), http://www.salaryexplorer.com/salary-survey.php? loc=171& loctype=1&job=998&jobtype=3, retrieved 06 December 201411 Adopting an omnibus compensation and position classification of civilian personnel and the base pay schedule of military and uniformed personnel in the government, and for other purposes, Antonio Trillanes IV, 2013

Security of TenureThe guarantee of security of tenure under the Constitution means that an employee cannot be dismissed from the service for causes other than those provided by law and only after due process is accorded the employee.12

Unlike the private sector in which the market forces are relatively unpredictable, the government can never go out of business. Government agencies or instrumentalities may devolve functions, but there will always be government jobs.

In government service, once one employee has been in the roll of plantilla of regular personnel, he has the security that the item (or the vacancy) can never be removed from him, except in cases where ethical issues are being raised.

Contrary to stability of government operations, businesses bear the risk or the uncertainty that the benefits they derive from operations cannot cover the expenses to sustain their continuance. In such cases, downsize or operation shutdown is inevitable.

Other Derived BenefitsGovernment service provides benefits that are better in the long-run. Among of these benefits that can be derived better in civil service include:

o Attractive Pension Plans;o Comprehensive Medical and Dental Coverage; o Rice Subsidy;o Congenial Work Environment; ando Flexibility (work-life balance).

The mentioned benefits are also offered by private firms for the employees in their custody. However, most of the respondents say that the benefits and incentive schemes are better in the government sector, in the long-run.

Behavioral ImplicationsIn this era of rapid development, the workforce is of primary importance in the competitive advantage of each organization. What motivates the employees becomes a critical strategic asset in such competition. In most organizations, management seeks to address those motivational needs to condition the employees for increased performance and optimized productivity.

Motivation and prevalent Culture in the Bureaucracy has been discussed in the previous sections of this paper. We pointed out that the motivational needs of the civil servants are being addressed by the current remuneration package offered by the Philippine government to invite dedication to serve among the people in its employ.

The prevalent culture of dualism and bureaucracy that does not think exists in the Philippine bureaucracy and is adopted by civil servants around the country. However, through the incentive schemes offered by the government, the ill effects of this culture are mitigated that translates to continued and unwavering public service that delivers the basic needs of its clientele – the constituents.

12  De Guzman vs. Comelec, G.R. No. 129118, July 19, 2000

CONCLUSIONS AND RECOMMENDATIONS FOR FURTHER STUDY

To reiterate the discussion of findings outlined in the previous sections, presented below is a table that discusses the comparison of the benefits offered by public and private organizations that translates to addressing the motivational needs of the employees living in the corporate-wide culture prevalent in the organization.

Factors Private Organization Public OrganizationBase Pay Competitive CompetitiveSecurity of Tenure Relatively Unstable Relatively StableOther Derived Benefits Good Better

Table 2. Comparison of Benefits Derived from Private and Public Organization

This study is empirical, per se, and bases its findings on observation and experience anchored on established principles and theories, which were all cited in the review of related literature and studies in a preceding section.

Further authoritative studies anent to the topic on this paper can disprove the tentative findings and conclusions drawn hereto.

This paper can be improved through the use of an instrument that can measure objectively the retort of the respondents using a scale and the like.

Extensions of this study could include a more thorough analysis on the link of remuneration in the Philippine government and the behavior of employees. The ‘Other derived benefits’ factor can be expounded into various specific factors that could help gauge more accuracy and depth to future researches.

REFERENCES

Published Studies

Maslow, Abraham H. (1943). A Theory of Human Motivation. Psychological Review, 50, pp 370-396.

Monsod, Toby C. (2009). The Philippine Bureaucracy: Incentive structures and implications for performance. HDN Discussion Paper Series. 4.

Racelis, Aliza D. (2005). An Exploratory Study of Organizational Culture in Philippine Firms. Philippine Management Review. 12, pp 72-86.

Unpublished Studies

Novita, Ariastuti Wulan. (2010). An analysis of the relationship between motivation and performance for direct hire temporary employees. Unpublished Undergraduate Thesis. Tilburg University.

Stella, Opu. (2008). Motivation and Work Performance: Complexities in Achieving Good Performance Outcomes; A Study Focusing on Motivation Measures and Improving Workers Performance in Kitgum District Local Government. Unpublished Master’s Thesis. Institute of Social Studies. The Netherlands.

Government Documents

Civil Service Commission. (2010). Inventory of Government Personnel.

____________________. (1994). Manual on Position Classification and Compensation System.

Office of the President. (2012). Executive Order 76. Implementation of the Fourth Tranche of the Modified Salary Schedule for Civilian Personnel and Base Pay Schedule for Military and Uniformed Personnel in the Government.

Senate of the Philippines. (2012). Adopting an omnibus compensation and position classification of civilian personnel and the base pay schedule of military and uniformed personnel in the government, and for other purposes.

Jurisprudence

De Guzman vs. Comelec, G.R. No. 129118, July 19, 2000

Internet Sources

Salary Explorer Philippines (2014). “Accountants” Retrieved from http://www.salaryexplorer.com/salary -survey.php? loc=171& loctype=1&job=998&jobtype=3