Left: Richard Byles, president and CEO, Sagicor Life Jamaica. Right: Kavan Gayle, BITU president - file photos

Sagicor Life Jamaica is introducing a new 'pay for performance' compensation scheme that will not only revloutionise the fixed-salary system, but also form the basis on which the company will eliminate staff in a tough year.

The plan is already raising hackles in the company, but Sagicor president and chief executive officer Richard Byles suggested Tuesday that the new arrangement was a done deal, saying it would be tested starting March when the former Blue Cross staff formally join Sagicor Jamaica's payroll.

Those workers, about 100 of them, were required to sign on to 'pay for performance' as a condition of their re-employment, following Sagicor's acquisition of Blue Cross of Jamaica's $2-billion health insurance business.

But Byles said the plan, which his company has been developing for a year, using information technology specialists E-Services Group Limited as consultants to build the compensation matrix, has been pilot-tested in his company for the last three months, and would eventually be rolled out across the company, starting with clerical level staff.

"I want to give my people an opportunity to realise their potential - for the top performers to earn more and for the company to benefit from greater cost efficiency," Byles told Wednesday Business.

He already faces a 20 per cent wage claim from the Bustamante Industrial Trade Union, but Sagicor says it has frozen the wage bill.

"We have told the union, with which we have cordial relations, that we are deferring any adjustment to compensation until we are able to measure the real impact on the company's bottom line," said Bernita Locke, vice-president of human resources.

Streamline operations

Sagicor Jamaica predicts that 2009 could potentially be disastrous for his company's bottom line, and is acting pre-emptively to streamline operations. The company made $2.7 billion at September 2008 and seemed on track to surpass the $3.4 billion made in the 12 months of 2007

"We are coming off a good year, but last year is last year and now we are staring straight down the gun barrel of a disastrous year," he said, taking as warning the massive redundancies announced at the top of the year.

Some 7,000 to 8,000 of the 13,000 job cuts announced in January, said Byles, was business that his company would be losing.

"With the large numbers of redundancies now taking place, people are losing their health insurance," he said. "We have to be paying out pensions. Group life is going to be affected, so too is individual life."

Byles is not promising that there will be no staff cuts, but says 'pay for performance' will provide the "quantitative" basis on which to 'separate the sheep from the goat' and eliminate underperforming staff.

"It will determine who can earn more and who stays," said Byles, adding that the accompanying systematic performance appraisal will prove a more efficient methodology for reducing the workforce than asking supervisors to put forward names for redundancy.

"The latter route is subjective and you risk losing your best staff, cutting the company's muscle rather than the fat."

Byles said he has been working with E-Services to develop the new matrix since last year, while denying categorically that the current arrangement extends beyond the consultancy to include back-office processing.

"I visited E-Services today with about 40 of my staff members to get a first-hand look at how that company's successful performance-based remuneration arrangement works. Sagicor Life is not outsourcing to E-Services."

Byles did not commit to a roll-out time for the new system across the company, saying only it would happen "eventually" and likely in phases - perhaps because of the reluctance emanating from within Sagicor's ranks.

BITU president Kavan Gayle says the move does not yet have the full support of staff, who are seeking further clarification before signing on en bloc.

Union incensed

"The union has no problem with the principle of performance-based pay, but there are several issues, such as the appraisal tool, the absence of a guarantee from the company that jobs will be protected, the unilateral changing of employment contracts, which need to be settled," Gayle said in response to queries from Wednesday Business.

The union is further incensed by what it says is the stance of the Sagicor management not to negotiate any item on the 2009-20011 wage claim from the union until the new performance pay scale is in place.

Asked whether the new system would cover all categories of staff up to his office, Byles said managers are already on a performance scheme of sorts, linked to their bonuses, but then said eventually the intent was to "roll up" the new compensation plan to executives.

Revolutionising

His sales agents, too, are on a performance scheme.

"Pay for performance works for Sagicor Life's 350 agency force of salespersons, who are the most productive in the Caribbean. We have to get serious about productivity in this country," said Byles. "If they were not on pay for performance, they would not be the best."

While accepting that Sagicor is not now seeing any declines and is coming off a good 2008, Byles is not optimistic that the trend will continue into the current year.

The Sagicor CEO says the introduction of a pay-for-perfor-mance regime will revolut-ionise the existing fixed salary earning structure, causing much concern among workers who have been accustomed all their working lives to receiving set salaries.

huntley.medley@gleanerjm.com