Shock and awe

On Wednesday, Transportation and Infrastructure Minister Shirley Bond said she was shocked British Columbia Ferry Services Inc. boss David Hahn makes one million dollars. But that's not what I'm shocked about. What I'm shocked about is that Minister Bond is shocked.

After all, since the Liberals have been in power, B.C. Pavilion Corp.'s head has seen his salary increase 166 percent to $400,000 - even though public facility heads in Seattle, Toronto and New Jersey make significantly less according to 24 hours's Bob Mackin. BC Railway Co.'s president and chief executive officer continues to make half-a-million dollars even though the tracks he's responsible for have been privatized. And our top bureaucrats can now earn around $300,000 all because, I think, of a mistaken faith in the cult of the chief executive officer - the belief the province's public institutions need to pay the best to get the best if British Columbia wants to be the best.

But last month's edition of The Atlantic Monthly questioned the corporate American branch of that faith, citing studies that show chief executive officers seldom make a decisive difference to a company's performance. Instead, in a recently published book, Massachusetts Institute of Technology management professor Paul Osterman argues it's the middle managers who matter - news that might also shock Minister Bond and her own chief executive officer Gordon Campbell.


Suppose I was an executive who recommended or decided upon compensation for senior associates. My best interest would be served by increasing the salary packages for other executives because my own remuneration would be based on that of those around me.

Don't pretend for a moment this rule doesn't apply broadly.

There is little connection to these guys who run departments usually with no competition, than public sector folks who either deliver to the stockholders or they get rid of them. It's awful hard to support big bucks for the Ferry guy. No competition and no other way to get across the water unless one flies or is a good swimmer. Ferry rates go up partly because the outfit has to pay more money than the government when they loan money. The built out of the country boats are considered gas guzzlers and have cavitation issues. They were built in heavioly subsidized yards. Oh we can't subsidize our BC ship builers says Gordo. The big prize is the BC Rail executive who manage a bit of property and what must be the shortest rail line in the country. THose guys must know where the bodies are buried to get such amounts of tax payer money. Only in BC.

Well said, Sean.

If executive pay levels at BC Ferries have come as a surprise to the Minister, it also tells you that the shareholder's representative (i.e. Finance Minister) has been doing a lousy job all along in terms of keeping tabs on this public corporation and reporting back to Cabinet and the public.

Colin Hansen has some explaining to do.

Agreed, Norman. You've describe in a nutshell the contrived formula that Gordon Campbell et al have used since coming to power to establish an elite culture of highly paid individuals within the provincial pay system.

This race-to-the-top in executive pay compares and is contrasted to Campbell's race-to-the-bottom approach toward public sector wages. This was especially so during his first term, for example, when he unilaterally discarded health sector contracts in advance of hiring cheaper replacement workers.

I recall his rationale at the time for both approaches. It went something like: To recruit the best we need to pay the best, which was followed by the excuse that other provinces where paying less for labor and thus so should BC.

Funny how marketplace theology can be used both ways when it suits power.

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