Corporate salaries – part 1

Two readers – Samdrups and Sharu – asked me for my views on our government’s recent announcement on corporate salaries. My views are simple. And they are straightforward. Government should not be involved in doing business. Yes, government should regulate businesses. But no, government should not interfere in how businesses are run. So our government’s decision to define the salaries of corporations – business entities, all of them – is wrong.

First, consider the Druk Holdings and Investment Limited. DHI was established by His Majesty the King as an autonomous organization in order to promote “…the competitiveness of Bhutan’s economy by transforming companies with government shareholding into highly efficient and productive companies that strive for excellence.” If DHI is to strive for efficiency, productivity and excellence, it goes without saying that they should have full authority over their HR policies. And that includes the salaries of their employees. The government cannot dictate salaries to DHI and expect them to become highly efficient or productive enterprises.

That’s why the Royal Charter of DHI (which outlines how DHI will function and which, incidentally, was revised to incorporate the submissions made by the government to His Majesty the King) clearly states that “the remuneration of the CEO and the employees of DHI shall be determined by the Board of Directors of DHI.” The DHI’s Board of Directors must do their job. Two of the seven-member Board of Directors are civil servants, purposely, to ensure that the government’s views are adequately represented in the organization. Any attempt by the government to encroach on the Board’s authority is illegal. And must be challenged.