Today’s competitive business environment has led to a greater emphasis on organisation and worker productivity. Attaining a higher level of productivity is considered to be key in achieving a thriving business, as resources are used more efficiently in the business work process to create more value for the firm. It is commonly viewed that organisational productivity is fairly low due to the ‘production process’ but it is also important to note the role of employees in boosting productivity. Organisations are increasingly investing in the development and implementation of performance based actions which contribute to the achievement of organisational goals.
Performance based incentives link individual and corporate achievement of predetermined outcomes with remuneration. In other words, pay is allocated on the basis of the individual performance and business results rather than paying for the job or length of service.
Many businesses which have implemented performance-based incentive programmes have realised the benefits. They have found that an incentive program that rewards improved business results translates into increased productivity, higher profitability and a more motivated staff or employees.
An article in the Harvard Business Review of March-April 2000, called ‘Leadership That Gets Results,’ reports that ‘of six leadership styles studied, the use of rewards was the single highest predictor of ‘organizational climate’ and in turn had a direct correlation with financial results’.
In his article, ‘The Reward That Makes Employees Work Harder’ on The Business News Daily website, Chad Brooks adds, ‘A study by workforce solutions firm Kelly Services found that 40 percent of employees feel they would be more productive if they had their earnings linked to certain performance or productivity goal. Currently, nearly a third of the companies surveyed use a performance-based pay system with their employees. Performance-based pay involves any arrangement where an element of the total salary is tied to meeting performance targets, including profit-sharing, performance bonuses and sales commissions’.
However, before an organisation can develop a successful performance-based incentive program, there must be a clear vision. Without such direction, it is difficult to identify the types of performance that should be rewarded. Therefore, organisations must create a clear vision and identify the steps required to achieve it. This is important as, a clear corporate vision is the foundation on which all effective performance based incentive systems are based.
The corporate vision has to represent a high-level understanding within the organisation of where it would like to be in the short, medium and long term. After defining the vision, subsequently the elements of an effective performance-based plan can be identified. Without a clearly stated vision, even the best designed programme will drift aimlessly. It is also important to bear in mind that although incentive programs can encourage employees to perform at high levels of productivity, employers should always analyze the merits of the program prior to implementation. They must determine the optimal incentive plan that is in the best interest of the business and that will help improve performance and promote ethical behaviour.
The establishment of an efficient and effective Commercial Court will mark an important step in enhancing the business climate and thus competitiveness of Saint Lucia. In the 2013/2014 Budget Address, the Honourable Prime Minister endorsed the establishment of a Commercial Division of the Court with the subsequent hiring of a resident judge to hear commercial disputes. As such, the Government of Saint Lucia has partnered with the Compete Caribbean Program in the design and establishment of a Commercial Division of the Court.
This is an ongoing project spearheaded by the National Competitiveness & Productivity Council Technical Secretariat and the Ministry of Legal Affairs. The overall objective of this project is to reduce the burden on the court system and to enhance the business environment as it relates to the enforcement of commercial contracts. Therefore, the Commercial Court will be established to provide an efficient and cost effective mechanism to rule on commercial matters in Saint Lucia.
During her address at the opening of law year in 2013, Chief Justice, Dame Janice Pereira stated “….The reality is that economic and social development depends on an effective legal system, which is just as pivotal to a country’s growth and development as any financial institution.” The Chief Justice has understood the advantages that a Commercial Court has provided for the British Virgin Islands (BVI). The BVI has been cited for having an internationally well known Commercial Court. The Chief justice further indicated that there is a link between economic well being and the justice system.
The Government of Saint Lucia has therefore identified the establishment of a Commercial Division of the Court as a high priority reform as it is likely to impact on Saint Lucia’s overall development. The driving force behind the creation of the Court is to facilitate the resolution of business disputes in a quick and effective manner that ensures economic growth. The Commercial Court is expected to deliver an expeditious and cost effective mode of resolving disputes that directly affect the commercial and financial sector in Saint Lucia.
The establishment of this mechanism will increase Saint Lucia’s competitiveness in the regional and international market. The World Economic Forum defines competitiveness as “the set of institutions, policies and factors that determine the level of productivity of a country.” Therefore, the establishment of a set of institutions in a country to support businesses and help increase their productivity levels can increase the competitiveness of businesses and the country as a whole. Thus, the operations of a Commercial Court can impact the competitiveness of a country through the promotion of business and investment prospects. For example, officials at the Uganda Investment Authority state that the Commercial Court has assisted in marketing Uganda as an investment destination. Therefore, a commercial court contributes to a healthy investment climate which encourages investment into the country thus leading to economic growth.
A healthy investment climate is essential in increasing investor confidence as well as business opportunities into a country. While it may seem that the business and legal sectors are two different entities, a weak commercial justice system cripples investors’ willingness to bestow funds into a country. Furthermore, when there are difficulties in obtaining commercial justice, this dissuades business opportunities from coming into a country. Moreover, this ongoing economic slowdown accompanied by high financial uncertainty has reinforced the need to establish efficient processes for commercial dispute resolution and the recovery of losses.
Additionally, banks are less willing to lend to the private sector in the absence of an efficient legal system to settle commercial matters. This is the case as, there is no assurance of the ability to collect on debts or obtain property which was pledged as collateral to secure loans. This has the potential to limit the funding available for business expansion. This means that fewer businesses are able to expand and reach overseas markets and thus slows down trade and the competitiveness of businesses. This prevents increased private sector participation in the local economy as fewer businesses will be established as a result of the inability to access credit. This can hamper the economic development and competitiveness of a country.
The establishment of an efficient and cost effective Commercial Court and the associated commercial laws is expected to improve Saint Lucia’s performance on the World Bank’s Ease of Doing Business Ranking. The Enforcement of Contracts indicator has been the worst performing indicator in the last five years. The establishment of a Court without bureaucratic procedures that resolves commercial matters in a fast and cost effective way will impact on this indicator. In Rwanda for example, the implementation of a Commercial Court in 2008 resulted in a decrease in case backlog and contributed to a reduction in time to solve commercial cases by nearly three months.
To conclude, in the absence of a Commercial Court small businesses struggle to survive, disputes are settled through unofficial means and in the worse scenario investors take their business elsewhere. The establishment of a Commercial Court will make it easier, faster and less expensive to conduct business in Saint Lucia. The Court and the associated commercial laws should improve the enforcement of commercial contracts making it more efficient. This will impact the competitiveness of businesses in Saint Lucia as there will be greater access to credit. This means that businesses are more likely to engage in new business ventures, new customers and borrowers which ultimately impacts on their level of competitiveness.