PREMIER Service Medical Aid Society (Psmas) Managing Director Henry Mandishona, appointed to his current position in May, is reportedly earning a staggering US$40 000 per month, almost four times the US$11 000 he should be getting under the new remuneration structure, while the company is struggling, the Zimbabwe Independent has learnt.
Mandishona effectively took over from former Psmas CEO Cuthbert Dube who was reportedly earning about US$500 000 dollars in salary and perks from the group.
Information obtained this week shows Psmas has now reduced its wage bill by 96% or US$6 million after a restructuring exercise. The company had hired a consultant to restructure the business and cut costs.
Details seen by the Zimbabwe Independent also indicate Mandishona is getting far more than what he is entitled to. Efforts to get comment from him last night failed. Besides, that Mandishona reportedly also splurged US$53 000 on office furniture since his appointment.
After hiring a consultant, Psmas has streamlined operations, including remuneration, benefits, and vehicle policies. The average monthly salary for top executives before the current rationalisation was US$65 000, with a few top executives earning between US$100 000 and US$400 000 then.
However, Psmas executives are now supposed to earn between US$9 000 and US$11 000 as monthly salaries despite that Mandishona is getting US$40 000.
Insiders say the average benefits for executives which were US$ 10 000 have now been slashed to about US$1 000. This has left top company executives fuming, while others were resisting changes even though the firm is struggling.
Some other new changes include a new vehicle policy which states that heads of departments will now be driving twin cabs 4×4 vehicles, not luxury cars such as the Mercedes Benz and Jeep Cherokee. All top executives will be entitled to a single SUV Land Cruiser and a sedan such as a Mercedes Benz.
Insiders say Mandishona has two cars, an SUV and Mercedes Benz.
The new MD took over the running of Psmas at a time the health insurer was facing serious financial challenges that have seen it failing to pay service providers and its members being turned away by medical practitioners.
Psmas blames part of its problems on government’s failure to remit civil servants’ contributions. Government owed Psmas US$71 million, although it recently paid US$61 million.
All things considered, it however still owes Psmas US$25 million in outstanding contributions. Civil servants constitute the majority of over 800 000 members of the health insurer, which has branches across the country and the region.
Last week, the Independent reported a looting frenzy at Premier Services Medical Investments (PSMI), a subsidiary of Psmas, where large sums of money had reportedly been squandered or siphoned off by its top directors through overpriced car acquisitions, insurance fraud and huge salary perks.
PSMI is a group of medically related, strategic business units wholly-owned by Psmas.
Insiders say attempts to change the situation at Psmas followed the hiring of Ethel Kuuya (EK) Consultancy Services (EK is owned by turnaround strategist Ethel Kuuya) which has been trying to reorganise the company.
“The new consultants at Psmas introduced a new market-based remuneration structure which was accepted by the interim board and signed off by interim committee chairperson Dr Gibson Mhlanga,” a senior Psmas executive said this week.
When EK came on board, they proposed a structure that would enhance service delivery for both members and service providers which was accepted and endorsed by the board in December 2014. “They ensured project preserved jobs and avoided retrenchment of general staff as well as introduced an equitable grading system which previously did not exist,” the executive said.
Kuuya was awarded the contract to carry out Psmas restructuring after she left PricewaterhouseCoopers (PwC) which had initially been hired to do an organisational transformation exercise.
The Memorandum of Agreement (MOU) between Psmas, PwC and EK, seen by this paper, states that PwC was awarded the contract in April 2014, the same month Kuuya resigned from PwC.
Kuuya served out her three months’ notice from April to June, during which time she was project manager for PwC at Psmas.
“On the first day of April 2014 Psmas engaged Pricewaterhouse Coopers to do an organisational transformation exercise. Whereas the consultant was the PwC project manager and in that capacity was an instrumental member of the project. The consultant left the employ of PwC for personal reasons,” reads the MOU.
“As the notice period drew to a close, Psmas and PwC both acknowledged that Kuuya was instrumental to the success and conclusion of the project, and all three of the parties (Kuuya, Psmas, and PwC) agreed to a constructive way forward.
“PwC signed an addendum to their contract acknowledging and agreeing to Psmas intention to contract EK directly. EK signed a contract with Psmas to carry out the work that PwC could not conclude. EK signed a contract with Psmas as an independent consultant on the 1st of August 2014.
“PwC, Psmas and EK are all in agreement that for the project to be successfully implemented, the consultant (EK) should continue working on the strategy organisational review and design service while PwC does the rest of the work as contained in the agreement signed between it and Psmas on the 1st of April.”
Kuuya specialises in turnaround strategies, organisational development, culture realignment and performance measurement. She has done consultancy in Botswana, Namibia, Zimbabwe, Kenya, and Nigeria for both private and public entities. Efforts to speak to Kuuya were unsuccessful as she was said to be out of the country.