Friday, Feb 27, 2009
Utterly missing the point. Why should *anyone* get a bonus if a company is doing really badly?
BBC 'News': Bank staff deserve bonuses too
She argues that most bonuses are targeted - 75% of her bonus last year was performance related - based on a mix of sales and own her own performance - while the final 25% relied on the bank's performance.
Meanwhile, most lower level jobs in the industry are advertised as a package, which is usually a basic salary bonus plus free shares or share incentive schemes as their package.
Posted by paul @ 10:59 AM (665 views) Add Comment
15 Comments
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1. ketha said...
The argument is easy enough to work out. The retail profitable side of the business is helping absord the stunning loses. They're paid based on performance and that should be dept based. I think the stuff about pensions and bonuses is popularist and a distraction from the real issue. Either pay bonuses when deserved or nationalise the whole banking system. This game of political football and parade of strawmen is making a bad situation worse.
2. Browneconomy said...
Footballing analogy re bank staff & bonuses:
Last night Spurs drew their 2nd leg match with S Donestk but were knocked out of the UEFA cup on aggregate. Should team members, even those who played well, expect an UEFA cup winners medal?
These bonuses are ultimately being paid not initially by taxpayers but by us savers who have had a 80% drop in income imposed on us (interest rates falling from 5 to 1%). And it is this reduction in interest rates that are recaplitalising the banks.
3. bob1 said...
I have always been a paid bonus but I'd rather have been paid a straight salary. The idea that bonuses improve performance is nonsense. They create a febrile, panic stricken, backstabbing environment that cannot possibly be considered good for performance or morale. A bonus payment makes the assumption that without it, you would have deliberately held back a bit. However, the truth is that without bonuses people work hard to achieve a pay rise next year or even a promotion. At the other end of the scale, people might even work hard to avoid the sack.
Why are bonuses paid? In my narrow experience it is because my bosses want to pay out a large bonus so that they can justify getting a bigger one. It's that simple.
4. P. Riddy said...
Not even that is the point. Bonuses got paid because institutions got bailed out. The fundamental point is, that they should not have been bailed out.
5. Gooders said...
I totally agree with Sheila....if she met all her targets she should be entitled to 75% of her bonus and that is it. The remaining 25% she will not get as the bank has not performed. Indeed any one who has met the personal bonus realted targets should get that bonus as they have done exactly what was asked of them. In fact the only people who should not be paid a bonus are those who decide on the strategy ethos and risk of the bank (the board) they set the targets and the only thing they should be bonused on is the performance of the bank. Ultimately the buck stops with them (if only they accepted this eh) Presently it seems the buck stops with the taxpayer.....wheteher we nationalise or let true capitalist markets prevail the only people hurt are the customers or taxpayer.. . the governemnt wont listen and the fat cats wont listen.....BUT if we all withdraw all our money from the banks on a single day they will they would listen as they cannot let the banks go bust.
6. ketha said...
I totally agree. The bonus culture has driven banks to this. It creates an intense, irrational environment where everything is target driven, and values mean nothing if sales aren't involved. It brings Double Glazing salesmen into the domain of complex financial advice. In that sense I agree and I hope that the government have the courage to tackle this issue, but they won't.
That said if 'low-level' staff are paid lower basic then by rights they should get some bonus... otherwise the same argument could be used everytime a company makes a loss then contractual agreements mean nothing. I know the scale of this is not 'normal' but the goverment did not tackle these issues head on 'at the time', so they should take the blame.
7. d'oh said...
I have absolutely no problem with these staff being paid bonuses...interesting that the distinction between retail and investment staff is blurred in the media...now why would anyone do that?
8. denzil said...
I do have some sympathy for the Woman in question. The problem is that the banks are bumbling on in some kind of fantasy world.
If you base bonuses purely at the departmental level then ultimately the results of the overall business can be shocking and there is little in the way of a safety mechanism to catch a failing business.
If a bonus culture is based on a combination of departmental targets, but primarily based on the overall success of the business then it is in the best interest of all that the company is successful. That would seem unfair to some, and some may say, "but I've achieved my target and just because the Bank collectively failed, why should I not get my bonus?". Now, what normally happens (at least in normal businesses), is that those people who are rightly peeved about not getting their full bonus will leave and go and work for the successful competitor who does pay the full bonus, because their overall results are good.
The problem is that many of the banks have been operating in lah lah land for too long.
It's often been said that Banks have needed to pay these massive salaries in order to recruit the best people. Really, you could have fooled me.
I genuinely feel for the worker who is at the lower echelons of the structure and if their contracts stipulate defined bonus terms and they have achieved their targets, then they should be paid that bonus, but culturally the Banks have to change.
9. M4nclad said...
What world do these people live in? - it's not the world I live in. I for a substantial American multinational cooperation and I can tell you from over 10 years of bitter experience that if the corporation fecks up in any given year we get jack sh*t or next to nothing at best. You accept it and get on with it.
Why are these people different? - do they take no ownership of where they work and who they work for? Quite honestly these are the people who pushed their companies "products" (all be it under some duress from their management and under the influence of bonuses) onto the poor, innocent, feckless and clueless members of our society. They have to take some accountability for where they are now.
In the mid 2000's, jobs have been a plenty, these people can not say they were held at gunpoint to force their products on to the public because they had to do it as there were no other jobs. They could have walked away to do something more ethical. You reap what you sow. Each individual in the world can (or could have made) make a difference. They chose not to, so quit moaning.
10. wdbeast said...
I have worked in several "bonus culture" businesses over the years.
I remain convinced that the only reason the "bonus culture" exists throughout companies is to allow the directors and senior staff to pay themselves astranomic sums for just doing their jobs.
Junior staff usually get a small bonus to make it appear that the "bonus culture" is fair to all employees.
I think commissions are fine, I think share options can work, but from my experience bonuses are all about getting your nose in the trough!
11. bob1 said...
There used to be a concept of "strategic industries" in this country. For example, the road network and the coal industry were strategically important enough to be 'protected'. The banking world can easily be considered to be strategically important because it has the potential to benefit our economy or impose systemic disaster on our economy. I think for this reason the payment of bonuses should be banned in the financial world. People will do crazy things for a large pile of notes so it’s not entirely sensible to encourage crazy behaviour in a strategically important industry.
On the other hand bonuses should clearly be paid to a teacher whose pupils achieve higher than average grades or even a bank teller who is good with her customers. I’d still rather they just got a pay rise or promotion but there we are.
12. letthemfall said...
The notion of bonuses also raises the question of how employee "performance" is measured and what constitutes wealth creation, if that indeed is the criterion. In the case of banks we have seen not so much wealth creation as wealth transfer, as well as widespread wealth destruction. How does one assess the wealth contribution of, say, teachers, or scientists, whose created value is immeasurable in both senses? In my view the distribution of wealth in this country does not generally reflect the contribution of those who make it. High pay seems to go with high cash flows more than high productivity.
13. timmy t said...
This is a definite "you can please some of the people some of the time...." topic. I could never understand why sales people get paid commission on top of a salary - it's like being paid twice. If you want a "cut" of every deal then you should be paid on results only, but if you want a job selling stuff then you should be paid a salary for doing just that. If you do deals, congratulations you have done your job so you've earned your salary. Why would you expect a bonus or commission on top? Do procurement people get 10% of the savings they make for their company? Nope - why not? It has the same effect on the bottom line.
14. unplugged said...
letthemfall @ 8,
that pretty much hits the nail on the head IMO .
For me, any reward system, economic system even, should be based on recieving value relative to what is put in... but how to quantify? Could a socially or environmentally contributive or destructive elements of a business/economy ever be truly (or honestly) quantified? Until ALL the cards are on the table I can't see any improvement.
15. unplugged said...
I suppose value and contribution is the underlying issue here. I guess thats the point - the free market attempts to establish raw value, with government intervention countering the negatives - short termism and lack of ethics etc. That seems to get 'overlooked' much of the time.