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Rbs £588 Million In Staff Bonuses

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Another year, another round of massive bankers bonuses... The Royal Bank of Scotland is making headlines for paying out over £588 MILLION in staff bonuses


The bank is saying it needs big pay outs to stay competitive. But are these huge sums justifiable full stop? Should we take action to fix excessive greed in the banking system? SHARE if you agree


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It always amazes me, that in a first-world country like the UK, there exists such an enormous, wasteful, and parasitic industry as finance. Algorithms are all that are needed to allocate money, and thank goodness they will lance this boil from the country within the decade.

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interesting watch, money incentives actually don't work unless you do very menial jobs

It's interesting to compare and contrast the logic of the bankers bonus and one commonly raised objection to a basic Citizens income.

The bonus is effective- we are told- because the prospect of financial gain is a powerful motivation among human beings- so much so that even people who already have a lot of money will still be motivated by the prospect of gaining more.

But-we are also told- if we were to create a basic low level Citizens income for the poor this would be a disaster because it would lead to an indolent population who would no longer have the motivation to work. Only by cutting back on welfare can we hope to motivate these people.

So we are forced to conclude that the way to motivate rich people is to give them more, while the way to motivate poor people is to give them less.

So the fact that bankers get large bonus payouts even when their employers make a loss is easily explained- they need those payouts just to get them out of bed in the morning- just as the poor need the prospect of destitution to do the same.

It all makes sense once you think it through.

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The bonus system is not about making people work within that organisation, it is about stopping that person going to another organisation who pays more. If no firm in the financial industry paid bonuses, I suspect little would change in terms of the current workers (some would leave to do other jobs, but not huge numbers).

So - as usual - the fault is the government for not setting up the legal structures correctly. If there was a 100% tax on all non-income segments of payments to employees, the issue would go away.

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The bonus system is not about making people work within that organisation, it is about stopping that person going to another organisation who pays more. If no firm in the financial industry paid bonuses, I suspect little would change in terms of the current workers (some would leave to do other jobs, but not huge numbers).

So - as usual - the fault is the government for not setting up the legal structures correctly. If there was a 100% tax on all non-income segments of payments to employees, the issue would go away.

Surely the bonus system is a tactic deployed by employees of joint stock companies to ensure that the economic rewards flow to the employees and not the owners and are a result of the fact that it is much easier for the relevant employees to coordinate than it is for the owners (i.e. shareholders). This is further exaggerated by the rise of managed funds and the institutional investor where it bites twice. The institutional investor has a vested interest in the bonus "paradigm" as they are themselves are usually an employee of a joint stock company. Further the consequences of the fact that unnecessary bonuses are being paid at the companies in which they have invested are borne by the institutional investor's clients (who are ultimately the owner of the company that has been invested in).

I suppose you could call it an interesting example of a situation where labour (executives) have outwitted capital (shareholders). The problem is that it affects only a vanishingly small number of people, so the meritocratic sales pitch of financialised capitalism is not a complete sham, it's just that it has real lottery odds associated with it.

[Edit: typos]

Edited by bland unsight

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interesting watch, money incentives actually don't work unless you do very menial jobs

...

Hasn't there been quite a lot of research to suggest that the people who strive to reach and in due course reach the jobs that pay these bonuses are not neuro-typical? Disproportionately relative to the population from which they are drawn they have psychopathic tendencies, or are just flat out psychopaths. Hence whilst I'm certain that the research about autonomy, mastery and purpose applies to the great mass of people I'm not sure that it applies to the people who end up making the weather in economically critical organisations like the large public listed company banking groups, (historical and present examples of which include HBoS and RBS).

Through the coalescence of the 'technologies' of the joint stock company and the fiat money system with money creation devolved to the private banks we've obviously created a situation where the lunatics are running the asylum. What is astonishing is the apparent complete inability of our political system to perceive it and deal with it. It seems that the only watery dissent seems to be coming from some central bankers - who are notionally supposed to be outside the political system!

Edited by bland unsight

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The finance industry only survives because it has safety in numbers. Logically, you'd think the greed and "survival of the fittest" mentality would drive the spoils into the pockets of just a few individuals. But the the industry needs lobbyists, so an equilibrium has been reached that enables the participants to enjoy a stable, decadent lifestyle.

Financial technology will reduce the headcount in the industry and reduce its lobbying powers. Can't bloody wait.

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It's nothing to do with motivation (or "talent") it's just that the money gets created out of thin air and as they consider that they created it then they might as well have most of it.

If they spread it as thickly elsewhere as they do for themselves then they would be pricing themselves out of asset purchases and so on and that would never do.

Edited by billybong

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Surely the bonus system is a tactic deployed by employees of joint stock companies to ensure that the economic rewards flow to the employees and not the owners and are a result of the fact that it is much easier for the relevant employees to coordinate that it is for the owners (i.e. shareholders). This is further exaggerated by the rise of managed funds and the institutional investor where it bites twice. The institutional investor has a vested interest in the bonus "paradigm" as they are themselves are usually an employee of a joint stock company. Further the consequences of the fact that unnecessary bonus are being paid at the companies in which they have invested in are borne by the investors clients (who are ultimately the owner of the company that has been invested in).

I suppose you could call it an interesting example of a situation where labour (executives) have outwitted capital (shareholders). The problem is that it affects only a vanishingly small number of people, so the meritocratic sales pitch of financialised capitalism is not a complete sham, it's just that it has real lottery odds associated with it.

Nail on head.

Barclays,RBS, JPMorgan etc also all operate using the AVP/VP director, etc etc structure.

What this in effect means is that there is a cabal of staff - I'd say about a fifth/quarter (pure guess) who are 'the company'. They are the prime beneficieries of the enterprise at the cost of Shareholders, other staff and, ultimately, productivity. IE they destroy value for all other stakeholders.

This large minority imposes omerta and discipline across it's ranks and extracts cash from the business. Loyalty is demanded and rewarded (renamed 'talent'). Clearly the main aim is to enrich those at the top, but this is an efficient structure to facilitate it. I've seen first hand how this sucks the life out of the organization, rewarding dubious practices over and over again and stifling truth. Try speaking truth to power at RBS.

This is the cultural failing at the banks, and it is not one inch closer to being resolved than it was in 2008.

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anyone with any rbs accounts should move to another bank if they aren't happy with this - that is the only protest you have

I would be over the moon if the bonus plan included a simple multiplier on corporate profitability i.e. corporate profit <=0 means that all bonuses are multiplied by zero and, therefore, nothing is paid

I have nothing against a profitable business paying big bonuses but I think it should be illegal for a loss making group to pay bonuses

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Apart from anything else RBS ("Phoenix" :lol: ) is still nationalised.

They're having another visit to the trough in case their Conservative/Libdem chums don't get back in power in May with more of their handouts. Not that it'll be any different if Labour get back in.

Edited by billybong

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....Bonuses should only be paid when an individual exceeds the target they have been given.....a bonus should not be given for doing the job irrespective of results. ;)

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....Bonuses should only be paid when an individual exceeds the target they have been given.....a bonus should not be given for doing the job irrespective of results. ;)

INdividuals should be happy to have a well pauing secure job and no bonuses should be paid.

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INdividuals should be happy to have a well pauing secure job and no bonuses should be paid.

Some public sector employees do get bonuses.......bonuses are good for employers, they are only paid once and are not subject to compounded pay increases or are not pensionable.....they can also incentivise employees to achieve..

It is not the bonuses that are wrong, it is what has to be achieved to gain one...no bonus should be paid for failure.....fat pay packet along with a fat bonus for poor performance is not on, this goes for every industry, public and private....including politicians.

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Some public sector employees do get bonuses.......bonuses are good for employers, they are only paid once and are not subject to compounded pay increases or are not pensionable.....they can also incentivise employees to achieve..

It is not the bonuses that are wrong, it is what has to be achieved to gain one...no bonus should be paid for failure.....fat pay packet along with a fat bonus for poor performance is not on, this goes for every industry, public and private....including politicians.

I've worked in and with industries (public and private)that use bonuses and I can honestly say that the best long term performers for the company and society are not the ones that get the bucks. Vested interests and nepotism ALWAYS distort.

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