It has been apparent for some time the bonus culture is not confined to the hyper-inflated rewards associated with bulge-bracket investment banking. Therefore I must congratulate the Western Mail on a fine piece of journalism today.
Using the Freedom of Information Act, Sion Barry its Business Editor has identified bonus payments for the last financial year made to civil servants in the upper echelons of WAG. I am not sure what signals this sends out but at best it seems the payments are badly timed.
It also raises wider questions about the need for remuneration structures to include this element of incentivisation. There was a time when people in all walks of life did their job and were compensated accordingly. The price of continuous failure was inevitable and the reward for success was the respect of colleagues, appreciation from your employer and enhanced self-esteem in the knowledge of a job well done. At some stage this all changed.
From memory it seems to have been associated with the self-justifying claims on the part of large corporations that to remain internationally competitive the best people needed to be brought in and they needed to be compensated appropriately. Nothing wrong with that but maybe a better approach would be to establish the right level of expectation and set the pay level in accordance with this.
Which brings me back to the world of banking. That notorious Welsh-man Lord Griffiths of Fforestfach, Vice Chairman of Wall Street investment bank Goldman Sachs recently defended the banking bonus culture by suggesting the British public should “tolerate inequality as a way to achieve greater prosperity for all.” This is an interesting point of view and needs to be contrasted with the news in Friday’s Financial Times that Moody’s, the ratings agency, has suggested UK banks are expected to experience further writedowns of between £130 and £250 billion over the next few years.
If this proves to be true there are numerous implications from this. One of them should be the cancellation of bonus-time and a stinging rebuke from the mouth of Lord Griffiths to those contemplating being rewarded for failure.
Jonathan Richards 10:18 am on 6 November, 2009 Permalink
I am not an economist so I may be ignorant of why certain words are used. The words we choose to use can betray values, assumptions and culture. I am still very angry every time I think about the senior Barclay’s Bank interviewee using the word ‘compensation’ to describe bonuses on a Today programme some months ago. Compensation implies to me that the person being compensated has been harmed in some way and is deserving of benefit. Since these people are in well paid rewarding jobs, in what sense of the word ‘compensation’ are they deserving?
I think that people enduring deprivation are much more deserving of compensation than senior executives.
robert 11:16 am on 8 November, 2009 Permalink
I no longer care, take what you can, make as much as you can and cheat like F*ck.