Oh God! This whole thing about banker’s bonuses has got us hot under the collar… but with bankers’ bonuses back in the news let’s get real for a minute and consider what’s actually happened.
Because, much like politicians and their expenses, we seem to have lost sight of the real issue of bonuses.
It goes like this…
If we turn up to work we get paid. It’s called a salary. To earn our salary we have to perform duties to a specified standard which are set out in various documents such as contracts (when to turn up), Job Descriptions (a list of the tasks we have to complete) and objectives (what we need to achieve or how much we need to make).
Great; simple so far.
The things I’ve listed above, amongst others, are what we get paid for… our salary!
Now, if we breach our contract we get disciplined or fired. If we can’t do what we should be doing we get training or we get fired and if we don’t achieve the objectives we’ve been set, we get development… or we get fired.
That’s just the way it works, or should work in a sane world!
But what happens when we do well?
And I’m going to pause here and just say that last sentence again… WHEN WE DO WELL…
You see, bonuses do not get paid for simply turning up, being able to do the job or meeting targets.
They are paid for exceeding targets, doing better than the minimum standards that have been set.
So, the issue is not the amount of bonus nor even whether they are deserved. The issue is what the decision to pay bonus is measured on.
If the bank’s bosses have said: ‘you must make a million pounds profit’ and not said anything else, then, when a million pounds of profit has been made, a bonus is due.
If, however, the boss said you must make us a million pounds, it has to be sustainable and it must be done within certain risk parameters, then there’s a different kettle of fish to be considered.
And this is my beef with the HR function. HR professionals should be business savvy enough to be able to stand up to the bosses and stipulate conditions on what and when bonuses are paid…
…unfortunately, the issue is that HR and business often doesn’t meet.
But let’s not forget the core issue of bankers’ bonuses. Surely, given that we now own many of the banks we get to stipulate what bonuses get paid for. All we need then is for HR to shape up and set the parameters in the right way.