The Bonus Issue
With all the hoo-ha over bonuses for bankers and others, we need to avoid throwing the baby out with the bathwater.
Bonuses aren’t bad. It’s a good thing to pay people more for their performance and perhaps not quite so much just for turning up. Basic salary is what you get just for turning up; bonus is what you get for doing your job better than expected and the sack is what you get for doing your job badly.
But, particularly in the case of public sector workers, we the public must know what the performance criteria are. That means we must be able to see the fine print of the contract – and the contract should have been written right in the first place. In the case of Stephen Hester, the boss of RBS, his contract should have said, “you get £X basic salary just for turning up” (and while £1.2m does seem a bit steep to me, if that’s the going rate I’m prepared to accept that it’s the going rate) – “plus a bonus if you deliver the difficult goods. We want you to sell RBS back to the private sector and make a profit for us. That’s all that really matters, so your bonus will be 5% of any profit you make for us. Paid in cash when you deliver the cash for us”. Would there have been a hoo-ha over that? Even if it had been billions, not millions? I don’t really think so.
So publish those bonus criteria written into employment contracts. Let’s see what they are, and lets see how they’re met.