I have a new friend who when he revealed to me that he was a banker, he said it in hushed tones. In recent months we have all learned not to like bankers and indeed despise the huge bonuses they have received. Reading some articles about this whole debacle of the credit crunch, you might be forgiven for believing that had bonuses not existed, then none of the recent events would have happened and the world's economy would still be merrily expanding as fast as the Arctic ice is melting. But I wonder - can we blame it all on bonuses? Are they the difference that made the difference between financial services which made huge tax contributions and financial services that needed huge dollops of public cash to keep them afloat (and which we will be spending years to pay off). The short answer for me, as a non-economist, is I don't know. Certainly I do not intend to get into the political / ethical debate about bonuses here.
But, as an organisation development consultant, I do have a view about bonuses as a means of achieving organisational improvement and good results. And so while I pumped away for my 30 minutes of aerobic exercise this morning, I got to thinking about what questions and challenges I would be contributing if I happened to be in a boardroom of a large bank - perhaps as their non-executive OD adviser. Here is what I came up with:
- What evaluation has been done on the bonus scheme - what is it there to achieve and how well does the scheme do against this purpose?
- When the scheme was introduced, what was the evidence base (from organisational / occupational psychology) that guided its design?
- Indeed what were the principles that guided the design?
- How are the bonus levels set - who have we benchmarked our scheme with?
- If our bonus scheme is all about motivation to make good profit for the company, how do we motivate those who don't get a bonus (or does everyone get one)?
- How much of our recent success / failure (delete as applicable) has been down to the people who have been getting bonuses?
- Given that our organisation is an intricate web of connected processes, how was it worked out who would get rewarded & by how much when a success was achieved (or is it easy to know who is responsible)?
- Considering our recruitment strategy, do we hire people who are motivated only by bonuses? If not, what sort of people do we hire?
- What would happen if we did not have a bonus scheme but paid our staff a flat (but competitive) wage instead?
- What would happen if we rewarded people with shares or share options instead?
- What has been our turnover of bonused staff in the last two years - and what has the analysis of their exit interviews evidenced?
- Indeed, what do we know about the people who join us - why have come to us rather than another bank?
- When was the last time we reviewed our bonus strategy?
- Over the last two years, what have we learnt about how bonuses affect how we do business - and what do we now know about the impact that they have on our medium to long term profitability?
- Do I get a bonus for asking these questions?(!)