The recent announcement that Network Rail bosses are getting 6 figure
bonuses despite failing to achieve corporate targets hardly caused a ripple.
Apart from the inevitable outcry by trade unions and left-wing politicians
there seems to have been very little response. You have to ask whether this is
because they only received 17% of their salaries, instead of the full 60%, due
to missed performance targets.
There are a number of reasons, however, why these reports are quite shocking
and indicate the extent to which “the bonus culture” has become endemic and how
– despite some public outrage, especially over financial sector bonuses – nobody
is really giving the subject any deep thought.
This BBC report
begs a number of questions that should be being asked.
Firstly, the percentage of the bonus. These executives will receive “only”
17% of their salaries as a bonus. That may be tough for them, but what
percentage of their salaries do the ordinary employees get? The UK average is
about 5%. It is certainly nowhere near 17% – even when they met all their
targets fully! Yet no one questions this inequity.
That in turn begs the next question. Do non-executive employees get any sort
of pro-rated bonus if they don’t achieve all their targets? It has been a while
since I was in full-time corporate employment, but in my experience you had to
meet ALL your performance targets in order to get ANY bonus.
Then there are the performance measures for these executives themselves.
You have just got to love the statement that “Network Rail met its passenger satisfaction bonus target of 84.3%.”
In other words it is totally acceptable to have 15% of your customers
dissatisfied! Who else would expect to get performance bonuses with that number
of dissatisfied customers: a figure that, in this instance, probably runs into
hundreds of thousands of passengers? Do you think any non-executives have such
tolerant targets? I very much doubt it! So why the double standards?
And what about a punctuality target of 92%! That suggests these executives
either drive the trains, or actually have some influence over their day-to-day
operations, whereas they are in fact run by completely separate rail companies.
Now I am not suggesting that executives and their strategies do not impact the
effectiveness or quality of the train services that run on their tracks, but
the correlation or line-of-sight between the measures and the extent to which
executives can effect it, is – at the very least – tenuous.
This report highlights how ridiculous this bonus culture has become.
Performance measures become impractical, and identified and defined more for perception than anything! But the worst is their self-defeating nature,
for, in order to even reach these targets, executives depend on the efforts of
their people. This demands engaged employees. Yet, different rules for
different levels within the organisation, means you will never get the kind of
employee engagement needed to achieve the results for which the executives are
– or at least should be – accountable or for which they are being richly rewarded.
How much longer will this folly persist? At least you are not going to tolerate
it in your organisation, are you?