The issue of bankers' bonuses is making headlines again. The banks, even the ones that were bailed out and are effectively owned by the taxpayer, are making profits again. And that means that once again bonuses are being lined up. Great for those that get them, but still an emotive issue for the rest of us – not least the government, who are making headlines with statements threatening to reduce or stop them.
The problem is that neither the government nor the bankers talks about value.
For the bankers the issue seems to be one of entitlement. Their response to threats of government action includes such statements as:
- Banks will relocate.
- The country will lose it status as a premier financial services hub (and receive less taxes.)
- There will be a brain drain – all our best people will go elsewhere where they are not subject to such treatment.
The implications here are obvious – that these people will feel victimised and so relocate banks to other countries where there are no regulations regarding the size of pay packets.
What if the customers decided whether these bonuses should be paid? The general consensus from the man in the street is "that the banks are all the same" and the service definitely leaves a lot to be desired. Only this last week I heard the case of a chap who has requested a statement for his savings account for the third time. Annoyed that he should have to ask three times, but he was even more annoyed by the fact that, despite having to spend 10 minutes each time on the phone answering security questions and being told the calls might be recorded, they had no record whatsoever of the previous two calls! The trouble is that stories like that are legion. The government finds a willing audience because we don't believe the bonuses are merited.
So what is the solution?
I still think it is lies in greater employee engagement and that in turn is created by greater employee ownership. Then you can do away with discretionary bonuses and share profits equitably amongst those who do the work and provide the service. That would help make value pervasive and salaries can be fixed accordingly. This would end the perception that bonuses are a gravy train for the big boys and stop them being a lightning rod for political agitation – or industrial action. It is about value, isn't it?