Saturday, 18 February 2012
So why exactly do bankers get a bonus? Starting with the reality for the vast majority of bank workers bonuses aren’t 6 let alone 7 figures. Heck 5 is way better than most. That aside, the thing to bear in mind is employers luuurve the bonuses because they’re discretionary and as such a powerful lever, which means stuff like:
1) They’re non-pensionable. Base salary 20 grand, bonus potentially another 30? Tough, you’re pension is set entirely in relation to the 20 grand. But, when you advertise the job you talk about the 50, i.e. you spin things.
2) This has an appeal to employers cos offering more money means a wider pool of candidates to choose from when recruiting, but for less than it actually appears (this is an uncomfortable point to make because it’s predicated on the assumption some people are better at shit than others, which the credit crunch obviously challenges even if it is still true on average).
3) Bonuses are flexible. Good year for profits? Bonus. Bad year in an organisation where labour is a key if not the key cost? Cut the bonus and cut the costs i.e. what employees, based on years of experience, regard as a routine part of their total pay can be readily flexed to suit without all the negotiated shite you’ve seen in the public sector over pay freezes.
4) Bonuses can be used tactically, like is she no earning as much as he is for doing the same job? Well then she’ll get a bigger bonus than him won’t she (ideally). Gendered pay inequality? Not on a total package basis (ideally).
5) Oh, oh, now she wants to leave for another employer, there’s a dependency on her and it’d cost what she earns and then some to replace her, then train up a replacement. Pay a big bonus and hopefully she’ll stay.
6) Alongside shit like that bonuses are actively and aggressively used to encourage effort. Hence the sustained periods of free overtime, lip biting when given yet another unreasonable request, travelling hither and thither at the drop of a hat and so on shit that makes up private sector work. Like consider the following couplet: TOIL? Yes! Bonus no. TOIL? No! Bonus yes.
7) Finally banking is about sales. Rather than bonus you’re probably better thinking about a lot of what bankers get as sales commission. Except, banking is too “posh” to see things that way, hence the use of the word bonus.
As for those not selling product, like me fer instance, the potential discrepancy between sales jobs that pay a basic wage plus a commission (i.e. a bonus) and every other job would be so large, no one would want to work in back office roles or at least no one worth a damn. Hence, bonuses across the piece serve to lubricate organisational labour markets (however, don’t think for an instant that back office roles pay the same kind of bonuses sales people get. They don’t).
Please don’t confuse any of the above with justifying the way things are. I can think of huge great examples where bonus arrangements have been bent, buckled and gamed typically by high heid yins intent on awarding themselves bigger bonuses at the expense of as many people beneath them as possible; in practice the system is flawed and abused. And personally, I’d much rather get a one off pensionable pay increase and have done with it. Except that would run counter to how employer’s actively use bonuses as a means of asserting managerial discipline so it ain’t gonna happen.
But, please do note none of the above has much if fuck all to do with a bonus being a reward for exceptional effort and/or performance, which appears to be the Labour party line. Realistically, if you work in finance and don’t get a bonus, chances are you’ll be getting managed out the door within the next 12 months. Essentially, the Labour party rhetoric is an appeal to potential voters who don’t participate in, know or recognise this system. Like to compare and contrast, in the public sector length of service is frequently king. Another year? Another increment thank you very much. Except the notion that an unpromoted teacher with say 4 years service is genuinely worth less than one with 5 years on a consistent basis across the piece purely because of that 1 extra year is facile (and a reminder of the different bargaining power labour currently has in the public sector).
As for 6 and 7 figure bonuses I’ve no idea. I saw a scratch card recently called “Rich for life” that paid winners £40 grand a year for life. That, it would seem, is what most people regard as rich (I know I’d certainly jack it in if I’d won). Comparing that to all the headline grabbing bonuses, one very obvious point is that when you think about the recipients of those you’re dealing with a different (frequently psychopathic) mind set altogether. Hence, my view that when it comes to big bonuses you need a sociology rather than an economics of pay because what most folks regard as normal simply doesn’t apply.