I always had the understanding that bonus payments were directly correlated to performance. So if that train of thought runs true then I am finding quite hard to get my head around the figure of $18.4 billion. That was the Bonus paid out by Wall Street Bankers in 2008.
Firms justified bonus payments as a means to prevent their best employees from leaving. If what the firms say is true then why would these financial institutions retain a compensation system which allows employees to hold their firm for ransom?
I personally believe the word 'bonus' is not the appropriate term. Instead of calling them bonuses, employers should really call the payments for what it really is; part of the workers base salary. If financial institutions like AIG is telling the truth, then performance has little bearing on the amount of compensation a top banker gets. Compensation is entirely based upon supply and demand, if the firms are going to pay out the bonus regardless of the individuals performance wouldn't it make more sense for employers just to guarantee the money from the outset rather than have the employees take unnecessary risk to get their bonuses?
Like most things the market will dictate how much investment bankers get compensated. I believe the income of people in the financial sector will start decreasing; as the shrinking financial industry realizes they no longer have the same amount of asset available to them, the income will have to decrease.
The mainstream media and politicians ought to stop sensationalizing the issue corporate pay. If regulators and politicians are really serious about preventing such thing from happening ever again they would need to initiate a total overhaul of the whole financial sector.
How? Stay tuned and find out!
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Once anyone in management reaches the upper echelons of management they are then basically inducted into the guild, an old boys network. Once your in the club performance reviews become a thing of the past and everyone plays musical chairs with handing out bonuses. “Who’s turn is it this time” These people are detached from reality and lack the compassion for us common working folk. Bring back some accountability I say.
ReplyDeleteI read of a case where an investment company was bailed out bytheir government only to use some of that money to pay for the payrises/ bonuses of their company not because they felt the should be dishing them out but because they were contractually obliged to do so. This makes me wonder if they way these contracts for investment companies should be altered to provide a claus that in times of financial recession that such pay rises should be ruled out.
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