Bonuses: What's wrong with them?

By Tony Cross

There is nothing intrinsically wrong with Bonuses. They are basically tips for good work and that is an old custom we would be the poorer for being without. The modern trend in restaurants to add 15% to the bill as a service charge is fine provided the staff get all of it and if we get bad service we can demand it is removed. I doubt many of us do, of course. So a bonus is a tip at the end of the year for good service.

I guess that what makes most of us uneasy is the size of the bonuses. Sometimes it appears out of proportion with the pay. Of course, it could be jealousy. If, like me, you have never worked in a sector with bonuses, it may appear unfair that some get them and some do not. The bonus for the Civil Service was the honours system but is that right, either?

Can you imagine the scenario when the waiter demands his tip, even though he brought you the wrong food, it was cold and he poured the wine over your best suit? When the tip becomes a right it ceases to be a tip and becomes a wage or commission.

So here is my first objection to the bonuses. When the company loses millions or cheats its customers and the bonuses are still paid, they have become contractual and therefore not bonuses at all.
In all these cases the argument is that the bonus is actually a contractual agreement, a payment for results achieved. Sometimes this is individual and sometimes a collective effort When the staff members reach their targets, they get their reward. But should they?

How would we feel about tipping a waiter whose advice on which dish or wine to have was based on the bonus she was getting for recommending certain dishes – perhaps ones about to exceed their sell by dates? This is more properly described as commission.

It is now clear that some of the bonuses have been going to people who did a good job for the company but engaged in mis-selling or other questionable activities as far as the rest of us is concerned. The task of all employees, including those in the board room, must surely be to serve the interests of the company by giving the customers the best service they can. Selling a duff product or one that is useless for the purchaser it is sold to, is not in this category.

There is an emphasis on the individual. A bonus ‘earned’ by an individual assumes that he or she is working entirely on their own. This is only true in a company of one and not even then! If ‘sales’ clinch a deal, what part has been played by advertising, admin, production (past record) and so on. It’s exactly the same as the tip that only goes to the waiter – a practice generally rejected in the restaurant business these days. When the Chief Exec of Royal Mail takes his bonus home, how much does he owe to the loyalty and hard work of the whole of his staff? How does he express that?

But what of the wider community? George does well in his year’s work, partly because the short stay in hospital enabled him to return to work quickly after his small op. Why was that? Because of the skill and dedication of the doctors and nurses at his local hospital, not forgetting all the other staff involved in the hospital. Do they get a share of his bonus? Of course not! They are paid to do a good job and should not expect any further reward than the sense of well being they get and their pay packets. This does not apply to George. He will only do a good job if he gets paid a bonus!

It is this aspect of the bonus culture that makes me uncomfortable. The sense that we are all out for ourselves and no-one else. I can sell, sell, sell a load of rubbish, lie to my customers, exaggerate my successes, get my huge bonus and it does not matter about anyone else. Since Margaret’s infamous announcement that there is no such thing as Society we have lost the sense of the common good. It is interesting that David Cameron would like to see that reversed as far as the local communities are concerned. He would not go so far, it appears, as the wider society.

So why are they paid? Why is it not just included in the pay if it is contractual? No-one has offered a satisfactory solution to this other than the concept of incentives. The incentive to achieve and do a good job is not enough for some people.

While we are about it, expenses can be just another form of bonus. That is how the MPs saw it. We can’t have it all in pay, so we will get it by some other means. We deserve it so who cares about the rest. That this should be the attitude of so many who claim to be in it for the public service, just underlines the lack of good community values. I hope David Cameron takes note!

The Bonus Culture highlights for me an attitude that must be addressed if the country is to get itself out of the current situation.

Ken Clarke, in discussing the Lord Ashcroft business, said that we all admire Ashcroft and long to be like him and pay no taxes. That may be the Conservative way but it is not the right way.
If the country is going to have education, health, defence, good transport provision, border police, regular police and all the other public services we all need to pay our share. The shares need to be fair.

We need politicians to lead by example and tell us that paying taxes is good. It should be something we are proud of. ‘I’ve helped pay for some teachers and nurses this month! I’ve paid my taxes!’ That should be our bonus. We need to rediscover the sense of contributing to the common good.

Tony Cross, 25/05/2010