Failure to pay bonuses as a commercial risk?
25/04/2014
Royal Bank of Scotland today have announced that they are going to cap their bonuses at 100% of salaries. They are doing this rather than attempting to apply for the 200% bonus after UK Financial Investments, the organisation that is administering the public ownership on behalf of the government, blocked the move.
The bank sees this as a commercial risk, presumably because they fear a loss of talent to their competitors.
But what are bonuses for? Are they to reward staff who have achieved high levels of performance? Are they to retain staff regardless of the level of performance achieved? Are they to motivate staff to achieve goals?
One of the issues I have is that many organisations don’t think through their reward strategy and in particular the consequences of that reward strategy. For example: –
- Are the rewards in the best interest of the individual or the organisation?
- Do the rewards encourage individuals to work as individuals or as part of a team in the delivery of performance?
- Do the rewards encourage staff to simply work harder in the pursuit of their goals, or do the rewards simply encourage them to take more risk with other people’s money?
- How do we structure the reward package to get both the behaviours and performance we need?
I understand that some banks are now paying more in bonuses than in dividends, so this topic is not going to go away in a hurry
Mike Bourne
Categories & Tags:
Leave a comment on this post:
You might also like…
Systematic Literature Review – combining your search strings
Our previous posts on the systematic review have looked at: Systematic Literature Review – Where do I begin? Systematic Literature Review – Selecting your Sources Systematic Literature Review - Identifying your search terms and constructing ...
Academic writing and being critical
Academic writing is daunting. Capturing all your thoughts and analysis and putting them down onto paper in some sort of understandable fashion is a challenge. Did you know we have resources in our Cranfield Study ...
Bank holiday hours for Library Services: Monday 6 May
Library Services staff will be taking a break on Monday 6 May for the early May bank holiday. You will still be able to access all the resources and help you need via our library ...
Cranfield’s Manufacturing and Materials Students’ Showcase Innovation at Project Day
On 26 April, Cranfield University buzzed with excitement as students from across our Manufacturing and Materials MSc programmes presented their group projects at the annual Group Project Presentation Day. This annual event presents ...
Come to a virtual study session in May
What are virtual study sessions? These are online study sessions facilitated by Library staff, where you can study independently alongside other students via Teams. They are a great way for you to dedicate specific time ...
Getting started on your School of Management thesis
Writing a thesis, business plan, internship project or company project can be a daunting task, and you might have some uncertainty or questions around how to get started. This post will share some ideas and ...