When everything came crashing down there was considerable discussion of the ‘bonus culture’; primarily but not exclusively in the finance sector. Bonuses were tied to outputs that, while rewarding the individual (usually a senior management figure), played mayhem in the economy –as if the dispensing of loans for property speculation is a measure of commercial success.
Bonuses, in general, have been with us for a long time. It actually started among workers and was paid out as ‘piece-meal’ work – the more you shovelled, the more you harvested, the higher the pay This benefited only a few, especially as the total pot of remuneration rarely grew – it was just redistributed (but it did get workers to produce more for their employers). But as economies industrialised, bonuses became a phenomenon of management and those with special skills; and as the financial sector was deregulated, bonuses became associated with bankers – senior bankers.
Bonuses are justified on the basis of ‘rewarding performance’ or ‘attracting the talented’. That’s the justification – a hypothesis rarely tested. It can reward some aspects of work but it ignores others; they can attract some talent but demotivates other talent. Employees rely on the fixed income of their wage – either the direct or social wage; bonuses can have a distorting effect and can leave employees reliant on HR whim no matter how dressed up it might be with metrics that aspire to measure productivity.
Whatever the justification, there is one thing we can be sure of: bonuses benefit higher income employees; namely, managers and professionals. Very little trickles down to workers on the shop and office floor, production line or building site. The CSO used to measure bonuses by type of employee – not so anymore. But we can reasonably assume that the share-out is much the same today.