For the banks, sorry is the easiest word, says Paul Lewis
When the former boss of Royal Bank of Scotland Sir Fred Goodwin told MPs this week that he “could not be more sorry” I wondered if that was only because he wasn’t very good at it. Lots of other people – not least 2300 of his former employees who are being told this week they are losing their job – are probably a lot more sorry than Sir Fred who earned £4.19 million in 2007.
Although several senior bankers have joined Sir Fred this week in ritual apologies for failing in the job of looking after all the world’s money, there is no indication that their behaviour will be any different in future. What is the point of an apology unless it is accompanied by an undertaking not to repeat the offence and a mechanism to make sure that happens?
Take bonuses. We can all agree that the top bankers – the board members and senior executives – should not be getting any bonus this year after nearly bringing the financial world to a grinding halt. Or almost all of us. It now seems likely that most of them will in fact get something. A sum of £25,000 in cash has been suggested as a small amount. Perhaps by those who do not realise that half the working population in the UK does not earn that much in a whole year. Without these bonuses we are told they might go and work for other banks abroad. If only!
But what about the person the Chancellor called this weekend “the average teller”? He said “they’re not very well paid and no-one would quarrel with making sure they are properly rewarded.” Should they get their poor pay boosted by bonuses?
The short answer is ‘no’. If someone takes a job – whether at £10,000 a year or £1,000,000 – their reward is the pay to which they have agreed. If they do their job well or even adequately that is what they will get. If they do not then they are offered advice, perhaps training, then given a warning and ultimately they are dismissed. It is called management.
Bonuses distort this simple model of work. In the financial world they are normally linked to sales. So ordinary hard-working bank staff are given bonuses not for service or for helping customers. But for selling us stuff. Whether we need it or not. One example of this is payment protection insurance. The Competition Commission has had to ban selling it at the same time as a loan after 18 firms were fined nearly £12 million for mis-selling it.
Bonuses distort the objectives of people at work and must be stopped. Otherwise it won’t be long before we see the return of the multimillion pound pocket-stuffers for those who have impoverished the world for a generation.
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