Monday, 13 October 2008

Banking bonuses


   So I'm shortly going to own a piece of RBS; Lloyds/HBOS etc.

The government aren't going to put anyone on the board of these new public private partnerships, and it's still unclear how they intend to meet their commitments to control bonus payments.

And is it the right action anyway?  Even if doing this is achievable, and it doesn't simply result in the reintroduction of the sort of allowances that were brought in to get around reward legislation in the 1970/80's, it's going to result in disengagement and a continued flight of talent to purely private financial organisations eg the hedge funds.

As I noted in Talking HR (002), the issue for me is more on of cultural change than reward policy.

I'm reminded of Howard Gardner's and Mihaly Csikszentmihalhi's call in their book 'Good Work' to constrain executives and managers by a code of professional ethics - a corporate equivalent of the Hippocratic Oath, vowing to 'never do harm', to act 'for the good of my customers and shareholders', and to 'not play God with people’s lives' (see these comments in strategy+business):

"The drive for competitive advantage and wealth, he argues, has taken business’s attention away from the almost chivalric honor of the professional doctor or lawyer. To be sure, doctors and lawyers don’t always live up to their codes of ethics. But the codes exist, forcing practitioners to confront their everyday ethical dilemmas consciously. This kind of thinking, over time, builds not just individual cognitive capacity for leaders, but also the collective ability of organizations to operate in a more complex world and satisfy the real needs of larger groups of people."


I think this call is now starting to look quite prescient:

"The very survival of business may depend on a more widespread benefit. Just as the church of latter-day Europe lost its influence when the mass of society began to doubt its relevance, so too could corporate enterprises be rejected by the body politic — consumers, employees, and even shareholders — if they fail to generate wealth for more than a privileged few."


Gardner believes there is a substantial opportunity in this - in that:

"Knowledge workers will flock to companies that embrace high standards of excellence and that allow them to feel engaged with society, leaving other firms with the less talented, less motivated members of the workforce."


This would be a major cultural change in city institutions, but I think that's probably what they need...