Thinking Managers

Robert Heller of believes that the reason bankers' bonuses are once again rising is because the system of pay and remuneration is self-serving.

The Executive Gravy Train

One major problem with the business world is that the reward for decision-makers has always been determined by vested interest. It obviously suits the men and women themselves to be paid gigantic sums which are irrespective of any rationale. It obviously suits non-executives to sustain a culture in which they themselves will find their rewards rising remorselessly. It suits other managers nearing the top. It suits the head hunters, who are remunerated according to a percentage of the appointees’ pay.

It even suits the politicians, generals and mandarins, who will find themselves in the queue for well-paid posts when they become civilians, so to speak. The least well served by the system include the staff, who don’t share in the rewarding joy. The strategy here is just to widen the gap between the lower paid and the royally remunerated. The shareholders will sometimes get restless, but events since the Great Crunch arrived have shown no truly significant reforms - and most investors are too far removed from the investee company to take an active interest in the matter.

That leaves the citizens, who are even further removed from the action, and must rely on the radical politicians and critical commentators to defend the interests of the wider society. The trouble with this method is that it is so feeble.

And then there are the non-executives lodged inside the firms. Even if they strive to supervise and guide the executives, they cannot move to transform the firm without revealing their huge chasms of ignorance about its markets, current performance at the key levels, and (above all) how the future is being prepared.

It should therefore come as no surprise that despite the events of the Credit Crunch and the billions of pounds of taxpayers money loaned to the banks, that executive pay and bonuses in the banking sector is once again on the rise.  The fact is that the only people with a vested interest in regulating this self-serving system are the legions of ordinary taxpayers – and we are not invited to the party.


About the author
Robert Heller is one of the world’s best selling authors on business management.

  Robert Heller