One wet Saturday morning, my friendly four-ball of enthusiastic golfers was in the clubhouse, waiting for a break in the weather. “I was in one of your shops last week,” said Sid, a retired surgeon. I nervously anticipated a complaint. “And your guy was great,” he continued. (He’s right – John in Chester is fantastic.) “How do you find such pleasant, hard-working people?” he asked. “Simple,” I replied. “We pick positive personalities, put them on our apprenticeship scheme and provide the best bonus scheme in the world.” “I thought bonuses had a bad name,” said Sid. “Tell me more.” I explained: “To calculate the branch bonus target, we multiply each week’s wage cost by a magic number (4.5). We pay 15 per cent of all turnover above target split between the colleagues according to their skill points. The most experienced receive the biggest bonus. It’s the same system for every shop, every week, with no limit to the bonus paid. We haven’t changed the scheme for ten years.” “How much do they get?” Sid wanted to know. “Superstars in busy branches can earn an extra £200 to £400 a week – some double their basic salary,” I replied.“I now understand why your guy was so helpful,” said Sid. “Yes, the bonus creates a buzz throughout our business,” I said. “But they don’t get as much money as Sir Fred,” said Sam, who’s become cynical since the RBS share price ruined his retirement plans. “No-one in the bank should get a bean,” he said bitterly. It was an insensitive remark. George, a good golfer and a regional bank manager, has just had his bonus trimmed by Gordon Brown. “I thought I had already earned the money as part of my salary package,” said George. “But the small print says it’s discretionary – I won’t see a penny until 2012. It wasn’t my part of the bank that went betting in the Credit Crunch Casino. I’m working harder than ever for less money. You might have a buzz in your shops but the buzz has gone out of the bank. We used to have fun and a future – now it’s just cost cutting and rules.” Sam, listening carefully, said: “Okay, but why should you get a bonus for doing what you’re already getting paid to do?” “I had an FD who said that,” I interrupted. “He couldn’t understand why anyone should receive more money for working harder, arguing that ‘they should always work hard, that’s what their salary is for’.” Sid chimed in: “An incentive might be right for your cobblers, but what about the government departments that have bonus schemes based on what they call KPIs, calling for accurate box ticking and politically correct procedures? I don’t want some bureaucratic department of administrative affairs promoting trumped up performance targets when we would all be better off if it didn’t exist at all.” “That’s a bit extreme,” said George, who, since Alistair Darling acquired 60 per cent of his bank, is turning into a civil servant. “But I take your point. Government expenditure still expands, while Woolworths and half the high street disappears. Perhaps Whitehall should be on a bonus for cost cutting.” Sid agreed with George: “Yes, if ten per cent of savings were shared between public servants that keep their jobs, a major efficiency and redundancy programme would bring dramatic results.” “Knowing the waste in some departments, top civil servants could earn as much as footballers,” said Sam, looking serious. “Which brings me to your team. This season Manchester City’s players have cost the club £200m – more than £3m per goal. Footballers get far too much, there should be a law against it.” “Be careful,” I said. “Before we know it, Mandelson will appoint a Bonus Tsar and set up an Incentive Payments Commission which, with an equal-opportunities agenda, will further dim our competitive spirit.” “Talking about competition, it’s stopped raining,” said George. “Let’s play golf. What are the stakes?” “The usual,” said Sam. “50p on each nine and £1 on the match.” Picture: source
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