Magazine article Management Today

MT Masterclass: Bonuses

Magazine article Management Today

MT Masterclass: Bonuses

Article excerpt

What are they?

To the ordinary person in the street, a bonus is something unexpected, a pleasant surprise. 'That's a bonus!' you say, when a bus arrives just as you reach the stop, or when you find a stray tenner on the floor. In the City of London, however, a bonus has become an (almost) automatic payment, something expected, even demanded. Job applicants enquire about both the basic pay and the bonus in the interview: there doesn't seem to be much conditionality about it. This is not only bad performance management, it's also an abuse of the English language.

Where did they come from?

The 'bonus culture' took root the 1980s. The Big Bang in 1986 changed the rules of the game. Old-style City partnerships came under pressure to change. The influence of Wall Street prevailed and basic pay became just part of the story. Bonuses that represented a large proportion of basic pay became available. But the trouble with such reward schemes is that they encourage extreme risk-taking. …

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