We see many businesses and
organisations put in place reward structures that focus predominantly around a receipt
of a cash reward. And we hear periodically about groups of individuals from
specific industry sectors, particularly investment bankers and banking in
general, earning huge cash bonus rewards. In some cases these can be referred
to as “balloon payments” and these are more often than not measured in the
hundreds of thousands of Euro.
When I worked in London one
of my friends was employed by one of the world’s largest merchant banks and to
this day he is still employed in this industry sector. I recall one year, in
the late 1990’s, whilst driving to Cardiff for a Wales versus England rugby match,
we started talking about the how well each of us were doing in our respective areas
of employment. Three of us in the car thought we were being gainfully employed
until we heard of the yearend “balloon payment” our banking friend was about to
earn.
It was an unbelievable
£250,000!
Well to say the car went
quiet was an understatement. We were simply dumbfounded and yet the amount was
such a regular payment in this industry that our banking buddy stated the
amount with such little excitement and enthusiasm that we had to ask again just
to make sure we heard the figure correctly.
When asked how he could
justify such a large bonus payment and how he could have earned such a vast
payment, the story I was told was trapped in my memory forever.
As a Senior Fund Manager he
would gamble, his words not mine, people’s pension funds on the open market and
was given leeway of plus or minus £5,000,000 a week! If a profit was being made
then the company rewarded his gambling with massive end of year bonus payments.
I ask if he had any concerns
that he was gambling people’s retirement funds and his answer was simply “No”.
He told us that he was so far removed from the source of the money that it was
just a process to him and the money was therefore not “real”. As he worked away
on several computer screens he never actually saw any of the money transactions
he made or lost, and as a consequence it was just like a computer game to him
and I suppose a bit like online gambling today, but with absolutely none of the
obvious risks.
Initially, I would have been
more than a wee bit jealous. As would the other two friends in the top of the
range BMW paid for on the back of balloon payments. It had started to rain, as
it always does when you drive towards Wales. And as the westbound carriage of M4
motorway was heaving in a sea of George Cross clad English rugby fans, and we crawled
ever nearer the Severn Bridge (the old one and not today’s shiny new bridge), I
was so glad not to be involved in an industry that rewarded such high risk
strategies and created a culture of greed, dishonesty and a breed of sales
people that in my mind had no scruples and or ethics whatsoever.
That journey was almost 20
years ago and yet we regularly read and hear about the very same over inflated
bonus culture that still exists within the banking industry. Despite the
collapse of banks, such as Barings, bailouts and many other financial scandals these International institutions facilitate. We just do not seem to have learned the lesson that over rewarding staff based
on large monetary bonuses can be counterproductive and in fact can often be incredibly
destructive.
There are so many other ways
to reward your staff other than simply taking the easy option by making
additional monetary payments to them.
I would always be concerned
that monetary payments, over time, not only become expected, but to a certain
extent become rather meaningless. And by meaningless I am implying that the
staff member or members in receipt of regular bonus payments more often than
not forget the “Why” and the “What” are the core values of the company or
business they work for. They merely do what is necessary to earn that yearend bonus
payment no matter what the consequences are.
It sometimes does quite evidently
become a race to the bottom with no real vision as to what a bonus culture is
doing to a company’s brand image. And remember every single employee is a brand
ambassador for the company and business they work for. So by creating a bonus grabbing
culture within a company or business this can be very much counterproductive.
You would think that it would
be relatively easy to set up a sales function within a company or business. But
getting the right structures in place and getting that sales function working
smoothly, is one of the core fundamentals that so very often is incorrectly planned
and more often than not not set up at all.
Many businesses focus on rewarding
their sales staff based on achieving, meeting and surpassing targets. Targets
that are often set without applying any real thought and science to the
process.
There is far more to
motivating staff to sell correctly than just a monetary reward. Clever
companies put a great deal of consideration and energy into coming up with
creative strategies on just how to reward their staff and when to reward their
staff. I have even come across some reward schemes that acknowledge and reward
an employee’s wife or husband and their family. These schemes build a unique
relationship with their staff and make sure that employees see a bigger picture
when working for the company. They are more likely to go that extra mile if
they know that their employer is taking an active interest in what goes on
“outside the factory fence”.
In many instances there does
not even have to be a monetary reward to motivate and encourage staff members.
We are social animals and in general we like the one to one human interaction
we have been designed to receive. And we have been blessed with two ears and
one mouth; I always say that we should be listening twice as much as we speak. Communicating
messages of encouragement is something that must happen more regularly in our
day to day business lives. A simple acknowledgement of good work and a verbal “Thank
You” is often all that is needed to bring the very best out of many staff
members.
Unfortunately, this is missed
on far too many senior managers and business owner and those who cannot even be
bothered verbally thank their staff will see this indifference seep into and
trickle down to ultimately affect how customers are dealt with.
And finally, remember that a balloon
always bursts when it comes into contact with just one little prick.
ENDS
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