Cap to bankers salary

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LineBall Tennis/Siva
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Re: Cap to bankers salary

Postby LineBall Tennis/Siva » Tue Mar 12, 2013 12:49 pm

Very interesting debate, which has been framed in news services to provoke just such sentimentality with good pros and cons, but really not on the money, dare I controversially say.

As someone who has some humble exposure to the inner workings of the bonus culture, the argument is surely NOT about the size of the bonus, because in good times the cake is bigger to divide (that's just good old fashioned meritocracy working), but more about the structural flaws inherent in risk / reward systems.

We must not forget that excessive and self-vested risk taking (which brought capitalism to its knees in 2007-08 etc), and the exigencies to curb incentivisation is about why bankers receive bonus when they make money but why no disincentivisation if they lose money other than being sacked! In an "all or nothing gambit" behavioural science suggests we take the risk regardless of consequence - the pay-off is worth it!!! So indeed, the debated needs to be centred again and talk about retrospective 'clawback provision' when money is lost; that's closer to being on-the-money.

We all know that 'private profit (not just bankers!)and taxpayer losses (when music stopped)' was incurred in the last merry dance of the financial cycle. Also I'm NOT concerned about non-doms welfare because they act like 'hot money' chasing highest interest / exchange rate benefits; as they are a) priviledged minority (some stat suggested 116,000 non-doms in UK!!!) and b) their contribution to society and community in taxes or social inclusion is negligible as HNWI (high net worth individuals) can exploit tax shelters / loopholes and are often behaviourlly a clique-set.

We DO NOT want the bonus pendulum to swing fully the other way, but we must encourage UK authourities to ply firm and fair principles to aborhorent flaws in reward / risk values.
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Braintrainer
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Re: Cap to bankers salary

Postby Braintrainer » Sat Mar 23, 2013 12:39 am

I suggest it's worth actually looking at what schoolgatesmum's link says -
http://www.blog.rippedoffbritons.com/20 ... s.html?m=1

This might help the debate as it turns the discussion on it's head.

Instead of arguing over whether bankers bonuses should be regulated, it challenges the whole concept of individualised bonuses to incentivise performance, i.e. the whole assumption that bonuses drive performance is flawed.

Ever heard what Warren Bennis said about management versus leadership ? Mangement is about doing things right, leadership is about doing the right things.

Methinks we need more leadership and suggest maybe the real reason we had banks that went bust were the bonus schemes in the first place ?

Stuart
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Scottov
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Re: Cap to bankers salary

Postby Scottov » Sat Mar 23, 2013 8:57 am

I wonder if the people who believe that bonuses are just manna sprinkled aimlessly from heaven, as some disingenuous media outlets have spun it, also believe in the Easter Bunny?

People respond to incentives, this has been true for centuries.

Arguing whether incentives are properly aligned with the shareholders is a fair question, arguing that incentives cause lower productivity is dumb. Share options & commissions are ok, but bonuses are not? C'mon.

Just think of some of the contradictory messages:
Companies only care about profits
Companies enrich employees with bonuses, at expense of profit
Companies don't care about employees, always cutting jobs & costs
Etc etc

The courts are full of people trying to enforce contractual bonuses, the idea that these are loose & discretionary is bonkers. They are often contractual terms paid upon achievement of very specific kpi's.
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