Stephen Hester, of RBS has just announced that he will waive his bonus in spite of the fact that according to his Chief Executive, Sir Philip Hampton, Hester outperformed the targets set. In this, Hester is following in the footsteps of John Varley and Bob Diamond from Barclays who also waived their bonuses although their bank reported an £11.6 billion profit. It is all very well and good, that high powered executives can afford to forfeit financial incentives. However, the issue is not about a few people acting magnanimously. The issue is about a culture that sees financial rewards as the one and only way to reward job performance.
It is clear that although money is an important motivator it is not the only motivator for people to excel in their job. There is also plenty of research that links increased job mobility of top performers within the banking sector to pay differentials. In other words, in a highly competitive sector, high performers will tend to switch jobs lured by financial incentives. A spiralling salary and bonus situation is then almost inevitable. Is this where we want to go?
It makes sense that our banking sector should hire the best possible people for the job and that they should be rewarded for their performance. However there are many reasons besides putting bread on the table that motivate people to go to work every morning. For example, there are learning opportunities; the contacts with colleagues; the development of personal networks and social capital; the intellectual challenge of negotiating a difficult problem etc. In short, the satisfaction of a job well done that contributes to society. To look merely at financial incentives devalues the nature of the cooperative, human experience of going to work and negates the fact that “man does not live by bread alone”.
Our society could be much improved by recognising that although the outcomes of work are important, the conditions and processes leading to those outcomes are also important. I believe that a more egalitarian workplace, family supportive policies, flexibility in work schedules, job stability and more control over the work performed are non-monetary compensations that can be extremely attractive to high achievers as well as to the thousands of people that work in the banking sector.