JOHN CRYAN, the new(ish) co-chief executive of Deutsche Bank, caused a stir earlier this week when he said that bonuses do not encourage bankers to work any harder. The German lender's boss was reported to have said that he had "no idea" why his contract included a bonus scheme.
Financiers like to claim that their bonuses are necessary to attract and motivate the highly talented. Many financial jobs are stressful, demand long hours and involve a great deal of unrewarding grunt work. Those who fill them have many outside options. With junior bankers literally working themselves to death high pay is necessary to attract people to the sector. Goldman Sachs hiked their juniors’ salaries by 20% this August.
Whether paying large bonuses—as opposed to higher base salaries—is the best way to motivate employees is a separate issue. Europe's regulators imposed a bonus cap in the aftermath of the crisis. That was strongly resisted by some banks. The practise of paying bonuses made it easier for them to...Continue reading
from Economics http://ift.tt/1TeBYM5
via IFTTT
No comments:
Post a Comment