Monday, 25 January 2016
How to incentivise people?
I really like this article in the FT, no other paper could come close to looking at such a subject in a dispassionate way. Bankers after all, earn a lot of money, so for most of the media it is much easier to start with the shorthand; evil people.
That clarity lets them get on with whatever story it is they are hanging on evil people.
The thing is, although I am not a banker, I do work with them every day. And for seven years this has been very dispiriting. After the burst of the bubble bankers became (rightly so!) hated figures. Then their bosses looked at the losses and cut their pay.
The smart ones left and set up their own hedge funds, but this was the smart few, most hung on, changed jobs, spent sometime out of work and adjusted to new, less eye-watering income.
Plus bankers do the same as everyone else does; live slightly beyond your means to a greater or less extent. Earn more money, get a bigger mortgage, fly further for holidays, that kind of thing. Nobody thinks, ah yes, put it all away and save it for the rainy day. Who the hell wants to worry about rainy days (well, accountants do, but their not happy either...)?
Anyway, I digress, this article suggests that financial incentives don't work - specifically the bonus. On this I would agree entirely, there is a whole cottage industry of angst and this is because the corporate impact and effect of a bonus is just wrong.
In a non-financial company, one that, er you own say, a big contract or win can make or break the company. Therefore you award yourself or the key staff well on the back of it. In a large organisation it is always a team effort, rewarding disproportionately one individual is never going to sit well. And as described above, they will fritter it anyway and not be happier.
Happiness is enjoying going to work and the people and things you do (caution; this is relative, some people working A&E). Being paid more or well is the benefit of a good job, not a feature.
So what should banks do? One thing I saw that worked well was in a US company, everybody earned around the same (and it was alot!), you got more in a good year than a bad year, but not too much - it was very meritocratic. Never seen anything like it in a UK company.
Another is to give people stability and a place to grow into in their roles, again, weirdly banks used to be good at this and are now terrible, when everyone thinks they are getting made redundant in a few weeks or months, today's paycheck counts for more.
I have had plenty of people in teams I manage leave over the years, but never for money, which I find instructive, capitalist that I am!