'People must be de-motivated to know that their leaders are hugely rewarded for working for external agencies like investors'.
Poll closed at 16:00 on 7/3/2005The final results were:
Agree with the proposition..75%
Disagree with the proposition..25%
Comments.
The recent announcements that HSBC, one of the world's largest banks, has generated bumper profits and that its directors have been awarded very large bonuses should be a cause for some celebration. Or should it? It would appear that many employees, who are reported to have received little or no increases in their pay, are considering strike action.
Managements have responded angrily to union calls for windfall taxes on 'excessive' banking profits (and bonuses to match?), claiming that such profits are good for society, because they provide superior returns for shareholders, who include ordinary members of society, pension fund members and savers. Therefore they are only doing what they do for the general good.
The ordinary mortal might be excused for feeling a little confused by all of this.
Here are a few interesting questions and observations to mull over:
- Does the argument that providing very high returns for 'shareholders' hold much water when one realises that the 'shareholders' are in this case are investment institutions which waste spectacular amounts of the funds entrusted to them through ignorance and pure gambling, as well as siphoning off very large amounts in fees, bonuses and commissions?
See: High performing Investment Institutions - Luck or Judgment? - Are top managements and the financial markets really driven by the best interests of society and its members?
- Are companies simply economic entities, with the single purpose of maximising returns for their 'owners', the financial markets? If so, managements that ally themselves single-mindedly with the interests of the financial markets are acting perfectly rationally.
- Or, are companies essentially human communities, dependent on the contributions of many, many people for their performance and long-term survival? If this tends to be the case, will they optimise their performance and contributions if they are not inclusive of the interests of all their employees and responsive to the needs of their customers - and, ultimately, society?
- Can effective and purposeful communities really survive if their leaders are beholden for their survival to some external agency? Should not managers' first duties be to the efficacy, health and long-term effectiveness of the organisations of which they are (or ought to be) a part?
- Differentials between the compensation of top and the average employees are greatest in large service and retailing organisations, where a few receive millions and the average a few thousands. Differentials are least in knowledge-based and high-tech organisations, where know-how is widely spread amongst the employee population.
- Such organisations tend to have lowish status and pay differentials and be rather including of the interests of the whole employed population. Do we not need more of these in Britain (and proportionately less of the other kind)?
- Do employees, savers, pension fund members need protection from exploitation by those who are supposed to lead them and take responsible care of their financial interests?
Discuss.......
