THERE WAS MUCH debate last week over Finance Minister Paschal Donohoe’s decision to review bankers’ pay.
Since the financial crash, government restrictions cap bankers’ pay at €500,000 per annum with no bonus. Donohoe said the restrictions won’t be removed but a review will be set up to examine bankers’ salaries.
Commenting on the announcement, Taoiseach Leo Varadkar said he believes the most “appropriate way” to reward private-sector workers is through incentives like share option schemes rather than salary top-ups.
Businesses offer cash bonuses as an incentive for workers to hit certain targets and increase productivity. They’re also a useful cost-cutting tool for bad financial years: it’s easier to scrap bonuses than it is to cut salaries.
However, UCD professor of management Niamh Brennan told RTÉ’s Marian Finucane show that she believes bonuses – for all workers, not just bankers – “don’t work, full stop” because they’re a distraction.
Meanwhile Financial Times columnist Andrew Hill wrote last year that the impact of cash bonuses is short-lived because employees start to think of them as a “permanent part of their compensation” rather than an incentive to lift performance.
With that in mind, we’re asking Fora readers this week: Do you think cash bonuses for staff actually work?