Who Moved the Goal Posts?

I might be biting the hand that feeds me given I work in financial services. I also live in Mosman, which houses many of those working for the institutions that are copping the flak over their reward system. At the end of the day we are all human beings doing our best and we are essentially hardwired to make the most of any opportunities and advantages we can.  Let me be clear - this is not a personal attack.
 

To get you in the mood here is some background reading for those of you who are into it. Read this and this to get a picture of what is going on in corporate Australia. I read them, tried to remain objective but was still left with a sour taste in my mouth.

What’s the story with moving the goalposts on the hurdles for bonuses? What the heck is overriding board discretion (code for really the hurdles don’t actually mean anything we will just give it to you if we feel like it)?

Hands up who has sat in a review with their boss and had it explained why there’s no bonus or pay rise because of the economy, tough times blah blah blah insert lame reason here. Yet…get up the top of the heap (undoubtedly with a lot of hard work no arguments there), buddy up to the board so they can use their “discretion” and those days are well behind you. There’s barely a year in which you don’t see your salary go up.
 

Now I am not disputing that in most instances there is a huge price to pay in terms of time, energy, accountability and risk of tenure in these senior roles. But bottom line is that there is barely a downside risk to payday when performance is not up to scratch. I can recognize the risk I take in buying Wesfarmers shares with respect to capital and dividend growth but what about those charged with the task of achieving those outcomes. Apparently the buck doesn’t stop here!!
 

Anyway enough griping and whining.  What’s the solution? Again I am going to defer to those with a larger perspective than mine and provide a link here to a great article from the man who wrote The Black Swan – Nassim Nicholas Taleb. His solution – end bonuses for bankers! Although it’s from an American perspective and pertains to bankers more than corporates I think he raises some good points on how the system of reward has become untenable and asymmetrical. As he points out “where is the disincentive for failure?”
 

Is change actually possible when there are so many powerful vested interests in keeping the status quo? Who has the stomach to take it on? Would we all, as human beings, have our own snouts in the trough if we had the opportunity?

The capitalist system, like anything, is not perfect. But it doesn’t mean, with informed debate about alternatives and solutions, revision can’t be made to shade the imperfections so the system evolves over time into something more stable and equitable.

In reality, we all need to know where the goalposts are once and for all.