Bonuses, premium distributed according to the results of an employee,
is an ancient form of work incentive, used in many professions, its most
common form was the performance pay, the rule for a long time in the labour
world. They are now best known to be used as additional remuneration for
those who practice the two best paid professions in the world, those of
finance and entertainment. And experience shows that they are not the ideal
way to compensate people.
First, they are often granted without any real connection with the
performance of the person concerned: thus, the banker’s bonus depends more
on his ability to get great deals, than on the number of long-lasting
customers he acquires for his bank; and that of the athlete depends more on
his ability to attract advertising than on the value of his exploits: and
the bonus for sprinters, even Usain Bolt, is way lower than that of golfers
or football players.
Then because bonus can distort performance: a truck driver hoping for
bonuses would be a risk to everyone he meets on the road; a trader will seek
to take maximum risk, especially if he knows that his bank is too important
to be allowed to fall into bankruptcy. An athlete will try to adjust his
performances according to his bonuses; thus, Sergei Bubka, who received a
Soviet Athletics Federation bonus whenever he defeated the world record, and
did beat the world record for one centimeter on each appearance, during more
than ten years, from 1983 to 1994.
Finally, because a bonus can only be awarded to someone whose job is not
essential to social life. Indeed, we can’t imagine doctors being paid
according to the success of their treatment or teachers being paid according
to the test scores of their students. In other words, a bonus is acceptable
only if society can tolerate that the person able to receive it is not
always at his best, that is to say if his job is not socially vital. This is
the case for an athlete or a banker. Not for a doctor or a teacher. Worse
even, a doctor or a teacher who would not do his work perfectly is indebted
of a malus, in the form of a fine or even of a ban to practice. Whereas in
the case of a banker the bonus is for him, and in case of losses, the
penalty is for the taxpayer.
The income differentiation according to skills is obviously necessary, but
it should not encourage to take useless risks. We therefore need first to
recognize that receiving a bonus is equivalent to admitting that one’s job
is of little importance so that society can tolerate if it is not perfectly
done. Then we would need to prohibit its use when it can distort the
behavior of the recipients which could be harmful to the community; this is
the case for the trader or the bus driver who would be tempted to take
excessive risks. We must finally accept that the person who is then deprived of
it leaves to go to the competition: a bank (as his country of origin) has
everything to gain by letting go those who have driven them in this
drifting frenzy.