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Rewarding people for doing a good job is part of running a successful and competitive business and every firm needs a structure that allows it to recognise and reward its best people. Paying an individual a bonus is one tangible way of showing recognition and we should not allow the politics of envy to derail this important principle, says Simon Culhane, Chartered FCSI, Chief Executive of the Chartered Institute for Securities & Investment (CISI).
The CISI, which represents 40,000 financial services practitioners worldwide working in the securities and investment sector, published its policy on bonuses in 2008.
It says: “The CISI welcomes the scrutiny of bonus payments. However, it also believes the financial industry is, and continues to be, a force for good. The UK industry is a world leader, providing over 10% of the country’s GDP and employs over a million people. It has contributed very significantly to the wealth and prosperity of the nation.
We recognise and support the concept of paying people an element of remuneration in recognition of achievements in their employment that are over and above what would normally be expected and/or for a legitimate share in the profits of the organisation or parts of the organisation.”
Mr Culhane said: “Three years ago we set out 10 core principles, which we believe handle the issue of bonus payments in an ethical manner. They are just as relevant today. One of our main principles is that the annual report and accounts of firms should, in future, provide a greater level of disclosure above the statutory minimum on bonus payments, breaking down details of these payments into the salary and bonus elements in the standard banks of £5,000 which have been reviewed by the remuneration committee.
“Transparency is extremely important in this debate. A bonus should take into account factors other than profit, such as co-operation with others, compliance with procedures and training of others.”
