...'Banking bonuses should only be given to high performing senior exewtires Banking bonus is the amount traditionally paid or awarded to some workers in the finance industry (encompasses a broad range of organizations that manage money, including credit unions, banks, credit card companies, insurance companies, consumer finance companies, stock brokerages, investment funds and some government sponsored enterprises) at the end of the bank's financial year.. It is referred to as money paid in addition to a stated compensation. In December 2009, the UK government announced in its pre-budget report its intention, during the first five months of 2010, to tax bonuses paid in this way by 50%. "Staff in banks who appropriate revenue in ludicrous bonuses which should otherwise go to strengthen the banks' capacity to resist write-offs, panics and bank-runs are in effect stealing from their customers, shareholders and the government," commented Will Hutton, executive vice-chair of The Work Foundation (formerly the Industrial Society), in The Guardian. The financial community "talk of the City being a national asset and a success story; of having to pay football star salaries of necessity; and that any insistence that the banks accept that they have obligations as well as rights to bailouts will be met by an exodus of talented staff to other countries," he said.[1] Billions of pounds in bonuses are expected to be lavished on bankers this year on top of hefty salaries, underlining a widening...
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...Many executives in the business world today receive hefty bonuses on top of their annual salaries. In recent times, there have been questions as to whether this is ethical behavior or not, especially when the company’s performance is low. Where is the line drawn between logical and illogical when it comes to bonuses? How big of a role do contracts play when it comes to these big payouts? Is it ever ok to break a contract, and if so, when? A bonus is defined as “a sum of money granted or given to an employee in addition to regular pay, usually in appreciation for work done” (Dictionary.com, n.d.). It’s no secret that money is a powerful incentive to employees to strive harder and to meet the goals that the company sets for them. Not only do bonuses increase productivity, but they also incentivize employees to have a longer length of employment and even increase morale. In general, bonuses are directly connected to an employee’s performance and their ability to generate sales or exceed a quota. A bonus can also be a result of the financial success of the company (WiseGeek.com, n.d.). For example, if a company has a particularly successful year, there could be a bonus in the form of financial reward for all of its employees to thank them for the good job they have all done. A bonus can also come from a stipulation in a contract. Sometimes when professional athletes sign a contract to play for a new team, that contract includes something that’s called a “sign-on...
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...Bonuses in Bad Times Spain financial crisis began from 2008, and many companies were affected, included the Spain big retail chain——Superado. Bonuses are the reward for the good performance. Clearly, it is very important for all the employees to get their bonuses. The two key features of the company operation are the sufficient funds and the staff cohesion. However, paying the bonuses may pose a threat to the operation of the company. The dilemma is whether to pay the bonuses to the employees during the recession time. The case study “Bonuses in Bad Time” (2012) outlines the circumstance of a supermarket chain. This case serves as an inside look into a grocery retailer——Superado, an expansive market chain situated all over the nation of Spain. Luisa Fernandes is the CEO of Superao; she had to take over the role as CEO after the demise of her dad. She is at present confronted with the issue of paying her worker's rewards amid a poor monetary time. Superado's Vice President of Finance, Maria Alva, makes it very clear with Luisa when she advises her that the organization cannot stand to pay rewards this year due to Spain's subsidence. Rodrigo Mendoza is the Vice President of Human Resources for Superado. He believes that Luisa should pay the bonus, and he has faiths in the workers and trusts that the accomplishment of Superado amid the retreat is because of management commitments. Jorge Ramos is the store manager. Jorge's essential concerns are his employees and the clients of...
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...be offered bonuses to do their job well when other employees are expected to do their job well in the absence of bonuses? Should executives have to be offered bonuses to do their job well when other employees are expected to do their job well in the absence of bonuses? Introduction Nowadays, in many companies, executives receives more and more incentives like bonuses if they do their job well. In these same companies, it’s a rare fact that workers have bonuses. Equality between executives and other employees’ compensation is often not respected, most of workers find the bonus system very unfair. That bring us to the following question: should executives have to be offered bonuses to do their job well when other employees are expected to do their job well in the absence of bonuses? In this paper we will see that executives have to be offered bonuses to do their job well only if others workers are expected to do their job well with the same advantage of bonuses as reward. Through this paper, we will see that bonuses can leads workers to be jealous of executives, we also see that bonuses improve the company performance and finally we will see that bonuses make the workers more devoted to their company. Thesis statement Executives have to be offered bonuses to do their job well only if others workers are expected to do their job well with the same advantage of bonuses as reward. To avoid any jealousy, any unfairness, all workers should have bonuses to do their...
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...Awarded to Major Bank Executives Their Impacts on Utilitarianism and Deontology Price TUI University Abstract This paper explores two published articles that report on banks receiving billions of taxpayers’ dollars awarded from the government known as the Trouble Asset Relief Program (TARP), who in turn paid their top executives billions of dollars for bonuses. TARP is a program to assist in the stability and strengthen its financial sector by paying for bad mortgages and other trouble assets. In order to prevent economic collapse, the Bush administration changed the programs goals. (Gold, 2008) Using the TARP funds to support and pay off executive’s bonuses poses a moral dilemma within society, which I will later discuss in the paper. The purpose of this paper is to answer the question, Should top executives of the major banks that received bail-out money be allowed to receive large bonuses? I will present my personal view on the matter using the bases of my values, beliefs and research that I have done on the topic. In addition, I will explain how bailout money awarded to major bank use for executives bonuses impacts on utilitarianism and deontology. Bailout Money Awarded to Major Bank Executives and their Impacts on Utilitarianism and Deontology The United States began experiencing the recession during the early years of 2000. On September, 11, 2001 a tragedy in New York City occurred when the World Trade Center Towers were struck with airplanes, which...
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...The article that is going to be reviewed is titled: Walmart Slashed Tax Bill By Giving Top Execs Big Bonuses. This article was retrieved from the Business Insights: Global from Ottawa University online library. The article summary will provide an insight into why the top executives who made big bonuses. At the end of the article summary, I will give my own personal opinion on the big bonuses issue. Working at Walmart has paid off for some big time executors. On June 6, 2014, at the Bud Walton Arena on the University of Arkansas campus, Walmart had its annual shareholders meeting. At this meeting, it was released that the company was to pay out $500 million in bonuses to their hourly employees. Although that seemed great, the article also stated that half of the amount of that bonus was going to only eight executives. As part of the compensation plan, the hourly and executive pay does come with bonuses. By paying out this bonus, Walmart has also been part of the Americans for Tax Fairness (ATF), a tax reform coalition. ATF has allowed Walmart to save $104 million in federal tax. By paying the executives this bonus, Walmart has followed the corporate pay at section 162 (m) of the Tax Code. It states: In the case of any publicly held corporation, no deduction shall be allowed under this chapter for applicable employee remuneration with respect to any covered employee to the extent that the amount of such remuneration for the taxable year with respect to such...
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...Bonuses Can Backfire: Maintaining a Happy and Motivated Workforce For so many years, firms focused on motivating employees by handing out rewards which are extrinsic in the form of compensation systems, while ignoring the other significant reward which is intrinsic in the form of employee recognition programs. Various studies seem to submit that monetary incentives may be more motivating in the short term, but what motivate in the long run are nonfinancial incentives (Robbins & Judge 2013, p. 259). Many firms are becoming more aware of the fact that essential work rewards can be both intrinsic and extrinsic. This paper will attempt to shed some light on how bonuses can backfire by providing answers to the four questions described in the headings below. 1. Do you think that, as a manager, you would use bonuses regularly? Why or why not? From what I have learned in these chapters, I don’t think I will use bonuses regularly as a manager because they can actually backfire as a reward when used regularly. While bonuses can increase motivation and influence employee loyalty, there could be some very real and unintended results. Once you start giving out bonuses monthly, quarterly or annually, it ceases to be a reward; it becomes a benefit and employees will feel entitled to it even if the bonus is based on performance measures. The workers may then feel demoted or penalized if there is a change in reward policies or when objectives are not met (Avey, 2000, p. 14). I personally...
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...Root Causes – The main problem is the Scanlon plan. The issues with this plan is that the employees have mistrust in the plan and it has not paid bonuses in over 7 months. This violates the P-> O part of the expectancy theory which states that employees need to believe that meeting their performance standard will lead to an outcome. The base rate has changed 5 times since its inception in ____ . and the employees have grown a mistrust of management because of it. This violates the equity theory which states that employees need to believe that they are being treated fairly. The reason employees at Engstrom don’t believe that they are treated this way is because of the fact that the base rate has changed so many times throughout the Scanlon plan’s inception. The employees are starting to feel that management is playing games with this formula and the fact that it is so complicated doesn’t help. The bonuses have started to be taken for granted rather than being viewed as a reward for productivity. The Scanlon plan has violated every level of Maslow’s Hierarchy of needs except for arguably the 1st level. The Scanlon plan has not given the employees the opportunity for job growth (violates second level); they do not feel incorporated since they feel like they are extremely separated from management (violated third level); they do not receive proper recognition such as employee of the month (violates 4th level) and hence they do not have self actualization Alternatives- Get...
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...fact that essential work rewards can be both intrinsic and extrinsic. This paper will attempt to shed some light on how bonuses can backfire by providing answers to the four questions described in the headings below. 1. Do you think that, as a manager, you would use bonuses regularly? Why or why not? From what I have learned in these chapters, I don’t think I will use bonuses regularly as a manager because they can actually backfire as a reward when used regularly. While bonuses can increase motivation and influence employee loyalty, there could be some very real and unintended results. Once you start giving out bonuses monthly, quarterly or annually, it ceases to be a reward; it becomes a benefit and employees will feel entitled to it even if the bonus is based on performance measures. The workers may then feel demoted or penalized if there is a change in reward policies or when objectives are not met (Avey, 2000, p. 14). I personally believe in combining employee recognition programs with some form of unexpected small bonuses. As indicated in the case study, employees will shape much of their behavior base on what gets rewarded in the organization. They experience the values of the organization by observing which activities are rewarded and which are penalized. As a manager, I want to be careful not to create a culture that expects receiving bonuses. It is also important to realize that...
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...is, “why is motivation at an all-time low, is the Scanlon plan benefiting everyone in the company and can the plan be revamped with the employees input?” From the beginning of the Scanlon plan, the employees were happy when production was good and they were receiving the bonuses. When the profits and sales decreased, so did the bonuses which led to disgruntled employees. It seems the employees were agreeable with the plan at the beginning even though they did not fully understand the concept of how the bonuses were calculated. So is it the Scanlon plan the root cause or the employees? As explained earlier, the Scanlon plan was put into place in 1999. It worked for many years then the company started facing issues with productions, profits, bonuses and employees. To answer the questions of the root cause, it is all stakeholders. First, in order to receive a bonus, the employees needed to understand their money was just that, a bonus. It was not a guarantee every month and was actually separate from their regular pay. If their production was up, the bonuses were good but when things went down, everything and everyone paid the price. Let’s focus on the Scanlon plan first. As long as the bonuses were being paid, no one questioned the plan. When the...
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...State Life Insurance Company. History NATIONALIZATION OF LIFE INSURANCE The life insurance business in Pakistan was nationalized under a Presidential Order on 19th March 1972. It was executed in two stages. In the first stage which covered the period 19th March to 31 October 1972, the management of 32 life insurance companies were taken over by the government. Trustees and sub-trustees were appointed by the Government to takeover different companies and to co-ordinate and guide their activities. The Government constituted Life Insurance Management Board (LIMB). The Board’s term included the task of recommending a permanent set up of life insurance within the framework of nationalization. The Board recommended establishing a single corporation with three units The second phase of nationalization started by establishment of Single Corporation called State Life Insurance Corporation of Pakistan with 3 Units called A, B, and C operating throughout Pakistan and competing with one another. On 1st October 1975, the 3 Units merged and different Zones were created. Initially there were five Zones with their Zonal offices at Karachi, Hyderabad, Lahore, Rawalpindi and Peshawar. The figure has increased to 26 Zones under four different Regions, South, Central, North and Multan headed by very competent Executives. By the Grace of Allah the Almighty, State Life has made steady progress in all fields of its operations. The future is even brighter as the Corporation is making very positive...
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...AIG Presentation Matthew Fong Minkyung Lee Yesl Lee Koo chul Jung Contents History of AIG Financial Crisis of AIG Bailout Policy Bonus Payments Outrage Conclusion Bibliography Cornelius Vander Starr - Established an insurance agency in Shanghai, China. -The first Westerner in Shanghai to sell insurance to the Chinese in 1949. -Management of the company’s lagging U.S and holdings to Maurice R. Greenberg. M.R.Greenberg -American businessman and former chairman and CEO of AIG -The world’s 18th largest public company. -Selling insurance through independent brokers rather than agents to eliminate agent salaries. -Currently CEO of C.V.Starr and Company. 1919 American Asiatic Underwriters(AAU) -Sell American insurances in Shanghai. Asia Life Insurance Company - Target is Chinese to sell life insurance - Hong Kong, Indonesia, Philippine, Jakarta. 1926 American International Underwriters(AIU) - Header agent in America, they were guarantee for American’s accidents.(started from Home foreign business) -New strong agent in Latin America around 1930~45 1968 -Starr died and Greenberg became a CEO 1970 -Greenberg was succeeded as CEO by Martin J,Sullivan. -Martin J. Sullivan began his career at AIG in London Office. 1984 -AIG listed their stocks on New York stocks exchanges and AIG be came the largest insurance company. 2005 -Became embroiled in a series of fraude investigations conducted by the Securities and Exchange Commission...
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...Our new strategies – round 3 From the first round onwards we have been following a quite conservative approach in applying strategies to different branches. Having changed the number of monitoring personnel and bonuses by two units in the first round resulted in the second highest profit among the teams in our ‘shirking’ subgroup. What is more, 23 firms out of 50 managed to either increase their profits or decrease losses. However, this approach lacked differentiation and spirit of experimentation with the given data set to try out how the things would go if we for instance applied drastic changes of 20 units or more. We decided to follow this risk-averse strategy as we thought of it as a simulation of a real-life case which was not quite right, but as we have already started with this approach and did not want to change our strategic approach completely, we decided to continue it adjusting our strategies in the next rounds. In the second round we changed the number of monitoring personnel by 5 units as the scale of monitors stretches up to 100. Bonuses were changed by 2 units as in round 1. The approach we applied this time was still quite risk-averse, but in the end we scored an even higher profit than in the first round. Again, 23 firms increased their profits obtained in the second round. Profits of six firms did not change at all in the second round which was the result of the strategy not to change any variables for the companies where the first round strategies were quite...
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...course they will be tired after their stint. The irregular routes and the days away from home are difficult for many drivers. This leads to the high abseenteism and driver shortage because they need to be ready at all time regardless what they are doing. Other than that, the problem is the matter of remuneration package that these drivers are getting from PHSB. Since PHSB was a small family-owned company, it was unable to provide an attractive remuneration package to the drivers. The hardwork of PHSB’s drivers were not paid accordingly. The way they work, all the hours they spend on the road not matched the remuneration package of PHSB. In addition, many big players in the market were able to draw drivers into their employ with benefits and bonuses, which smaller companies like PHSB unable to match. Solutions PHSB urgently need to settle this issues because this is the main driver of company’s...
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...employees to earn bonuses based on individual output on some tasks are set too high and there is also no way to compare the per-hour production rate for each item or assembly operation from 2012 to the production rate of 2013 for employees to receive bonuses for each piece produced because detailed records were never kept. The new system also doesn’t favor supervisors because they make less money than some of the workers and it creates increasing conflict with employees, as they don’t care about the quality of the products the produce as long as the output meets minimum standards. The individual production bonus system could work if some changes are made to the system to make it better. One such way would be to keep detail records of the per-hour production rate for each item to be able to compare them to that of the following year so that the bonuses can be given out effectively. Another way would be to set a standard of quality that all employees can follow to make sure all items produced are done effectively and there is less waste of raw materials. The final way would be to give bonuses to the supervisors also for the amount of workers they supervise that surpasses the past years levels. I don’t believe that the individual performance pay is suitable for this company because it brings about conflict between the workers and the supervisors and the workers don’t want to work on the hard production jobs because they find it hard to earn their bonuses on those jobs. If...
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