When a bonus culture is just a poor joke

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Teachers and doctors strongly resist the introduction of a bonus culture: not just because they resent measurement of performance and accountability for their activities – although they do, and with little justification – but because they oppose importing the culture of assembly lines.

As a young Oxford don, I was chairman of the panel assessing the preliminary examination that students took at the end of their first year. We failed the son of a particularly noxious third-world dictator. There was an opportunity for him to resit at the end of the summer. I waited in trepidation for a threat or an offer from a distant land. None came. Presumably the tyrant dealt with his son’s problem in a more appropriate way, since the boy passed on the second occasion.

Like most teachers, I received the occasional token gift from a grateful – usually foreign – student but never anything of significant monetary value. No one has ever suggested I might receive a bonus on the successful completion of a student’s course; although the effect of high examination grades at a prestigious university on lifetime earnings is extremely large. And, like most teachers, I would have felt insulted by the proposal if it had been made.

Many teachers would say that such a bonus would not affect their behaviour. I doubt this is true, and it certainly would not have been true of me. If the bonus were large, I would have kept a particular eye on that student’s progress. I would have taught to the tests, ignoring any broader educational objectives.

Still, when I had a medical operation, it did not occur to me to suggest a success fee to the surgeon. If I had, I expect he would have thought I was making a poor joke: and if he had realised I wasn’t joking he would probably have become angry. I do tip taxi drivers and restaurant staff. The law, and the word “gratuity”, imply that the payment is non-contractual, although the tip you give to a New York cab driver is as contractual as the protection money a shopkeeper pays to the Mafia.

At one time, the offer and receipt of a gratuity was a statement of social and economic superiority on the part of the giver, its acceptance a statement of social and economic inferiority on the part of the recipient. To be salaried – to be trusted to do the job for which you had been contracted and paid – was a mark of status. Contractually agreed performance-related pay – commissions and piece work – was widespread in shops and factories, but has now largely been abandoned.

The common outcome was that employees came to care more about the quantity of the product than its quality. The system polarised the conflict between the interests of the organisation and of those who worked in it: the film I’m All Right Jack celebrated this dysfunctional culture. Remuneration was the subject of constant and acrimonious dispute: the fictional Mr Kite of the movie imitated the all too red “Red Robbo” (shop steward Derek Robinson) of British Leyland. All this gave way to the harmonious ethos of the Japanese car plant whose employees celebrated their arrival at work by singing the company song. The verdict of the consumer marketplace favoured the Japanese production system.

Teachers and doctors strongly resist the introduction of a bonus culture: not just because they resent measurement of performance and accountability for their activities – although they do, and with little justification – but because they oppose importing the culture of assembly lines. They fear an environment in which they would be encouraged to focus on narrowly quantifiable objectives at the expense of the underlying needs of clients.

Even if many teachers and doctors are incompetent and lazy, many others are seriously committed to the organisations for which they work, the subjects and specialisations to which they are devoted, and to a broader sense of professional ethics: and it is only people like these who establish the kinds of schools and hospitals we want as parents or patients. In education and medicine, both employees and customers sense that the disadvantages of the systemic consequences of large personalised incentives on values in organisations are likely to outweigh the benefits of such incentives for individual motivation.

Of course, financial services and boardrooms are completely different. Or there again, perhaps they aren’t.

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