RBS employs warped logic to defend £1bn bonuses

Image: Rex Features

The largely tax-payer owned Royal Bank of Scotland has paid out £1bn in bonuses to reward its staff for achieving an impressive £2bn loss in 2011. Hurrah! Guru thinks it’s astonishing that people who can convince their bosses to award them a bonus in a climate of spectacular business failure cannot actually make a profit in the first place.

RBS chief executive Stephen Hester defended the bonuses, saying that not paying bonuses would give the message “come here, have a harder job and earn less”, adding that “we will not accomplish our goals if that is the message”.

It can’t just be Guru who finds this a slightly confusing defence of bonuses. Isn’t a bonus meant to reward good performance? Isn’t it meant to encourage talented, hard-working employees by giving them a stake in any success they help to achieve? Isn’t it perverse to defend bonuses rewarding poor performance by saying that they’re necessary to attract staff not already employed at the company? Isn’t the message then: come here and get massive bonuses even when you don’t perform well? Doesn’t that then undermine the entire reason for paying bonuses in the first place?

Stephen Hester gets paid about £1.2m a year to decide that the answer to all these questions is no.