Employee motivation system was one of the principle reasons for the problems faced by our Banks in my opinion.
They introduced a carrot and stick culture which destroyed employee morale to such an extent that many had to recruit new employees to in order to change the culture. A culture which led directly to the enormous losses being incurred today.
Employee motivation was predicated on a target and bonus culture that led to narrow and unacceptable behaviour often motivated by greed and fear – the fear of failing to hit the target. This led to a lowering of risk management standards which in turn led to increased losses i.e. quantity not quality was the order of the day as the Banks fought each other to misallocate their capital.
I opted out of this culture in 2001. My decision, whilst difficult at the time, has been wholly vindicated by subsequent events in Banking and the Financial Crash of 2008 which is not over yet.
This insightful video explains why, in most circumstances, the target and bonus culture does not work and what to do about it:
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