Profit Share Bonus and Salary - An Unhappy Evolution
The terms Profit Share and Bonus seem to be poorly understood and randomly interchanged.
Profit Share simply does not happen here anymore. It once did in one context of the word but was latterly distorted as a means to incentivize the decision makers. There is no possible interpretation of “sharing” in the way it is both decided and distributed. “Profit Allocation” might be more correct.
Bonuses however are given despite alleged “Profit Sharing”. These are contrived in various ways but applicable only to the loftier title holders.
The Bonus culture here is not dissimilar to the bonus culture that almost brought the world’s financial system to a complete meltdown. By this I mean that individual decision makers are driven to make decisions and take risks that enhance their year by year bonus at the expense of caution with regard to what their actions may result in for the company, particularly in the longer term which is generally of more interest to some stakeholders who often have their whole family dependent on these decisions for this much longer period. I assume because the myopic mid level decision makers anticipate having their bonus safely banked outside the country by the time the consequences become apparent.
The shorter term is covered by various methods of devolving responsibility or putting in place methods of deniability. There are many examples of this ranging from FRMS to a plethora of publications distributed electronically that allow the publishers to claim that advice and instruction was adequately given.
However, I believe that in covering their own particular area they fail to appreciate the others who are covering theirs with the result that the sheer volume received would be argued by any competent lawyer as inadequate, at times contradictory, and too prolific for anyone to reasonably absorb. Furthermore issues as to what is absolutely required, how that is differentiated from the deluge of information and the time allocated to dealing with this and the many other requirements of the organization is vague to say the least.
Like many corporations the focus is solely on profits and the managers are so indoctrinated that their mantra and behavior is entirely absorbed by this. The other issues that should also be core to any corporation like stakeholder concerns and external perception are being obscured. Ultimately this neglect has to come home to roost. Hence the word corporation now has a sinister connotation. It was never meant to be this way, rather a collaboration of people and skills brought together for the greater good of all.
In the pursuit of the greater profit, limits are continually pushed and often unreasonably so. Sadly one area of stretched limits is often not known or accounted for by those seeking to extend another limit. This results in all areas approaching limits. An analogy in the technical area of the industry would be “coffin corner”, a confluence of limits that is aptly named. I wonder if the powers that be have considered where they may be with the company as a whole, despite making cases and justifying the individual areas where they have whittled away to the narrowest of margins and used limits as targets.
For a company focused on data and obsessed with statistics they are very selective as to the data and statistics that they collect. It is seldom objective rather more in line with a desire to justify or support a point of view, often with the thinly veiled intention of pandering to the bonus culture. Pure logical reasoning and the lack of adequate response to queries shows the statistics, the methodology of collection and the conclusions drawn, to be flawed and definitely not up for debate. There are so many examples of this that illustration would require a thesis.
Profit share or Bonus, whatever you prefer to call these two animals will be whatever is decided by those who govern most aspects of your life. Nonetheless don’t search for rhyme, reason or any measure of fair play. That is a fool’s errand.
Perhaps more relevant will be the salary review. Data shows that here Real Salaries, in effect their purchase power, have continually diminished for the past decade and a half. A year by year analysis of the increases on the salary scale which has 30 steps shows that at any chosen step the salary has fallen well behind the published inflation and the cost of various basic commodities. An illustration would be the price of oil which has quadrupled over the time in question whereas any particular step has not even doubled. It’s poignant as the price of oil reflects in many areas and is often cited to us by our leaders as a major cause of concern! As if we need reminding!
I just wish they had been as concerned about this effect on us, as they were about its effect on the business. At least acknowledgement would be respected. Clearly the stakeholder is worth much less than the shareholder and is almost resented by the bonus seeker. QED.