THE DISADVANTAGES OF EXECUTIVE BONUSES

Reading related advantages disadvantages essay: “No more executive bonuses”; 

It has long been assumed that the individual who seeks to take the rudder and sail the ship shoulders the most responsibility, takes the biggest risks to himself, feels overwhelmed by all those depending on him and thus requires some additional compensation. The intrepid sailor being referred to is the CEO and the ship he is steering through the stormy seas is the company. The result in the second half of the previous century and the current one has been the custom of executive bonuses. Far from guaranteeing the future of the company and the welfare of all concerned, this system has produced a lot of disadvantages.

The most important disadvantages concern the chief executives themselves. Knowing that they get bonuses if they fail, in the form of golden parachutes, and if they only appear to succeed like in the case of mergers, the executives shift their attention away from what is good for the company to lining their own pockets. The average idealist is hardly going to get involved in such a racket so the rakes, the crooks and the sleazy businessmen take on the position. It is very hard to blame these executives for taking unnecessary risks as they get paid whatever they do but with the wrong man in charge, the company is doomed to suffer in the long run.

The second group of disadvantages concerns the rest of the staff of the company; those who don’t get the bonuses and look on. This silent majority, Nietzsche’s herd, watch ‘the rulers’ and quickly lose any loyalty they feel for them and the company. This kind of an attitude bodes ill for a company as very little can be achieved in business without cooperative team work. It is working together, sharing ideas and discussing them which produce innovative thoughts. With the passion gone, the workers go about their daily jobs and probably cut corners while working. The class structure created in the company is, therefore, very bad for business.

To sum up, although executive bonuses were created to further companies and get real, engaged leaders to head the companies, the system has backfired. The current system has done quite the reverse and brought the wrong people to leadership positions and undermined the staff. Future success for companies can only be guaranteed with managers with leadership potential.

Provided by: The Oracle