In light of the ongo­ing debate with regards to the finan­cial sector’s so-called ‘bonus cul­ture’, econ­o­mist John Kay looks briefly at the his­tory of the bonus and why the idea of a ‘bonus cul­ture’ is a “poor joke” (using the exam­ple of teacher and doc­tor bonuses).

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. […]

Teach­ers and doc­tors strongly resist the intro­duc­tion of a bonus cul­ture: not just because they resent mea­sure­ment of per­for­mance and account­abil­ity for their activ­i­ties […] 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.