RESEARCH SKILLS: How affective are bankers bonuses - Essay Example

The financial crisis that struck the world has been blamed on the banker’s bonuses. This is because bankers’ bonuses are seen as wasteful investment of financial institutions. Contrary to these assertions, bankers’ bonuses are helpful to banks since it affects the behaviours of bankers and investors in a positive way. Bankers bonuses is helpful to the financial industry in the following manner; they direct the behaviours of bankers’ and managers, they are good compensation methods to reward good behaviours, they are designed in accordance with the company’s goals and objectives and they help retain talented and skilled managers and employees.

Abraham Maslow’s theory of motivation helps un in understanding human, motivation, personal development, and management training. Finance may be essential in ensuring someone’s ‘Physiological and Biological Needs’, but just slapping a bonus as an additional motivator for someone to work ‘above and beyond,’ perform to a higher standard, and produce outstanding results does not always work. A lot of it depends on the persons ‘interpretation’ of whether they have their basic financial needs met.

And that’s difficult to determine, because financial needs have become elastic for many as an affluent western society constantly pushes and expands on what someone should possess to feel like their ‘basic financial needs’ are met.  Profits in financial institutions are volatile, therefore, there is the need to reward and motivate workers. Giving bonuses to bankers will encourage them to work hard and make wise investment decisions for the bank. Majority of bankers’ prefer taking short-term risks to increase their bonuses as opposed to long term risks that yield large sums of money.

On the contrary, bankers’ bonuses need to be regulated to decrease the risks they can create to the banking sector. Banker’s bonuses are paid to the