Banking world seems to apply double moral standards to bonuses


David De CremerBankers who have been awarded large bonuses are regarded by the banking sector as competent and above reproach. In contrast, bankers who, beforehand, express a desire to achieve high bonuses are seen as competent, but also as less morally upstanding. In other words, the banking world appears to use double standards in the matter of bankers’ bonuses.

This is the picture that emerges from a recent study by the <link erim research centres behavioural_ethics _blank>Erasmus Centre of Behavioural Ethics. The study examined whether bankers had changed their attitudes towards bonuses in the wake of recent massive public condemnation of this type of financial reward system.

Recently, the knives were out for bankers once again, after the German Hypo Real Estate (HRE) bank paid out lavish bonuses before turning to the government for renewed financial support. In the Netherlands, public attention was refocused on bonuses when the Dutch parliament expressed its disproval of the use of bonus systems.

The study was led by <link people david-de-cremer _self>David De Cremer (Professor of Behavioural Business Ethics and Scientific Director of the Erasmus Centre of Behavioural Ethics) and Chris Reinders Folmer (postdoctoral researcher). They asked 94 Dutch bankers to give their opinion of two scenarios; a hardworking banker who had received a large bonus, and an identical banker who had not yet received a bonus, but had explicitly expressed a desire to earn a large bonus. So the two bankers described were in essence the same; one banker had already been given his bonus, the other had only articulated his wish to earn one. Participants gave their verdicts on the two bankers in terms of competency, moral standing and reliability.

The study’s findings showed the banker achieving a large bonus was considered competent, morally sound and reliable. The second banker, who admitted his objective of earning a large bonus, was deemed equally competent but less morally upstanding and less dependable than the colleague who had already received his reward. This outcome suggests the Dutch banking sector has taken heed of public criticism of bonuses and now finds that openly striving for a lavish bonus is somewhat objectionable. At the same time, these same bankers have no problem with earning large bonuses per se and thus appear to apply double standards in this sense.

More information

<link people david-de-cremer _self>David de Cremer    
Chris Reinders Folmer      
<link erim research centres behavioural_ethics _blank>Erasmus Centre of Behavioural Ethics