Swedish bosses slate bonuses

Four out of five Swedish bosses say their companies’ bonus systems are faulty. Many complain that bonuses reward short-term gains rather than their firms’ long-term interests, according to a new survey.

The survey of the CEOs of 320 companies with more than 500 employees was carried out by trade union group Unionen. Almost half said that bonuses encouraged people to focus on short-term gains:

“A very small proportion thought they were well designed to achieve goals that were 5-10 years in the future,” Unionen’s chairwoman Cecilia Fahlberg wrote in an article for Dagens Nyheter on Monday.

Bonuses can lead to “the company’s overall development suffering, when a few key indicators have to look as good as possible when the annual review comes around,” she wrote.

Four out of five of the companies surveyed had bonus systems.

Only one in twenty company bosses would have turned down their jobs if they hadn’t included a bonus element. Seven out of ten said they would have taken the job even if they had been offered a fixed salary at market rates. One in ten said they would look for a new job if their current bonus system was replaced with a fixed salary.

Most of those surveyed said they did not believe that bonuses were an effective form of incentive. They viewed a stimulating job, influence over the company’s direction and pride at doing an important job as incentives that “far surpass the possibility of gaining status and high remuneration,” according to the survey.

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