Network Rail points the way

Network Rail’s chairman, Richard Parry-Jones, has just said something which is of such significance that I wonder if it will mark the change of mood in the business sector. Network Rail has taken the sensible step of scrapping its bonus structure and replacing it with a system that allows for a maximum top up of just 20 per cent, compared with a staggering 160 per cent.

Moreover, Mr Parry-Jones has suggested that earning a decent executive salary should be sufficient reason to get out of bed every morning and do the best possible job. He said, in announcing the change, ‘We are confident that the unique challenge of having the executive responsibility to decide how to most effectively run Britain’s railway infrastructure is a huge motivation in itself for the kind of leaders that we need’.

Actually it is a rather banal, self-evident statement. Yet, in the context of 2014 and the crazy bonus system of most corporates, which borders on a kind of licensed theft of shareholders, this is almost revolutionary. It has taken the public sector, and the railways, to point the way for the banks and other industries.

In The Observer coverage of the story, there is a brilliant anecdote. It quotes the former boss of Barclays, Antony Jenkins, who recalls¬† discussion about paying an enormous bonus to some young individual working for the bank. He wrote that his predecessor was told that ‘the very survival of our 200 year old firm was dependent on the continued employment’ of this fellow. He was offered a partnership, refused it and left. A few years later, Jenkins discussed the matter with his senior management and ‘none of us, myself included, could remember his name’.¬† That so illustrates all the cant about the need for these massive bonuses which are doing so much to wreck our economy and the companies who pay them.

It is great that the railways have learnt – more about this in the next issue of Rail.






  • IsambardBrunel

    There seems to be an assumption here that all bonuses are bad. My experience is that bonuses work, they give people additional motivation to work late when there are problems at work etc & help boost morale. Would be interesting to see some stats on this from other industries. It’s not bonuses per-se that are the problem it is the size of the bonus and the basic salary underpinning it that are the problem. If you ever did become mayor you might learn the hard way that there is a place for bonuses to keep London running.

  • Greg Tingey

    Depends on the bonus -as Isambard has said.
    A lot of companies used to pay everyone a bonus, if the company did well ( I used to work for one)
    There’s a difference however, between that sort of thing & the ridiculous “rewrds” given to people who are already well-paid, whilst the rest sweat away ….

  • Ben Oldfield

    About 2 years ago an editorial in the New Scienist discussed the scientific evidence on the effectiveness of bonuses. The evidence was that bonuses worked for simple repetive work but for proffessional jobs they ere counterproductive. In fact the bigger the bonus the worse the effect was with more and more time spent on increaseing the bonus than on doing the job.

  • RapidAssistant

    Parry-Jones is a good bloke. A slight irony is that it has taken a “car guy” (Parry-Jones was an ace engineer at Ford) to recognize the errors of the railway industry.

  • peter

    Parry-Jones is probably the best senior manager they have recruited in recent times, perhaps ever.

    Let’s just hope that his colleagues are paying attention.