The question of bonuses has been around since 1890.  It became popularised through the term ‘agency theory’, used from the 1920s onwards. The term described how an individual could incentivise an agent to act in the best interests of the investor – and recoup maximum profits. The assumption was, the more an agent was paid, the more incentivised they would be.
Where the task is obvious and the target clear, bonuses will work. However, when it comes to safety, this requires the individual to be aware of contingencies. For example, are they conscious of where the infrastructure is getting weak, but such weakness is not yet obvious and may not require immediate attention? Safety is a philosophy, a way of life. How can a bonus deal with that?
It is therefore concerning that BP is considering paying bonuses for safety when that is a [...]

In mature markets, where growth is slow and costs are managed to the extreme, what differentiates one company from another? Many organisations and managers have actually become rather indistinguishable in that they uniformly pay attention to teamwork and quality, reduce costs where they can (often through outsourcing) and get rid of poorly performing executives—these activities make for good organisations. But then what give some companies a leading edge over others? It comes down two factors.
The first is brand—a strong brand reputation makes people believe that a Mercedes is better than a Ford, and can help a company even if this belief proves not to be true (e.g. if Mercedes outsourced some faulty components and their quality did decline below the perceived quality of Ford).
The other differentiating factor is people. Better led teams will be more motivated; when there’s a single company mentality, especially among [...]