City businesses more focused on short term profits than long term

A report that has recently been issued by the government is showing that those in the city have a focus on short-term profits which means that the incentives are poorly aligned with the long-term vision of the business. Prof John Kay is from the London School of Economics and he has said that the business world has a hyperactive focus on delivering instant reward rather than long-term benefits.

In the report it is stated that incentives in the city of simply gotten out of control and a breakdown in trust has taken place and the inequality of returns has increased massively. In an interview with the Today Programme on the BBC he commented, “In the last decade many people in the financial sector is made a great deal of money, but those who have been investing in it and saving funds, have done badly.”

The bonus culture that exists for driving short-term profits has also caused a great deal of antagonism to those who work in the city. There are numerous scandals that have occurred over huge bonuses for poor performance and this is something that is significantly negatively affected the image of city workers.

The report stated, “These people are doing very demanding jobs but so do a great many other professionals. The idea that a judge, a member of the Cabinet, or a scientist would be rewarded through a bonus such as those seen in the city would seem bizarre. The idea that they would perform their duties better if there were massive financial incentives would seem strange to them. All of this shows that the incentives in the city need to be altered dramatically.”