Neil Woodford scraps 'largely ineffective' employee bonuses to discourage 'wrong behaviours'

Top Fund Manager Neil Woodford has decided to scrap bonuses, arguing that they do not correlate with performance of investment funds.

Woodford Investment Management will put all staff on a flat salary this year – which has been increased in light of terminating bonuses - to discourage “short-term” decision making, improve performance and focus on long-term returns.

Contrary to beliefs that run deep in the finance sector that bonuses are essential to motivate employees, Woodford dismisses them as “largely ineffective” which can lead to “wrong behaviours” – The Guardian reports.

Craig Newman, Chief Executive of Woodford Investment Management, comments: “While bonuses are an established feature of the financial sector, Neil and I wanted to take the opportunity to do something different that supports the firm’s culture and ethos of challenging the status quo.