‘”nce upon a time there was a company that sold water for drinking, and cooking, and washing, and scrubbing. It also took the dirty water away and made sure the 16 million men, women, and children always had a trusty service. Good old company

One day they said they needed really clever people to manage all that work. They called them CEO and directors. To make sure they got the very best clever people to be a CEO or director they said they had to give them two piles of money. The first pile was for doing the job. The second pile was for doing it in a super-duper way. They called that second pile a ‘bonus.’ Good old bonus.

So did every CEO and director and 16 million happy men, women, and children live happily ever after?

No, because the company who sold the water and took the dirty water away ran out of money.

Oh! No!...but how could that be? I thought you said they got the very best clever people and paid them two piles of money?

Clever people aren’t always the right people. No matter how much you pay them. You see the right people know how to deliver water and take it away. The clever people know how to make money and take it away. Good old right people.”

The above fairy story is written in primary school level understanding and therefore suitable for many of the current water company (wc) boardrooms. In this case it applies to Thames Water but should be a sanity check for others.

To prove the more adult rationale or more appropriately, irrationale, of the fairy story you need look no further than an extract from a very recent internal report written by the Chief Risk and Compliance Officer at Thames Water. Before quoting, a couple of quick points:

Point one. For the past two years Thames Water has been at the centre of worldwide press, media, and political attention as a result of its parlous financial situation – teetering as it is on insolvency.

Point two. The Labour Government has introduced new powers for Ofwat (the water industry economic regulator) to ban boardroom bonuses, including a Water Bill, currently passing through Parliament.

With these points in mind you may have been forgiven for thinking that some humility may be swirling around the higher echelons of Thames HQ. Not a bit of it. Here is the Thames Water Report extract:

“ We have made it very clear to Ofwat that, if it proceeds with its proposals (re bonus payments), it is highly likely that base pay will need to be increased to compensate for the loss of performance-related pay plans. We also highlight the impact the proposals will have on attracting, retaining and motivating critically needed talent across the sector, and the importance of this for attracting investment.”

Couldn’t make it up, could you? Which takes us back to the fairy story. This is surely the common-sense thinking of the Mad Hatter but this time in Alice in Waterland. Or perhaps the inhabited water company boardrooms of Wonderland.

Attracting the right people, not the clever people