Bonuses have had a bad press recently – and now the government is pushing banks to limit payouts in a way previously never seen. But before this trend goes any further, it needs to be said clearly that we can’t turn back the clock to executive reward systems driven solely by job security, career development and “fair pay”.

Incentivising people, in financial institutions or elsewhere, just doesn’t work that way any more, whether we like it or not. Meeting the expectations of investors for constant growth means challenging management continually to strive for more. Money – and therefore bonuses – will always be a big part of that equation.

In my view, regulation won’t work. The statutory obligation to report on remuneration systems in annual reports has made things worse, not better – they are unintelligible and have supported a ratcheting up of senior executive pay. Relying on management to “do the right thing” is naive.

So that leaves us with company boards. The role of the chairman and other non-executives in controlling remuneration is critical. But in the past, when it came to the governance of remuneration, many boards missed the mark.

Challenging management isn’t easy, especially when you’re in an upswing. Board remuneration committees, heavily dependent on the consultants who created the complexity in the first place, face a very difficult task and deserve some sympathy. But sorting out the mess means accepting that what’s been done to date just isn’t good enough.

What’s been missed is the need for active, organisation-wide remuneration governance. Board oversight has focused on the pay of the top few, and ignored trickier questions such as alignment of reward with culture, risk appetite, strategy and decision-making.

There’s also been too much focus on the upside – how to drive growth and profits – and not enough on the downside – how to discourage the wrong sort of behaviour and risk-taking. The linkages between reward, risk-taking and corporate strategy have been uncoupled, and must be linked up again.

Let’s stop kidding ourselves that we can go back in time. Instead, we need to make sure the systems and culture we’re largely stuck with are properly kept in check by those we’ve entrusted with the task: boards and their remuneration committees.