UK
With banks’ pay systems being revised away from bonuses and towards salaries, organizations might take this opportunity to reduce overall compensation bills.
Alan Johnson, doyen of Wall Street pay consultants and advisor to numerous banks, says he’s advising his clients that the increased certainty of a salary means that every $1 of base pay is equivalent to $2 of bonus.
With places like BofA and UBS said to be increasing salaries by as much as 70%, Johnson’s recommendations mean bonuses could fall substantially forever.
“I’ve been advising Wall Street to increase base salaries for the past 11 years,” Johnson says. “A lot of these firms haven’t increased their base pay for 20 years. Managing directors were being paid $200k salaries in 1986 and bonuses were much lower then.”
Would you rather have the certainty of a reasonably large salary than the uncertainty of an unfeasibly large bonus? Unburden yourself below.
Personally, I’d far rather be given the opportunity to earn big bonuses over a few years of hard work than be a wage slave for the next 20 years.
I LOVE my job, so whay would I want to stop working??
I would rather get the decent bonus than swap 2 for 1. If you were trying to sell that as an investment, who do you think would buy that sort of PV?
just wait a few years. everything will be back at the level it was 2 years ago – it always is.
and for those who say that this is a seismic shift in the industry and things are changing for good, dream on. greed will always win the upper hand, maybe it takes 2 years longer this time but that is only a problem for the dweeds that drop out of the race before things pick up again, and nobody cares about losers, right!? Not even in these darkest of days.
“everything will be back at the level it was 2 years ago – it always is.”
I invite you to read any book on financial history – you’ll see just how silly this statement is!
The industrial revolution created markets, they were buoyed by war spending in 1914-18 to create the roaring ’20s. What followed was a DECADE of poverty. This situation improved with war spending — but many European countries still had rationing through the 1950s.
The markets shifted fundamentally in the 70s with the demise of Bretton-Woods, and in the 80s with derivatives and the 90s with credit derivatives.
If you think it cannot happen today… see Japan’s financial situation over the last 20 years or so.
This is not some stock market crash or bubble like ’87 or 2001. This is an economic catastrophe that politicians are trying to “fix” and that the public is taking a serious interest in. This means the “fix” has to be suitable for public consumption… and it has to look/sound big enough to create real change.
Who knows: we might move back to 3-6-3 banking…!
D, I take your point. But are you in banking. If so, why haven’t you left? If not, what is the next big thing?
Observer, I am in banking services…
As for predicting the next big thing: who knows!? Leading areas at the moment seem diverse: from debt counciling to environmentally friendly energy/products. The current “bust” may also be an opportunity to better apply some of the recent technological and information systems advances resulting from the bubble – internet networking, computing power, etc. in a variety of “hard” or “physical” fields (e.g., manufacturing, mining, …)
Its also possible that the banking sector will bounce back in some new, fabulous incarnation. I just don’t agree that it “always has” done so — or that it “must” do so.
‘Greed is good. Greed works.’
No matter how fast the market is shrinking – the number of participants is shrinking faster. Look at UBS today. Oligopolies will lead to higher prices – cake gets bigger, more juicy. Look at GS earlier this week. Maybe deferals will tweak the bonus scheme. The pot itself still is the golden one.
i think people forget at the end of the day people determine their own paths. Those people who desperately seeking lots of cash for little effort, end up in the back office.
Those people who work hard and are creative in their approach for success, are the guys that make the big bucks.
Their will also be people making loads of money even when they don’t derserve it, but that’s Life. If an individual is motivated by bonus then so be it and if an individual is motivated by huge salary, so be it. In the really world nobody cares…………………
I have seen guys earning 150k a year jealous with other people earning less than 50k.
There is more to life than the pay packet……
Having expereience in multiple sector, I am not surprise to see consultants advising on salary and bonus, which is nonething more any guess work, to which they are reward by their fees. I think all sector must look at the reason and purpose for having a consultant on board, as the business is driven by it’s board member. In today’s business enviroment to much reliance is put into consultant work which could be influenced by a or group of director who is looking for a specific result. At the end of the day consultants only service them selves in maxmimize their pay reward, irrespective of the consequences for the business years down the line, why so they can came back a provide another guesswork with massive fees. At the end of the day the directors are accountable to it’s shareholders and must view consultancy work clearfully. It would be interesting to know how much consultancy work directly impact a the business Goals. Vision and the cost of it. I would not be surpised if it is the the second largest direct cost of a business after Salary/Wages. Another interest piont, how many consultants are ex-employee to the sector? What goes around cames around, it’s all about greed!
Bankers: say goodbye to bonuses… a good salary and the bonus goes to the stock holder. You guys have just been so greedy…
Has anyone given back their bonus for the last 5 lousy banking years?
Cant name one and can name a bunch that after sinking the ship walked off with a fat golden handshake.
Bonus’ should be made illegal.