SG
We’ve seen the headlines about Asia fighting hard to keep its top banking talent. Yet at the same time we hear incessant warnings that bonus pools will shrink. This begs the question: how can firms retain their star performers during these cost-conscious times?
Money remains the perennial carrot it seems.CNN reported last week that the majority of bankers on Wall Street will receive bonuses that are about 30 to 40 per cent smaller than last year, with the payments of overachievers staying on par or only dropping slightly – effectively widening the industry’s compensation gap.
Such a sharp differential is likely to be echoed in Asia come bonus season, say recruiters we spoke to. Annie Yap, managing director, AYP Associates, says: “Asia generally follows the same trends in Wall Street and London. Paying bonuses in this manner makes sense because the top performers are a select few who can’t be easily replaced.”
Nevertheless, even the best-performing bankers may experience diminishing returns. Front-office employees like private bankers are likely to receive skinnier payments even as they continue to be sought after. “Last year some professionals got bonuses of seven to eight months; the figure this year is likely to be a lot smaller – about two to three months,” says Yap. However, that’s still a better scenario then certain back-office and HR roles, which will receive doughnut bonuses, she adds.
Restless bankers expected
A potent mix of money and discontent is likely to lead to considerable movement post-payouts. Gareth Fish, managing director, First Executive Search, foresees stiff competition as firms vie for top talent this year.
“The elite bankers will want to subsidise any potential decrease in bonus as they best can, and while the same could be said for the average banker, most firms will be keen on acquiring the best people first.” Hence, he anticipates firms increasing base salaries as an incentive to attract these candidates.
That said, bonuses aren’t the be all and end all of retaining talent in Asia. Banks rely on other strategies such as shares, promotion opportunities and carer development. Fish says: “Yes, bonuses are important. However, a lot of banks I speak to also realise the need to offer more than just a cheque at the end of the year, it’s about the complete package. The best talent also needs some sense of security during these times.”
Pay differentiation should be accepted as the norm. Poor performers have been rewarded for far too long, and mostly because managers don’t know how to (or don’t want to) have the tough conversation. Base salaries have gone up for most people, so there should be no complaints. You want a big bonus? Then do some work!