Goldman Sachs is paying impressively large bonuses, but could they be larger? What are the chances of negotiating more money once bonuses have been announced?
“In 20 years at Goldman, I never once saw anyone renegotiate their bonus after it had been announced – ever,” says one ex-head of department. “Bonuses are decided in October and it’s not done on the back of an envelope – it’s a very long and thorough process.”
Renegotiating a bonus at this stage of the game is hampered by the audit cycle. “Bonuses are announced around December 15th and the end of the financial year is November 29th,” says the ex-head. “The accounts are now closed.”
It doesn’t look too promising for anyone eyeing Goldman’s increased profits. Although average compensation at the US bank is set to be 40% higher than last year, at US$620k (314k) per employee, the ratio of compensation to revenues for 2006 is at an all-time low. If last year’s ratio still held, each employee would receive an additional US$40k.
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Never say never, however. The head of HR at one bulge-bracket bank says the firm will occasionally bump up bonuses after numbers have been announced. But this has more to do with remedying errors than appeasing disgruntled employees.
“We may have pro-rated the bonus based on the wrong hire date,” he says. “Or a manager might realise they left a major revenue element out of bonus calculations. In those situations we can give an advance on next year’s bonus, but it’s really very rare. It’s not like GCSEs where you can ask for a re-mark.”
Headhunters are more positive about the prospect of renegotiating a bonus. “If you’re a top performer, the best thing to do is to say you’ve got another offer on the table,” says Zaheer Ibrahim at search firm Kennedy Associates.
But this is a dangerous game – a bank that calls your bluff and asks you to hand in your notice before bonuses are paid out may be able to avoid paying anything at all.