Not all managing directors (MDs) in investment banks are created alike. Sure, Goldman Sachs has its partners and Nomura International has its senior MDs, but at most banks the term MD is just a catch-all acronym for someone who's somewhere near the top of the pile. It doesn't reflect the fact that within the MD class there are huge gradations in importance, internal popularity and likely career longevity.
Fortunately, Stephane Rambossen, managing partner at search firm Veni Partners has come up with a method of gauging an MD's importance, based around how much they're paid. Rambossen doesn't use the exact taxonomy from our headline, but he uses something similar, His categorization is as follows:
Top performing MDs:
Earn $1m or less.
If money is the object (which, let's face it, it probably is), you will want to be a top performing MD. Rambossen says MDs in this category are often, but not necessarily, heads of large business areas. They are also astute players of internal politics who are buddies with senior management. Rambossen says more senior MDs fall into this final category now than in the past. "Frankly there is less money to go around now. As a result there is a clear delineation between top performers and those in teams who are more marginal. Also anyone who says pay is disconnected from politics is not being entirely truthful."
By comparison, robust MDs are "good quality" MDs who are head of a small group or bringing in revenues. And bottom performing MDs are people who've only recently been promoted and still need to prove themselves.
MDs apparent good luck runs contrary to claims that they're all getting paid less as pay is reallocated to ambitious (and cheap) junior bankers. Although MDs have borne the brunt of recent job cuts, Alex Tracey at Kinvara Search Partners, says the senior bankers left behind are being well remunerated. "In their defence they would say they that regulatory issues are taking more of their time. They’re still making money in a more challenging environment and are more personally culpable for anything that goes wrong on the desk, “ he says.
Another headhunter, who declined to be named, said there are three things which determine your pay as an MD in an investment bank: "You need to be in business that makes money. You need to have made money. And you need to have played the political game so that people see you in a favourable light."