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Chopping staff before bonus time

Would you prefer to work somewhere that does the decent thing and removes surplus employees only after paying bonuses? Or should banks cut and run?

Dresdner is the latest to lop staff in advance of payday – the Telegraph reports that the German bank is preparing to forcibly remove 200 staff and that it’s already cut 60 of them from its credit team, just “days before they were to receive news of their annual bonus”.

Dresdner is no stranger to slimming down before bonus day – it made around 125 people redundant last December. Nor is it the only bank to favour protecting the bonus pool over rewarding employees for their efforts in the previous 12 months – Bear Stearns announced a round of investment banking redundancies a few weeks ago and Merrill Lynch and Morgan Stanley may yet unveil new cuts when they announce 4Q results soon.

Clauses in employment contracts typically mean bankers let go before bonuses are paid have no legal recourse to force banks to pay up.

The advantage of the situation is that there are fewer staff to share bonuses between, meaning lucky survivors are better off. The downside is that you could work all year and walk away with no more than your salary. And the upshot is that everyone has a financial incentive to see as many colleagues chopped as possible before bonuses are paid.

Would you rather live and die by the sword when it comes to bonuses? Or is now the time for banks to provide a financial cushion in the form of pro-rated payouts to those who are let go?

Comments (13)

  1. Waddaya mean? Dead wood is just that – dead wood, no point in paying good money for it.

  2. Yes, whaddya mean, the decent thing? In the field, there’s no mercy, and let the survivors feast.

  3. Why should you pay bonuses pro-rated or not to people who have not performed all year? You would pay them a doughnut bonus anyway right? It doesn’t make sense to lop off good staff before bonus time every year, so you can safely assume that those who have been lopped off deserve to go. I have seen some go and I agree with almost all of them.

  4. Does Dresdner STILL have credit and ibanking? Why?

  5. I would tend to disagree with the approach whereby commercial / investment banks obtain the services of ‘unproductive’ staff with a lay-off at the end of the year to protect the bonus pool. Maintaining the unproductive through the year is a contradiction in itself and the inefficiency through the year has already pulled the organization performance and in turn the bouns pool down. Unproductive staff need to be relieved of responsibilities at the earliest and I refuse to believe in the coincidence of organizations laying staff off a week before bonus.

  6. I think it is absurd that people can be led to believe that they are doing well in their jobs and suddenely chopped off before they can their bonuses. Because there is no fairness inb this world, if there was, I would imagine that they can iether tell them on time to pick up their sleeves or be given the choice to leave the company. Cutting them from getting a piece of the pie they think they have worked for is unfair and unscrupulous and this will enventually drive the company down, you can not fool all the people all the time, sooner or later they will catch with the unjust tactics

  7. It’s a matter of carrot and stick. I prefer to work with a humane house that uses the carrot not the stick, and has a well-respected HR team who can support those in genuine difficulty and once in a while weed out some of the unscrupulous and self-serving who exist in every organization and are usually elbowing eachother out of the way to the top.

  8. If you have spent any time in the City you would know that one managers “dead wood” is another mangers “star”. Bleating on about cutting dead wood is only a way of vacuous managers trying to feel better about their decision. It all comes down to sponsorship and popularity. I have seen top performers fizzed and poor performers protected. If people are truely underperforming, cut ’em during probation, if “underperformance” happens after that, then the manager has a morale responsibility to take some of the blame and correct things. Bonus round (outside the quantative Front Office) is a Beauty Contest.

  9. I second City Cynic’s comments, he’s right on track.

  10. Comments from some people are amusing as I am not sure that all of them went through significant downturns. When bad times come, it is naive to believe that only bad people go and good people stay. Decisions are slightly less rationale. During the last downturn, I have seen fantastic people asked to leave and some poor performing people staying because of affiliation. In these circumpstances, only politics count at least after a few rounds of lay-offs. Arrogance tends to dissapear when these things happen and most of the people may not feel so secure after all.
    Good luck as things may turn very bloody as they did in the past.

  11. sack em all

  12. There would be NO advantage of the situation where fewer staff to share bonuses between, meaning lucky survivors are better off.

    Lets not be so gullible – Banks are not going to share unpaid bonuses to remaining staff. The banks will keep the surplus money for themselves.

    This is a scam created by some middle management weasle (scruge) to make you work harder all year in fear!

    Merry Christmas.

  13. City Cynic is bang on the money, couldn’t have said it better myself.

    Dynamic Hedger Reply

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