This year’s bonus round will be…complicated. Revenues haven’t been great and certain areas (FX) have been hit by mammoth fines. European banks globally and U.S. banks in London are constrained by the EU’s bonus cap. In London, at least, the era of mega-bonuses for senior staff is probably over.
Nonetheless, banks like UBS and Morgan Stanley seem to be hiking pay for 2014. And the watchword this year – as in the past few years, is ‘differentiation’. In other words, if you perform well you’ll get some sort of bonus. If you don’t, you’ll join the ranks of the pejoratively-named ‘zombies’ who receive nothing at all.
We asked a selection of current and ex-bankers (and one psychologist) for advice on bonus-maximization. This is what they said.
1. Don’t think personally – maximizing your bonus nowadays is about the team
“Bonuses used to be much more individualistic,” says an equities salesman at a U.S. bank in London. “Now they’re awarded to the team, and you always need to think of your bonus in that context. There’s no way you can maximize your bonus as an individual now – and if you try to, it won’t be sustainable.”
2. Don’t leave it until the last minute
You’re not going to achieve a maximal bonus if you wait until your actual bonus meeting to make your case. A big bonus is the result of a campaign of self-promotion/assertion that lasts the whole year. Share on twitter
“I went into a meeting with my new boss and he’d ranked me as 3 out of 5 for client development,” says one equities saleswoman. “This was despite the fact that I managed four out of ten of our top accounts and had been ranked as 1 by each of those clients. When I pointed this out to him, he said he didn’t know. He was managing 30 people and everyone else had emailed him details of their achievements. I’d just assumed he’d be aware of mine.”
“You need to make sure that your managers are kept aware of what you do throughout the year,” says a former MD in structured credit. “It’s no good trying to demonstrate your value just before bonus time.”
Decisions about bonus pools are typically made from September onwards. In other words, if you leave your bonus campaign until November, it will be too late.
3. Do think about weighting some big achievements in the second half of the year
“Your manager is far more likely to remember your achievements in the third and fourth quarters than in the first and second quarters,” points out the former structured credit MD. “Your near-term achievements will always stand out when people are deciding how much to pay you.”
4. Don’t threaten to leave – unless you know they can’t afford to lose you
Threatening to quit has traditionally been a favourite negotiating strategy for risk-addicted bankers. However, now that banks are trying to dump expensive managing directors – preferably without paying their redundancy packages, they’d be happy for most senior bankers to walk away on their own accords.
“Threatening to quit is a very high risk strategy,” says the recently ex-MD. “It works if you’re a very strong performer, but it can backfire if you’re not.”
5. Do visit the head office in the third quarter
If you want to improve your visibility before bonus time, it helps to visit a company’s head office in the third quarter, says one Paris-based M&A banker. “You need to go a few weeks before the date that bonuses are allocated,” he advises.
6. Don’t become commoditized
Banking jobs are increasingly commoditized, says the equities salesman. There’s a perception that staff are dispensable and that there’s no real need to pay any particular individual as everyone’s replaceable. If you want to maximize your bonus, you’ll need to negate this. “Every day, you need to make the extra effort for your clients so that you’re different,” he says. “You need to be insightful and inspirational – you need to stand out.”
7. Do talk about all the revenues you’ll be generating in 2015
Bonuses aren’t just rewards for past performance, they’re also retention mechanisms based upon anticipated future performance. “Talk about the future and your expected contribution in 2015,” says the MD. “If managers are convinced that someone with your profile will have a particular opportunity to generate revenues next year, they will see you as valuable,”
8. Don’t be crass in your attempts at self-promotion
Self-promotion is a difficult game. Get it wrong and you’ll be seen as self-aggrandizing and aggressive – especially if you’re a woman, in whom such traits are judged far more harshly than men.
“You need to bookmark your achievements,” says psychologist and expert on office politics, Oliver James. “The way you do so requires astuteness,” he adds. “There’s no single formula for success, it’s all about the personality of the person you’re dealing with.” James says you can be humorous, direct, or opaque (in such a way that it’s nonetheless clear what your intention is) in the way you flag up how wonderful you are. It all depends upon the communication style of your manager.
9. Do try this subtle psychological method of manipulating managers’ perceptions of you
Finally, one M&A junior relates a possibly apocryphal tale of bonus maximization from Morgan Stanley. “Most analysts don’t wear a tie because they’re always in the office working on spreadsheets,” he says. “But there was this one guy who did. He said that the tie meant his bonus was regularly 10% higher than everyone else's. Share on twitter Senior managers saw him and assumed he was invited to a lot of client meetings because he was always smartly dressed. – And that made them think he must be pretty good.”