While 2016 certainly had its bright spots, there are going to be a lot of lousy bonuses in particular areas across the financial services industry. If you get a small bonus or none at all, ask yourself, is it bad because you are terrible at your job and you didn’t perform well compared to your peers? Or is it because your company didn’t perform well even though you did great?
At the end of last year, Wall Street compensation consulting firm Johnson Associates forecasted that 2016 bonuses would range from flat to down 20%. An Options Group survey of the top 25% of performers in each sector found that fixed income traders expected increases of 5% on their bonuses last year, but equities professionals and investment bankers expected reductions of 5% and 4% respectively.
Of course, a lot depends on how well the firm you work for did overall. While banks are not obligated to reveal the bonuses they pay in the U.S., we do have intel into bankers’ bonuses in the City of London, plus we have estimates for Wall Street bonuses based on 2016 results. For example, the bonus outlook is good at UBS and Perella Weinberg, but poor at Credit Suisse and Deutsche Bank, whereas it is moderate at other big names.
Here are several potential factors to consider.
If you’re a recipient of a measly-to-non-existent bonus, ask yourself: “Is it me? Is it the sector of the industry I’m in now? Or is it my employer?”
“It shouldn’t be hard to figure out – if your company did really, really well, your group or division did well, and your peers got a good bonus but you didn’t, then it’s your performance that was lacking,” said Jeanne Branthover, a managing partner at DHR International, a recruitment firm. “You have two choices, leave or stay, but if you stay and they think you’re a bad performer and that’s why you didn’t get a good bonus, then maybe it’s better to leave, work harder and improve your performance to get a better bonus next year.
“If it’s company-driven and the part of the industry you’re in didn’t do well and no one else at the company got a good bonus, and if other companies in your industry did better, then could be worth making a move, but if the whole industry struggled, then there’s no sense in moving for same base salary,” she said. “Bonuses used to be part of your overall compensation, but now you have to do something better than your regular job to get a bonus."
There is a reality that if you’re not getting a good bonus, it’s a statement that you’re not doing the work at the level the firm is expecting, said Pam Schilling, associate professor of strategy and finance at North Park University and managing director/founder of career advisory services at the MBA Exchange.
“Especially as a junior person, you really have to look at your own performance,” she said. “It could be you’re not doing enough – you’re doing just fine with what’s assigned to you, but you’re not doing anything extra, which is a realization that is difficult to have.
Related to that, it could be that those around you who are making those decisions do not have enough information about the job you’re doing, or they’re seeing certain things and they’re not connecting it to your work, Schilling said.
“If there’s some sort of knowledge gap in your relationship with your manager that’s lead to your contributions going unappreciated, you might not be doing the appropriate amount of self-promotion – you’re not being assertive enough,” she said. “It may be that people you work for legitimately don’t know what you’re doing.”
Another possibility: You could be on a desk or working in an area of the business that is underperforming. At the macro level, it could be broader economic conditions causing your firm or division to struggle because of the broader business environment.
“Different areas have different targets, different performance metrics, so it could be that you’re swept up in the storm or the group of people you’re working with are not succeeding so you’re getting the carry-over from that,” Schilling said. “Some base bonuses are not based on overall performance but a particular set of targets – maybe everything’s gone great but they weren’t as great as what the targets were set to be.
“Once the stock of the company I was working at went up 30% but none of us got bonuses, because the internal targets were about EBITDA, EVA, churn rates and a bunch of other things in an algorithm that dictated potential bonuses, and we had a few misses resulted in no bonus, whereas if it was based on stock price and earnings per share, then everybody would have been happy,” she said.
There are times that you have a bad project, whether it’s your fault or due to colleagues’ mistakes or lackluster effort. Good managers know how to motivate their team to correct missteps and do better next time.
Other times, you may find yourself working for a manager that is a complete jerk, and the ripple effect of that is very significant, Schilling said.
“It may cloud the entire year, because that person’s voice weighs in very heavily, leading to shock events on your team or even across your entire division that have an impact on your end-of-year review,” she said.
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