Figure-happy: the road to a better bonus
When Santa visits the City each Christmas, he leaves a bundle of slips of paper on the desks of each manager. These are the presents for the hardworking men and women of the square mile. Depending on whether they’ve been good or bad, the number on the slip will have more or less noughts. ‘Tis the season of goodwill bonuses.
But to those outside the banking triangle the bonuses system can be puzzling. How can you measure the effort you’ve put in over the year? How can you make sure you come out on top? The general rule is that bonuses are calculated in relation to how much you have achieved for the company since January. However, they are also dependent on the financial state of your business. If your company has had a profitable year and met or exceeded its targets, you’re probably well-placed for a bonus. If things are less buoyant, you may well be disappointed, so it is worth taking an interest.
The bonus is a great personal incentive but it is also a good idea for business in general; when individuals perform better, the company as a whole performs better and a virtuous circle is created in which – theoretically – payment and bonuses will increase. In banking, your performance is solely based on the amount of profit you make for the company, but in other sectors the rationale can be more opaque. For this reason, if a bonus is part of your compensation package, it is a golden rule to set down goals with your line manager at the start of the year.
When you have set these targets, both you and your manager can measure your progress, and how much reward you deserve. The bonus that you are eligible for will depend on your level within the company, for example at a senior managerial level you might be in line for 40%, as opposed to 5% for someone starting out. In the banking industry it will also depend on how critical your department is to the corporate body.
‘If you started in telecoms a year ago, you’re getting paid big bucks now,’ says one senior headhunter. He recommends careful consideration before choosing both which sector and which bank to work in. ‘Lots of the second-rate banks like Commerzbank and Paribas are paying out a lot of money to lock people in,’ he says. ‘You can go there if you’re only interested in money, but your career will be over in three years.’ Deutsche Bank, Merrill Lynch and Goldman Sachs are some of the most generous with their bonuses, although rumour suggested that Morgan Stanley had made more than 50 of its staff millionaires in 2001.
There are ways of making yourself appear more valuable to your manager, although the reality with bonuses is that nothing is guaranteed. Making noises that you are much-sought-after commodity can raise your bonus as your manager seeks to keep you sweet. Mixing your skill set is also a useful tool – spend some time doing some consultancy work, or do an MBA – but be careful not to dilute your assets too much. It is always good to be considered a specialist in something.
And finally, if you feel that you haven’t been adequately compensated for your efforts over the twelve-month, go and see your line manager and take with you some kind of documentary evidence to show how you have been meeting your agreed targets – word of mouth is not enough. Be assertive, not aggressive, and make the best argument you can.