Many financial services professionals got their bonus for 2015 last week, or they are set to receive it soon. Whenever you do receive your bonus, you are going to be disappointed, unless you are the heaviest of heavy hitters.
Assuming you do get an underwhelming bonus, what’s the proper response? Do you grin and bear it or shout “Take this job and shove it!”? Here’s an expert guide to help you decide.
Remember that bonuses are bad across all banks
When judging your own bonus, you need to consider that most financial services firms have announced that their bonus pool will be significantly lower this year. In addition, most big sell-side firms increased their staff last year, but profitability was down in many cases. More people with outstretched hands wanting a slice of lower profits is a double whammy.
“Bonus season is a tough one this year – a lot of folks are going to be dissatisfied,” said Roy Cohen, career counselor, executive coach and author of The Wall Street Professional’s Survival Guide. “Alternatively they could be zeroed out, which is not an unexpected event for a lot of folks.
“Recognize that it may be a byproduct of the market, and the compensation model as a whole is shifting,” he said. “Not a lot of banks are hiring right now, so if you do decide that you want to leave, where are you going to go?”
Look at the roles that are hardest hit
Equities specialists are faring better than fixed income professionals – looking at general compensation trends, firms across the board are paying equities, electronic trading, M&A and other investment banking professionals more than fixed income specialists, who have really taken it on the chin, according to Mike Karp, the New York-based CEO of Options Group, a recruiting firm.
If you’re a trader, in theory it’s a good idea to go to a competitor if there is a job for you, but there aren’t a lot of bids right now, he said.
“The firms that hire do so strategically,” Karp said. “Everyone wants the next upcoming superstar, but that’s hard because rising superstars typically get paid well at their current firm.”
After the shock of a disappointing bonus wears off, it’s a good idea to take stock, look at other factors and consider the big picture.
“It’s not always about the comp alone – people don’t want to hit the reset button and start over on day one,” Karp said. “A lot of people think about the platform, management, compliance, finding the right firm, a great franchise that checks all the boxes, more so now than before the crisis.”
Figure out the reason
Whether it’s a lower-than-expected bonus, no bonus at all or – worse of all – a layoff, you have to understand why it happened. If all of your colleagues got a small bonus too, then that says something about the overall state of the firm.
“That’s common in startups and smaller financial institutions with cash-flow problems – it’s not about individuals’ performance,” Jane Cranston, the president of Executive Career Coach. “People got used to fabulous bonuses, but [they are] lessening all over the place.
“A lot of places have been giving out miserable bonuses – pretty much everybody I’ve talked to got significantly less than they did the last few years, other than the very top performers,” she said. “I wouldn’t quit, but if a company doesn’t have a good financial status, then you might think about leaving.”
Look yourself in the mirror. If it’s just you who received a disappointing bonus, then you have to find out the reason, but regardless of why it happened, you should start revising your resume and seeking out other opportunities immediately.
“That’s a red flag. If it’s only you, then it means something. It’s a subtle way of saying ‘We want you to leave,’ pointing toward the door,” Cranston said.
Keep things in perspective
You may have got a lesser bonuses, but did some of your colleagues get pink slips? It’s important to keep things in perspective.
“How did other people get treated, and what’s the market like?” Cranston said. “Most people can’t afford to just up and quit, but that doesn’t mean you can’t start looking.
“I never tell people to quit on the spot – it’s too impulsive,” she said. “Never quit for spite, ‘I’ll show him…’ You’ll show him what exactly?”
Don’t blow your top
Whatever you do, don’t burn bridges without stopping to think things through. Take a step back when you get the number on your check and try your best not to take it personally, at least initially.
“Once you’ve had time to digest, then you’ve got a decision to make,” Cohen said. “Conduct a job search while working, but never quit without a job opportunity in hand, because you never know how the market will respond.
“If you do quit impulsively, how will it look to the rest of the world? How will you explain quitting or job-hopping?” he said. “A potential hiring manager will say, ‘Our firm didn’t pay great bonuses either,’ and might question your judgement. Quitting in haste or getting angry without examination is very dangerous.”
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