发布者: shunitang | 发布时间: 2008-9-5 13:42| 查看数: 1146| 评论数: 2|

The bonus season rapidly approaches. Soon enough Wall Street will be flooded by tears of fear and rage from unhappy bankers. 'How can you do this to me?' the banker will cry when given his number. 'There is not enough money to go around,' his boss will reply.

Which will be the truth, but not the whole truth. The whole truth is that Wall Street's bonus system isn't working the way it's supposed to. It's supposed to be a meritocracy. And it's supposed to align the interests of the individual employee with the bank and the shareholders.

But increasingly, the system is breaking down. And this year, the bonuses of most bankers will have little to do with merit and everything to do with the very steep credit losses incurred by a handful of their senior colleagues.

Negotiating bonuses on Wall Street was always a painful and political process. But twenty years ago, when investment banks were only a few thousand people, it was easier to figure out who deserved how much at bonus time. A few days in a conference room and bonuses were set.

As Wall Street grew into a colossus, so did the investment bank compensation system. Today, it's a bureaucratic monstrosity manned by scores of human resource professionals, ruled by committees and governed by thousands of pages of rules and regulations.

The apparatus is there to ensure fairness in pay. But that's mostly an illusion. The bonus a banker receives is still arbitrary and subject to countless forces beyond his control.

About this time of year, the bonus season kicks-off with the 360-degree reviews from peers, superiors and subordinates. The amount of detail is enormous. And so are the exaggerations and lies bankers stuff into the reviews.

It's astounding that 90% of all bankers are among the 'hardest-working and most talented bankers at the firm.' But that's the answer you get when everyone is gaming the system.

Bankers are graded and ranked on these reviews. Department heads review the reviews, re-grade and re-rank. A committee or two then does the same. Then the division head has his go at it.

Why the time-consuming rigmarole?

Money, of course. The division's bonus pool is divvied up - in large part - on the basis of the rankings.

But the process also underpins the bank's claim of meritocracy. It's proof that a banker's individual performance and contribution matters. And it serves as the fountainhead of the firm's culture. Want to foster teamwork? Punish the banker who doesn't practice it, drop his ranking and let him know it.

At least, that's the theory.

In practice, the review and ranking process is a sideshow to give executives cover for internal maneuvering and future lawsuits.

Other factors matter much more to a banker's bonus, especially a senior banker's; the two or three-year guaranteed contract, the threat to hop to a hedge fund, a close decade long friendship with the division head, and of course, super- outsized profits earned by his team.

Years ago, a banker had a long career at a firm. Nowadays, he has a good run. Almost nobody trusts the bonus system. The banks are just too big and the role of the individual is too small. To trust the system is to leave yourself vulnerable to the uncertain fate of an uncertain bonus. Today, it's every man for himself.

Which brings us to the credit mess and this year's bonus season. Of course, it was Wall Street's bonus system that practically begged the credit traders and bankers to take huge risks in search of those super-outsized profits. And $150 billion in losses later, there's not much left for the shareholders, much less the bonus pool.

Today, the grinder Lehman M&A managing director may be having his best year ever. He'll be happy to get a paltry bonus. But how does he sleep at night having passed on that offer of a fat guarantee from Deutsche Bank a year and a half ago, choosing to stick with Lehman for his entire career?

That was a mistake. He was living on the Wall Street of twenty years ago. Not the Wall Street of today.


shunitang 发表于 2008-9-5 13:42:45

















如今,雷曼兄弟(Lehman Brothers)负责并购交易的董事总经理或许赶上了自己有史以来最好的年头。他会很高兴地接受一份微薄的奖金。一年半以前,他拒绝了德意志银行(Deutsche Bank)丰厚的保证合同,选择在雷曼度过整个职业生涯,有了这样的经历,他晚上还怎么睡得着?

丹妮 发表于 2008-9-5 14:08:12
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