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The first wave of articles speculating about bank bonuses are already out and it’s pretty clear that bonuses will be down.There will be some variation from source to source or institution to institution but the overall trend is clear and unsurprising.
And when bank employees are delivered the news they’ve waited all year for, the word confidential is invariably repeated add naseum.
Bankers are told that their bonus numbers are confidential, that other people’s numbers are confidential, that talking to other people about bonus numbers breaches that confidentiality and that basically any data or truly helpful context the firm might have about bonuses is confidential.
You’ll probably get told that you ‘should feel good’ about your number. A reference to your performance evaluation might get thrown in.
Sure, you know what you got paid last year. You also get anecdotal information about firmwide numbers relative to last year, but these are really nothing more than parroted versions of media speculative you’ve already read.
You basically get no useful information beyond what dollar amount minus 50% will hit your bank account a month later.
So should you take all those warnings about your bonus confidentiality seriously? For that matter, do banks expect you to? The answer to both questions is absolutely not.
Here’s why, from the perspective of someone who went through five bonus cycles. What follows could more neatly be described by someone with a detailed knowledge of game theory, but I never really got past the prisoner’s dilemma and the stag hunt.
As a banker, you need to talk to your peers about your and their bonuses to make sure you are being paid fairly. You work at a bank, which means a large part of what you get out of your job is what you get paid to do it. So you had better protect yourself make sure your comp is fair.
Don’t think banks would play games with bonuses? Of course they do. Institutions created to exploit the nexus of human behaviour and money don’t suddenly halt their modus operandi when it comes to their own employees. Far from it.
Here’s just one example. I once worked in a group with one junior member who had an incessant need for praise in order to function professionally and emotionally. Her manager saw this and smartly praised her (average) work at every turn. That same manager made sure to deliver a glowing review. As a result, a mediocre employee acted like she ran the place but otherwise had marginal impact on the group’s dynamic or output. Then, this person got a bonus that was half what her peers got. How did she find out the bad news? By talking to another person in the group about their bonuses.
There are a number of complicated ways you could go about this. A funny one about putting numbers in a hat comes from this classic and accurate New York Magazine article.
But really the best way to do it is to engage is sophisticated gossip with peers and mentors you trust. And if you find gossiping about money too awkward to engage in, you shouldn’t work at a bank. It’s the professional version of I’ll show you mine if you show me yours and you have to get over any vestigial modesty and do it.
If you find out you’re getting way less than your peers, talk to your manager about how to address it so it won’t happen next year. If you don’t, you will continue to get underpaid. Talking about your bonus is the only way to ensure you will be fairly paid relative to peers.
And that brings us to why banks need you to talk about your bonus: you might be getting underpaid for a reason.
Banks talk about how comp is one of the ways they, umm, ‘send messages about performance’.
But if that message is a bonus number relative to others bonuses and all bonus information is kept confidential, how can that message be delivered at all? Especially since manager delivering the news rarely deviate from telling you how pleased you should be with your number.
So banks deliberately underpay poor performers. What they won’t say is that those under performers often have to find out that they were underpaid by talking to their peers or through second-hand rumour. Either way, banks rely on bankers talking to each other about pay to accomplish one of the goals they seek to achieve through bonuses .
So compensation is confidential?
Far from it.
Bankers are forced out of self-preservation, oh, and motivated by self-promotion, to talk about their pay.
And banks expect bankers to talk about comp so that poorly paid poor performers will receive the message and leave.