It is only natural for the majority of
the general public who have never been the beneficiary of a
whopping great bonus to pour scorn on those who have.
Particularly when such bonuses
are seen as part of the cause of the recession and for some of the
ridiculous and destructive mergers and acquisitions that, besides
helping bring banks to their knees, also lined the pockets of those
who dreamed them up in the first place.
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It is also easy to sympathise
with those leasing staff at GE Capital who, having just learned
that their salaries had been frozen, according to communications
leaked to Leasing Life last month, were then told by management
their bosses’ “bonus payments this year have been substantially
lower than previous years”. Lowered, but not gotten rid of.
And what of the bonuses for
leasing staff at those British banks hardest hit by the
recession?
Rumour has it that at least one
such bank has implemented a scheme whereby its sales staff’s 2008
bonuses are to be staggered over the next three years, from
2009-2011. Historically leasing arms of UK banks have paid their
staff either three months, six months or one year in arrears.
For captives, which have been
known in the past to pay sales staff bonuses that are several
multiples of basic salaries, such a phased way of payment would
have a serious impact on their quality of living – whether it’s
paying the children’s school fees or a hefty mortgage.
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By GlobalDataBut sales staff of leasing arms
of banks – used to bonuses of between 15 and 20 percent – are
better cushioned against such losses.
It is also these UK banking staff
who are most likely to be subject to not only new ways of paying
bonuses, but also new reasons for handing out bonuses.
Whereas in the past bonuses have
been linked to the performance of individual sales people, now they
are being tied to such things as meeting cross-selling targets, the
value of margins, additional fee income and so on.
On top of this, new clawback
schemes – where sales staff have to give back bonuses paid out on
deals which have gone sour – are being introduced.
All this is bad news for the
British leasing banker.
Some might argue this will lead
to a brain drain from the banks as their biggest earners are
attracted to the larger pay and bonus packages offered by the
captives and independents.
But the fact GE Capital has
reduced the size of its bonuses means that even a move to an IT
captive – a sector well known as the biggest payer – might not be
such a safe bet after all.
Brendan Malkin
brendan.malkin@vrlfinancialnews.com
