Polly's press & media appearances
|
Bonuses: The Fictitious Meritocracy
Do Brits know more than we think?
Self-flagellation and the City
Rediscover your Passion - Go It Alone
Finansmiljøet i London - et Jobbhelvete
Fear and Loathing in the Heart of the city
My Glittering City Career Turned into Golden Handcuffs
|
Bonuses: The Fictitious Meritocracy October 2009 | Square Mile magazine Polly Courtney
As someone whose first £50,000 was earned in the square mile just a year after graduating, I am in no position to denigrate the City bonus. In fact, I’d go as far as to say that performance-related pay is the ultimate form of remuneration, whatever the industry. It draws in high calibre recruits, motivates employees to work harder and serves as a fair way of sharing out profits. In theory. I say in theory because, as anyone who works in the City will tell you, a bonus is as distantly related to performance as Lord Adair Turner is to Britney Spears. It is more likely, as a banker or trader, that the size of your bonus is linked to the number of hours you have spent wandering the office late at night doing ‘face time’, or rounds of golf you’ve played with the managing director, or maybe even bar bill at the last team bonding session, but to say that your end-of-year pay packet correlates with your performance at work is somewhat fanciful.
How naïve I was! I had assumed that a bonus was exactly that – a reward for doing well. Ha! Imagine my joy when the Head of Department informed me that I’d take home a further £10,000 that year, just for… well, being there. I remember watching a VP storm out of the boss’ office later that day and slam his notebook down on the desk. “It’s like working for bloody charity!” he fumed. I later discovered that he was referring to the six-figure sum that was his bonus for the year. The notion of performance-related pay is fantastic, in both senses of the word. It would be ideal if employees could be remunerated on the basis of their value or output in the workplace. There would be an end to the brown-nosing, clock-watching, back-stabbing practices that plague the offices of EC1. Sneaky trips to the office gym on the pretext of ‘going to the print room’ would become a thing of the past and ‘three-sixty appraisals’ would be no more. But back in the real world, we are faced with the fact that neither ‘value’ nor ‘output’ cannot be measured. We cannot quantify the unquantifiable. So, as a proxy, bankers and traders are assessed on the basis of performance reviews and annual targets, which – guess what? – lead to exaggerations, lies and excessive risk-taking: the very activities that have clouded the public’s opinion of the City in recent months. A friend of mine recently forced through a number of trades that involved temporarily exceeding his risk limit to try and recoup some losses and meet his targets for the year. I’m sure he’s not the only guy on the trading floor at it. Targets are a false economy in the City, just as they are in other industries. Look at the effect that league tables have on schools, or patient waiting time targets on the NHS. Bonuses and other forms of ‘performance-related pay’ are flawed and lead to an unhealthy short-termist approach. On the subject of short-termism, I can’t help noticing a parallel between our traders, frantically peddling their wares in the hope that they’ll meet their ever less likely-looking targets for the year, and our politicians, desperately towing their anti-fatcat lines in a last-gasp attempt to win back voters before the next election. Does anyone else see hypocrisy here? Lord Adair Turner, Chairman of the FSA, is proposing – among other things – a global cap on bonuses. Again, this is a brilliant idea. In theory. In practice, the proposal is completely unworkable on a number of levels. Putting aside the logistical nightmare of enforcing the cap across all G20 nations (bearing in mind the FSA is too stretched to regulate the UK industry as it stands) there is the challenge of devising watertight legislation that accounts for all possible loopholes across all forms of remuneration. I was intrigued to hear of Nicolas Sarkozy’s ‘strict new rules’ that limit the size of bonuses doled out by French banks – until, that is, I read the crafty caveat that states that the legislation only applies in the event of global agreement. At the time of writing, there is no sign of global agreement, and I’m willing to bet that we won’t be much closer to consensus by the time this goes to print. UK citizens are crying for an expulsion of ‘greedy’ City bankers from our capital, and it’s hard not to see their point. Unfortunately, though, a mass exodus from our square mile would do more harm than good – and not just to the Porsche Boxter-owning twenty-five year-olds who reap the rewards of our hitherto supremacy in the global financial markets. Our economy would crumble and it would be the ‘ordinary folk’ who would suffer the most. (In fact, the young bankers would probably be fine; they would simply zip off to Zurich or Singapore.) Lord Turner has declared that people would be ‘willing to accept high salaries and bonuses’ as long as they were convinced the financial sector was engaged in ‘valuable economic activity’ – the implication being that certain categories of financial activities are not deemed ‘socially useful’, including the complex securitisation packages and derivative trading structures blamed for the credit crunch. Yet again, this makes perfect sense in theory. The problem comes when we try to decide what is ‘socially useful’ and what is not. As a junior investment banker, my job involved looking up numbers in annual reports and punching them into complicated Excel spreadsheets, sometimes copying and pasting the outputs into a fancy PowerPoint presentation and occasionally printing off dozens of copies before being told that the meeting was cancelled and my hundred-hour week had been a waste of time. I’d be hard-pushed to defend my role as being ‘socially useful’. But what of other jobs? And other professions? Am I safe in the ‘socially useful’ bracket with my new career as a novelist? Who knows? There is no litmus test. Performance-related pay is a great concept, as is the global capping of salaries and bonuses. Limiting remuneration to practices that are deemed ‘socially useful’ is the perfect solution. There’s just the small matter of putting all these ideas into practice. I don’t have the solution, and I have a feeling that nor does Lord Turner. I cannot tell what new regulations or taxations will come into force or what the effect of them will be, but I can say with near certainty that we have not seen the end of the City bonus. As Lord Turner himself pointed out, “if there are supernormal returns made by an industry, they will end up in the hands of its employees in some way and no regulator can stop that happening.”
|
Polly's TV & Radio appearances
Breaking Stereotypes of Poles in Britain
From Engineer to Investment Banker to Novelist
Berliner Zeitung Magazin, 2007
I Know the Pressure Matthew was Under
I Sold My Soul to the City - then Wanted it Back
Banker Novel Shows it's not all Success in the City
Taste of High Life in City can Seduce Interns
City Woman who quit City over Sexism admits Lapdancing
|
In
2002, I joined the suited ranks of a large US investment bank in London.
At the end of my first year – a turbulent, volatile year in the markets
following the burst of the dot-com bubble and the 9/11 terrorist attacks
– I was fully prepared to ‘make do’ on my base salary alone, knowing
that the firm’s profit had taken a tumble and didn’t stand much chance
of recovery. Having seen several colleagues lose their jobs, I figured
that if the bank couldn’t afford to pay their salaries, they were hardly
going to line our pockets with gold.
