It's Bonus Time, But Don't Expect Too Much

by Cesar Bacani, 28 March 2012

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topics:
Human Capital Management

tags:
bonus policies compensation packages Professional Development

So you work in the financial services sector or you want to switch over from commerce & industry to banking? Listen up.

Bonuses this year for banks and other financial institutions in relation to last year’s performance will not be as juicy as they were in 2010.

In a survey of 1,269 banking and finance executives and employees in Australia, China, Hong Kong and Singapore, only 31% of respondents said their bonus was larger this year. When asked the same question last year, the majority – 51% – said they had received a bigger bonus than they did in 2010.

This year, 54% received a smaller bonus (33% today vs. 14% last year) or no change (21% vs. 20%). In US dollar terms, the average bonus this year for those in the front office is US$36,690, 25% lower than last year. The median is much smaller at US$11,468, indicating that only a select few were granted hefty bonuses, but the median bonus, too, is down 26% (see table below).

Click image to enlarge

Bonus by segment, 2011 vs. 2010, Asia Pacific total

Source: eFinancialCareers

No one should really be surprised, says George McFerran, Managing Director, Asia Pacific, at eFinancialCareers, the job portal that conducted the survey. “We all read the news, we know what is happening from the bank results’ perspective,” he explains.

But he warns employers not to ignore the feelings of disappointment – 39% of those polled said they were somewhat or very dissatisfied. “Firms may not fear retention reprisals this season, given the targeted layoffs and moderation in recruitment activity, but top performers may consider moving on if a better opportunity comes along,” says McFerran.

Holding Pattern

Bonuses are an important part of total compensation in the financial services industry, where top performers can make more than their annual salary in cash, stock options and other extras.

CFOs, finance controllers and others in the finance team also share in the bounty, though perhaps not in the same high multiples as the actual wheeler-dealers like investment bankers and brokers. The latest Hays salary survey finds that CFO compensation (including bonuses) in financial services in Hong Kong can be 30% higher than CFO compensation (excluding bonuses) in commerce & industry.

Is this premium disappearing, though, given the pressures banking and finance companies are under after the global financial crisis?

McFerran does not think so. “For me, it’s a period of adjustment,” he argues. “I think we’re going through a cyclical dip. Growing corporate business and corporate wealth [in the region] are going to require more financial services. Ultimately, the long-term future for financial services in the Asia Pacific region has to be good.”

Despite headlines about banks firing thousands of staff, McFerran says the jobs situation for financial services in Asia is actually stable. “When we speak to clients, they are saying: It’s not a no-hiring environment; it’s just a low-hiring environment. We’re hiring, but we’re cautious.”

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