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Let me clarify my point a bit: the easier it is to measure the actual performance of an employee, the more their compensation will be linked to their performanc
by pnako 7y ago
Let me clarify my point a bit: the easier it is to measure the actual performance of an employee, the more their compensation will be linked to their performance.
Take for example a company developing software. The variance in the compensation of the software developers will be lower than the variance in the compensation of the salespeople. That's because it's much easier to measure the performance of a salesperson.
In most trading shops it's becoming more difficult to estimate the contribution of a single individual because technology is more important than before, and plays a role in how competitive you are. That doesn't make them any less talented, educated, hard-working, etc. It just makes it more difficult to know their exact contribution. Which means that their compensation will not necessarily fall down, but will become less performance-based.
- anonu 7y agoI think were talking about 2 different things. Yes, technology is important - but these aren't simple systems - nor are they open source. In the trading world, as an employer you are disincentived to give the keys to your model - aka your secret sauce - to all your employees. You will reward only a select few who you trust to stay on board, manage the model, continuously improve on it to stay pace with the changing markets. If you give the keys to too many people, eventually they will jump to other shops, copy your ideas and your edge will deteriorate.