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People always explain the existence of bonus culture through the firm's ability to manage comp downward in hard times. I'm not so sure though - I've been throug
by soVeryTired 7y ago
People always explain the existence of bonus culture through the firm's ability to manage comp downward in hard times. I'm not so sure though - I've been through hard times at a hedge fund. One year my bonus froze at the previous year's value, and another year the more senior people took a 10% hit to their bonus.
I honestly think bonus culture is about power - specifically the power you're describing there. Your boss's boss can ask you to come in at 2am because if you don't, you risk taking a massive hit to your comp.
The other reason - also related to what you're pointing out - is that if you quit six months into the year, you leave a significant chunk of money on the table. Silicon Valley has similar golden handcuffs in that regard though.
- thrav 7y agoI agree, the power is a factor and that it's not about the company having a down year. This exists in Tech Software sales too. It's about not paying full price for a person who doesn't produce. It's about shifting the budgeted comp of the under-performers to the over-performers. Inevitably, you will end up with a bunch of over-performers killing it, and the under-performers who can't make their number will leave. It's a giant selection process. Good employees make bank. Bad employees quit and go somewhere with less downside risk.
- sokoloff 7y agoPerfect. That’s what good employees and companies in asymmetric businesses should want.