Andrew Pullman, founder of City HR consultancy People Risk Solutions, says the pain will be less if you can be realistic about bonuses.
What an apt quote on the financial markets by Warren Buffett:
"It's only when the tide goes out that you discover who's been swimming naked."
Over the last few weeks, given the choppy seas of global markets, many investment bankers and hedge fund managers have been desperately searching for fig leaves!
Forget multi-billion dollar losses on sub-prime conduits and leveraged loans, however; for many individuals, the most important thing now is to try and ensure end of year bonuses don't get too adversely impacted. Is there anything you can do?
The short answer, unfortunately, is "very little". The enormity or not of your bonus will be based on a consideration of three things: your own performance, your department's performance, and the performance of the institution as a whole. While you can influence the first, the second and third points are beyond your control. Over two decades' involvement in City bonus rounds has therefore convinced me it's best to enter bonus time with a degree of stoicism. Here's how to achieve it:
Expectations: Have you or your manager managed your expectations before bonuses are announced? Are your expectations realistic against the backdrop of the firm's overall performance? Have you really done as well as you think you have? Even if your expectations are not managed well for you, do it well for yourself and be realistic - you might be surprised.
Emotions: Bonus time is an emotional time for everyone - the payers, the deliverers and the receivers. Try to take the emotion out of it and be objective. Have you analysed your overall performance for the year? Have you been a good team player? What contributions have you made over and above the expectations of your job?
Precedent: Everyone looks back at last year's bonus number and references that amount for this year. Does that always make sense? Most bonus decisions are discretionary and so lots of elements make up the outcome - and often the biggest issue is how much of a bonus pool the organisation can afford. Try and find out how your part of the business has done; how does the profit - or loss - match up to budget?
Individuals cannot legislate for, or normally impact, the overall performance of the firm. However, each individual can assess realistically, if they ask the right questions, what bonus time is likely to look like. By managing your own expectations you are much less likely to be disappointed. You may be swimming naked, but this will at least give you a chance to cover yourself up before you leave the water.