Depending on who you talk to, bonuses on Wall Street for 2005 could jump 15%-20% on average over 2004. So what if your bonus is only 1%?
How should you interpret such a measly message? Should you stay or go? Or is your boss trying to tell you something?
Recruiters say there's only one way to find out: ask them. Most firms want to know how you feel about your bonus, says David Schwartz, president and CEO of D.N. Schwartz & Co.
"When you get your bonus communication, they might ask you whether you are happy with that or not," Schwartz says.
If you've heard bonuses are up 20%, on average, and yet yours was up only 5%, tell your manager what you have heard, and ask him or her whether your bonus is at the average or below, Schwartz says. "If it is below average, ask why."
Chances are, if you're being penalized for performance, you've probably already been given indications of that.
"Many firms now consider it 'best practice' to deliver the annual performance review prior to bonus communication, in order to put the bonus in context," Schwartz says. "If you got a negative review, odds are that your bonus will reflect that."
Back Yourself Up
Deborah Rivera, president of The Succession Group, a search firm based in New York, says your bonus should not be the only indicator of your "worth" in the group. You should be gauging that all year, not just at bonus time. That way the bonus is not a surprise.
"If you think it is low, you better have a tangible list of reasons as to why it should be higher, and if so, by how much," Rivera says. "Do your research before you talk to your boss or that could be the last conversation you have in your group or anywhere in the firm."
Jay Gaines, president and CEO of Jay Gaines & Co., Inc., says it's a problem that the press sets such high expectations. "Expectations are high enough without that kind of help," he says.
That said, it's critical for the bonus recipient to know where his or her payout stands relative to others, Gaines says. It can be a more honest evaluation of what the firm thinks of the employee because it's forced to put its money where its mouth is, he says.
Gaines doesn't advise employees to leave, though, just because they're disappointed with their bonus.
"In my opinion, too many people are too quick to move, particularly in good times, and then they repeat history and fall into the same pattern at their new firm," Gaines says. "Move only when you have taken 80% of the learning and development from your current situation. And even then, try to move internally before externally."
Fight or Flight?
Those who feel cheated can either stay or go. The one thing they probably can't do is sue. Few prevail because firms will always maintain bonuses are discretionary, says Michael Segal, a partner with Paul, Weiss, Rifkind, Wharton & Garrison LLP.
"Though I think you'd be hard-pressed to find anyone working on Wall Street who would say bonuses are optional," Segal says.
Bonuses may be discretionary, but they comprise a significant part of one's compensation. That can be problematic for someone who leaves in, say, the middle of the year.
"You need to consider the viability of an agreement protecting some or all of your bonus in the event of a mid-year departure," says Kenneth Taber, an employment law attorney with Pillsbury Winthrop Shaw Pittman LLP. "While such pro rata bonus protection is not yet widespread, it is available at some companies."
But employees have to ask for it, Taber says. Companies won't offer it themselves.
"Given the potential dollars involved, however, it's often a topic well worth raising," Taber says. "A discussion regarding this year's bonus might provide the perfect opportunity to do so."