Are clients calling the compensation shots?

A new study suggests client satisfaction will become the key determinant of bonuses for capital markets bankers.

The study by BearingPoint, a management and technology consultancy firm, predicts that corporates' demand for customised risk management tools will lead to increased emphasis on client service.

It says banks' compensation structures will evolve to reflect this.

Carl Sjostrom, a partner in KPMG's executive compensation practice, says banks are already experimenting in the use of client satisfaction as a bonus determinant: "Big banks increasingly recognise the need to base pay on measures other than financial performance."

Customer satisfaction surveys are most common at universal banks, which already use them to measure happiness among retail clients, says Sjostrom.

But a vice president in the compensation and benefits division of one US bank says he doubts client satisfaction surveys have much of a future at the pure investment banks: "It's one thing to ask a client whether they're happy with the service they're receiving, but it's another thing entirely to ask them to fill out a questionnaire," he says. "Clients are far too busy."