Banking Employee’s Bonuses — Another Perspective

In all of the brouhaha over the 2008 bonus scandal, it’s possible that a rather large group of people is being overlooked: the administrative staff and other low-ranking financial services employees who actually depend on those year-end bonuses just to get by.

According to financial careers expert Jon Jacobs, bonuses, “…often make up a vital chunk of total compensation for even first-year analysts, settlement clerks and HR professionals.”

(See Jon’s Employment Blawg guest post for more discussion on this topic)

Granted, Jon’s earlier writing on the same topic — bonuses for everyday financial services employees — probably won’t excite much in the way of reader sympathy:

For an operations worker whose pay comprises $75,000 base and an expected 20 to 30 percent bonus, that final $20,000 or so may bridge the gap to owning an apartment, or sending his or her child to private school.

It’s hard to believe that any of us would want to use our tax dollars to help a financial services employee send their child to a private school. However, we also have no reason to doubt Jon when he says that lower-level employees depend on their yearly bonuses for the basics.

Who is Responsible for the Current Recession, And Should They Have To Make It Up To Us?

Bonuses and incentive payments can be important avenues to encourage employees to be responsible for and take ownership of their work and their company. As George explained in an email to me today, bonus payments are also a way that employers can reward productive workers without locking themselves into a higher pay rate during questionable economic times.

Here at the Blawg we doubt that anyone wants to do away with bonuses and incentive pay as a widespread policy. Nor do we believe that anyone wants to make the “first-year analysts, settlement clerks and HR professionals” of the business world pay for the mistakes made by their CEOs.

However, the fact remains: The leadership of America’s financial institutions, perhaps aided by our government officials, have caused our country the greatest economic turmoil we’ve seen since the Depression of the 1930′s.

As voters, we have an automatic way to deal with our government — the voting booth. As taxpayers, we are now also shareholders in many of the same companies that caused the recession. This means we have several interesting questions to ask ourselves:

Who deserves bonuses and who should pay them back? Where do we, as taxpayers and (now) partial owners of these institutions, draw the line?

Did the year-end bonus system encourage financial services employees to make the seemingly great short-term decisions that inevitably led to the loss of hundreds of thousands of U.S. jobs? If so, should we do away with bonuses in the financial services industry?

Should taxpayers demand that the people in charge of the financial services companies that we’ve bailed out be required to live on their savings for awhile, a la Lee Iococca in the 1980′s?

If we’re going after financial services CEOs, what about the automakers’ corporate leadership — at least the automakers we’ve shored up with tax dollars?

Finally, do we really think CEO’s should be rewarded for cutting jobs?

Invitation — Let’s Talk About It

“Hang the bastards!” is an understandable sentiment at this moment in our history. It’s hard to argue — in fact, here at the Blawg we won’t argue — that the people responsible for this recession shouldn’t have to make extensive reparations to our country. Whether they must pay back their bonuses, live on their savings, or both — they must take personal responsibility for their decisions and the results of those decisions. During his Inauguration, President Obama called for a return to both personal and collective responsibility. That means all of us, not just those of us who aren’t in the position to send our children to private schools or ride in corporate jets.

The questions we need to ask and answer, and the work before us, will not be solved by “Hang the bastards!” anymore than we can afford to return to a culture where the few make the most while taking the least responsibility for their actions. We in the media need to do a better job of realizing that these are complex issues and covering them in a way that respects the intelligence of American citizens.

Yes, it’s satisfying to identify the “bad guys” and start piling on; but is that where we really want to leave things?

What do you think? We welcome a discussion about the financial workers’ bonuses, executive pay and corporate citizenship during this recession and beyond. George and I will chime in as we can from our occasionally differing perspectives.

Once again — no pimping of your products or services.

Photo courtesy kugelfish via flickr.