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Just how is your bonus calculated if you work in Banking Operations?

By Mark Stuart, Managing Director, Anagram Group
March 24, 2014


Global bonuses increased in 2013 by 29% compared to the previous year.


So, with the top bankers taking the lion’s share, where does this leave Operations staff in Asia?


According to efinancialcareers’ banking bonus survey released this week, global bonuses increased in 2013 by 29% compared to the previous year. With London leading the way with a 30% increase on 2012, HK and Singapore fell to the wayside with a 3% increase and 2% decrease respectively. Analysts have commented that the success of the top investment bankers in London has skewed the results whilst many are left disappointed again with their share.


So, with the top bankers taking the lion’s share, where does this leave Operations staff in Asia?


Investment Banks are still recovering from the recession years where job cuts and “doughnuts” (zero bonuses) replaced the traditional year-end windfall. Speaking with staff at some of the large US investment banks, revealed that bonuses are steadily increasing again but still some way off the heady days where 3-4 months pay were common for the higher performers. However, those types of figures can still be found at select asset managers and high performing hedge funds, offsetting the traditionally lower base pay.Depending on where you work, unless you are at VP or above, you probably don’t know how your bonus is calculated. If you’re a departmental manager, then you might get to help rank your employees, which your senior management will then use to start dividing the bonus pool. The process will never be 100% transparent until you reach the very top but below are some the steps taken in the compensation process prior to the announcement on “Comp Day”. Your firm will set aside money for the compensation pool on a monthly or quarterly basis.


The bonus pool will only be finalised once Q4 results are known and this will then get divided up between the different departments, often based on performance.Front Office will always get the largest tranche, with Operations competing against IT, HR etc. The HR department will review market trends, surveys, and competitor’s figures to ensure that your remains competitive.The Operations senior management team will then look at a number of factors including personal performance. This is where your manager has an important say but you should not be overly surprised at the amount in question. Good managers will manage your expectations through 1-on-1 meetings in the latter half of the year.


Historically, everyone from Analyst through to Managing Director would get something but the last five years re-introduced the zero bonuses, serving as a slap in the face to the more experienced staff. It wasn’t uncommon for 25-40% of Operations staff to receive nothing during the particularly bad years.When it comes to bonus day, if you receive disappointing figures, then it’s not the time nor place to start disputing and venting your frustration.


Your senior manager will have a busy and stressful day to get through and will only have time for a few minutes with each person. The best way is to communicate your disappointment and ask for a meeting on a later date to discuss why you received what you did. And never forget the number one rule – do not discuss your bonus with your colleagues, nothing good ever comes from it.Bonus payments in good years naturally increase morale and reduces attrition, but don’t think you have to jump ship just because it didn’t meet your expectations (more on when to move firms in a later article).


It should only be one factor to consider and I always found it best to view a bonus for what it is; a bonus. The moment you start relying on it is the moment it becomes an overriding factor in making a potentially ill-fated decision. Enjoy them in the good years and miss them in the bad years!


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