This is the time of year of the dreaded bonus conversation. I sat on the trading floor for 10 years and many times I watched my colleagues walk out of their managers’ offices feeling helpless, “pissed off”, and under appreciated.
First, I have some bad news—THERE IS NOTHING YOU CAN DO ABOUT THIS YEAR’S BONUS (well, at least at most financial services firms “the number” doesn’t change once it is set. )
On the plus side though, the bonus conversation is a major opportunity to establish expectations, build trust, and ask for support. Here is how:
Step 1: Go into your meeting knowledgeable about what competitors are paying, how the firm performed, and how you performed relative to others.
Preparation breeds confidence and confidence allows you to speak more freely and ask smart, probing questions. This takes us to Step 2.
Step 2: Ask your manager what determined your bonus amount?
Many times the bonus amount is low not due to your personal performance but due to the performance of the group, the firm, or another group…Knowledge is power and understanding how your performance impacted your bonus is essential.
Step 3: Ask for a range of what others in your job function and title level received
This is often more appropriate for those that are analyst, associate, VP and director level. The variation of Managing Director and Partner pay is so great that a range typically does not make sense. If your placement in the range does not coincide with your performance reviews then you need to find out why. For example, Joe has a performance review average of 4.8 out of 5 (stellar performer). His bonus is $200,000. The range of others in his line of work and title is $150,000 to $250,000. Why is he middle of the pack for bonuses when his performance is top of the pack?
Step 4: State your income goal for next year and ask what you need to do to get that
This is an opportunity to share with your manager your goals and aspirations and establish expectations for next year. It is critical to understand what you need to do to get there. Sometimes what is expected of you is unrealistic given current resources. For example, you are expected to raise $100mm of capital for your fund, yet, you don’t have the appropriate marketing materials which are produced by a separate team. The bonus conversation is a good chance to talk about how much more you could have done with more resources/managerial support, etc. this year and to set up expectation to receive this support going forward.
Step 5: Thank your manager
Even if you are really disappointed with your bonus number, show gratitude and appreciation. Being a manager can be tough sometimes, and giving out below expectation bonuses is dreaded as much, if not more, than firing someone. Your boss has to dole out bonus numbers to your whole department and you can bet that he/she is facing a lot of hostility from others in your team. You have an opportunity to be the anomaly and actually show gratitude. Your boss won’t forget that and this small gesture can be quiet rewarding someday.