Is this really true? Is there such high demand for financial services workers they can walk out the door and immediately secure an equally high-paying job elsewhere?
I sincerely doubt it, for all but the very highest performers.
It appears obvious to me that far too many corporations are being run in the interests of the executives rather than of the owners. This should be dealt with via a stockholder revolt, of course, not by regulation.
Of course not. This is the same tired rationale that politicians and their supporters use to justify more perks and compensation. We have to pay more to get good people. The truth is, with very few specialized and talented exceptions, in this society and large capitalistic market, there is nearly always someone capable of doing your job for less compensation.
Yes, it’s true. The key people (the ones you hear about getting the 7 figure bonuses) don’t need an “equally high-paying job elsewhere”, or any job for that matter. If they’re not sufficiently incentivized with fat bonuses to stick around, they’ll leave and do whatever. Manage their own investment portfolios, hang out at their multimillion dollar estates, do a little consulting which they can usually get paid very well for due to their long list of connections to wealthy and powerful people. Even the ones just getting the mid-6 figure bonuses are generally quite capable of supporting themselves very well just day-trading for their own accounts. At home, in their jeans or pajamas. The corporate rat race isn’t a lot of fun, and sane people don’t stick around unless there’s a lot of money to be made.
I can tell you I would absolutely leave if they changed my compensation plan. In fact, in 2002 many of my peers walked out the door after our comp plan was changed. Why? Because a few thieves had submitted false sales contracts and were comp’d for doing nothing more than filling out fraudulent paper work.
Yes, any salesman can walk. A Real Salesman can sell for anyone and sell anything of value to a prospect.
A company has an obligation to pay for production to the Salesman and the support team.
If they are not willing to honor their commitment, a salesman will absolutely walk and go to a company that will pay them what they are worth.
What is a salesman worth? About 10% or more in total compensation.
So for 10% of $2 million in production a salesman would earn $200,000 or more for the year.
If he produced $50 million then he should be comp’d $5 million and more.
Don’t like it? Try working for a company that doesn’t sell anything.
Think you can do a better job for less? Feel free and tell me how you feel when you learn how much your contemporaries are earning.
Yes, I would leave.
For a bit of context, I have a math/science/engineering background from top schools, plus teaching experience in and out of the classroom. I commute ~2hrs each way, and work 12 hour days. I do this because coming out of grad school it seemed like the best path to financial security. If compensation were to be significantly and permanently reduced, I would be gone the same day. Where? Someplace less productive (teaching at a school, or working for the government), or just less stressful/time-consuming (working for a computer/electronics firm), or starting a business with my wife, but in all cases somewhere less remunerative.
Also, it is important to note that (at least at my company) compensation is a matter of growth rate. So being considered a high performer means that your percentage increase will be higher than average (or in a year like 2008, less negative). So in order to get paid well, it is necessary to perform well, usually for multiple years in a row, and to be in a business that is performing well, and for the company overall to be performing well. And an increasing percentage of the compensation is in the form of stock, which vests over a few years (and even the part that has vested usually isn’t delivered to your account until some years have passed).
Note, by the way, that I’m not saying that we’re not willing to take a temporary reduction in comp if the company isn’t making money and if the prospects for future performance are good. But if my company were under tight govt supervision, and there were little hope of improvements, it wouldn’t make sense to continue.