| Topic Name: |
Lots of misinformation |
| Message Name: |
Here's my take on comp |
| Date Posted: |
05/27/2000 |
| In Reply To: |
Do you think the BB powerhoused are obliged (sp?) to follow suit and enhace compensation. Or do you think a ~25% premium is appropriate to work at lesser known/reputable/successful IB firms. I think that while that may be true with a place like Prudential, but I dont consider places like CSFB and ML to be so far behind GS and MSDW that one should recieve 25% more in salary to work there. I think doing zero would have a terrible effect on the incoming class of GS and MSDW from a morale point of view, even though very few would likely defect to other IB firms...any thoughts? |
| Message: |
and take it for what you will... Undoubtedly, the driving force behind the base salary increases for analysts reflects the retention troubles that we've faced this year in particular.
However, what I'd highlight to you is that when we discuss these issues and guage what the appropriate response is in adjusting the compensation level and benefits, the issue that we have focused on centers much more around a longer-term issue.
As is widely discussed, the challenge that these initiatives are meant to address is not necessarily short-term retention but rather to address the growing challenge of maintaining the quality of a class of incoming analysts (and associates).
In many cases, analyst attrition is not only an integral part of the program, but also a process of selection. We are not always unhappy to see a particular analyst leave, and the number of times a truly valuable analyst leaves is much smaller than the overall number of analyst departures.
The sad truth is that that percentage is much lower this year than it has been in the past, because the challenges we've faced in recruiting have transitioned down the line to analyst departures.
The purpose of adjusting compensation is two-tiered:
1) To stay in line with the Street. Some firms (read: Goldman), historically could afford to pay slightly less because of their reputation and the opportunity, however small, to perhaps achieve partnership someday. This is changing. Goldman can still pay slightly less, but only very slightly. They simply can't get away with more than a little difference. The truth is that I'd be shocked if they end up below the Street average.
2) To offer the most attractive career opportunity possible, in order to restore our industry's historically high level of attractiveness with top college undergraduates. This, more than attrition, is what has led firms to set base salary increases where they are. We simply cannot continue to recruit larger numbers of analysts from a shallower pool, and the most effective way of addressing the quality of the pool is to adjust our incentive levels.
Does this answer your question? Feel free to follow up.
|
|
