The financial markets industry is going through a period of structural change. It's the capital requirements, stupid - and the increased regulation. And the economy. And shareholders sick of bankers walking off with a big percentage of the spoils.
The trend for cash compensation is down, as banks, hedge funds, fund managers and private equity firms either pull in their horns or reduce payouts at the insistence of shareholders.
Jobs are beings slashed. The industry will be much smaller come the end of the year, and those that are in a job will have fewer opportunities for career progression.
But the group of employees who have the most to worry about are Managing Directors - there are just too many of them, and they just cost too much.
Goldman Sachs recognised this reality last week, when it told staff that it will name a new class of Managing Directors every two years, instead of on an annual basis, beginning in 2013.
And Heads of Recruitment at a recent eFinancialCareers round confirmed that investment banks banks simply have too many senior staff.
'We used to have a pyramid structure', complained one human resources professional at an international bank. 'Now it’s becoming more like a rectangle'.
Round table attendees said they were looking at various ways of dealing with this issue, including making different classes of Managing Director – some of whom would be less important (and less highly paid) than others.
One senior management consultant who works with banks, speaking on condition of anonymity, told eFinancialCareers: 'It’s an issue wherever I go. Banks promoted far too many managing directors and directors, often simply to retain them. They now have a lot of people with big job titles and big salaries but without the responsibilities that go with that'.
The best way to deal with this is simply to make big redundancies, he said: 'You have to fire 20% of them, period'.
Hit the link below to access the complete eFinancialCareers article:
Goldman Sachs not only top heavy bank; 20% of bank MDs must go
Asset manager pay hikes not enough to retain star performers
Surprise: Wall Street bank salaries are even higher than in London
The Alchemists: Three Central Bankers and a World on Fire
Hubris: How HBOS Wrecked the Best Bank in Britain
