The Importance of Bonuses

Roger Ehrenberg has an end-of-year post about when he was happiest. He talks about his personal life, but he also talks about his professional life:

There are two distinct times that stand out. The first is when I was 30 and a derivatives pro at Citibank… false modesty aside, I did pretty damn well. I turned health care into a true partnership between banking and Sales & Trading, advising clients on comprehensive liability management strategies in tandem with the banking team. It was a potent combination and quite simply, we rocked it. I also began to chip away at some big, legacy M&T clients that were in need of help but simply hadn’t looked at us as trusted advisers. And now some of them did. And we did some excellent monetization transactions as well as buyback-related hedging strategies. I really began to see how I could cover the client base and make money in a way that hadn’t been done previously. I was making it happen. And at the end of the year I got paid well for the work I had done…

if I had to pick when I was truly happiest, it is when I got my bonus after my breakout year at Citibank. It really wasn’t about the money. The money was the symbol of what really mattered: I had arrived.

It’s easy to laugh at someone who says that he was truly happiest when he got his bonus, and then immediately says that it wasn’t about the money. One’s first reaction is to say, well, if it wasn’t about the money, then why weren’t you truly happiest when you were "quite simply rocking it" on the derivatives desk, rather than at the end of the year when the bonus arrived?

But that’s not the way that Wall Street works. On Wall Street, you’re really nobody until you get your first big bonus. So yes, of course it was about the money, it just wasn’t about what the money could buy.

I’d be interested to know what first springs to mind when you ask an athlete what it was like winning a gold medal at the Olympics. I wouldn’t be at all surprised to learn that it’s the medal ceremony, not the event itself. Symbols are powerful things, be they medals or bonus checks.

And I think this is where the big disconnect appears between people who really understand bonus culture, on the one hand, and people (like me) who say things like "if I had that much money I’d never be working at a bank". Yes, you’re working for your bonus, and it’s your bonus which makes you happy. But actually spending it – that’s an afterthought.

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