Economic times call for investment in workers
In today’s uncertain economy, investment banks are experimenting with new ways to prevent employees from going to competitors. They’ve found that money can be very persuasive.
In Canada, Merrill Lynch is planning to sell its retail operations. In order to convince its brokers to stay on board until then, it has implemented a retention bonus scheme. Initially, bonuses were only offered to the company’s top producers – those who generated commissions of at least $400,000/year. The National Post reports that Merrill Lynch has recently extended that offer to all its 1,000 brokers. As of Oct. 31, they will receive a percentage of their commissions generated over the preceding 12 months.
Merrill Lynch estimates that the scheme will cost it $15 million. It plans to implement a similar scheme to retain its 2,300-member retail group.
In the United States, investment bank employees are in a holding pattern. Their employers want to retain them, but they just don’t need their services right now. The solution: voluntary deferrals, otherwise known as flexible leave.
Merrill Lynch is at the forefront of this move as well. According to The New York Times, it is offering employees who have been with the firm for at least two years the option of taking a sabbatical for six months to a year. Those who take Merrill Lynch up on the offer get 20 per cent of their salary plus benefits during their time off.
Salomon Smith Barney and J.P. Chase Morgan are making year-long voluntary deferral offers to their new college recruits. Salomon Smith Barney will pay them a fifth of their salary during that time. J.P. Chase Morgan sweetened the pot: new employees there get their 20 per cent up front, with an added $5,000 if the spend the year working for a non-profit organization.
There is, of course, a catch in all these offers. Participants in the voluntary deferral schemes may not work for a competitor during their time off.
The investment banks are taking a risk. If the economy doesn’t turn around in the next year, it may cost them more to dismiss the employee-in-waiting. The other alternative is to extend the deferral scheme, though new graduates, anxious for experience in their chosen field, may not be willing to defer any longer.
In Canada, Merrill Lynch is planning to sell its retail operations. In order to convince its brokers to stay on board until then, it has implemented a retention bonus scheme. Initially, bonuses were only offered to the company’s top producers – those who generated commissions of at least $400,000/year. The National Post reports that Merrill Lynch has recently extended that offer to all its 1,000 brokers. As of Oct. 31, they will receive a percentage of their commissions generated over the preceding 12 months.
Merrill Lynch estimates that the scheme will cost it $15 million. It plans to implement a similar scheme to retain its 2,300-member retail group.
In the United States, investment bank employees are in a holding pattern. Their employers want to retain them, but they just don’t need their services right now. The solution: voluntary deferrals, otherwise known as flexible leave.
Merrill Lynch is at the forefront of this move as well. According to The New York Times, it is offering employees who have been with the firm for at least two years the option of taking a sabbatical for six months to a year. Those who take Merrill Lynch up on the offer get 20 per cent of their salary plus benefits during their time off.
Salomon Smith Barney and J.P. Chase Morgan are making year-long voluntary deferral offers to their new college recruits. Salomon Smith Barney will pay them a fifth of their salary during that time. J.P. Chase Morgan sweetened the pot: new employees there get their 20 per cent up front, with an added $5,000 if the spend the year working for a non-profit organization.
There is, of course, a catch in all these offers. Participants in the voluntary deferral schemes may not work for a competitor during their time off.
The investment banks are taking a risk. If the economy doesn’t turn around in the next year, it may cost them more to dismiss the employee-in-waiting. The other alternative is to extend the deferral scheme, though new graduates, anxious for experience in their chosen field, may not be willing to defer any longer.
