David McCann, CFO.com | US
October 22, 2009

pay for performance

Is Credit Suisse trying to take a pragmatic approach to pay? All banks should take a look at the pay packages of small businesses, which are always tied to performance of the whole company. If the company has a poor year, no one gets a bonus. However that ensures two things: (1) there is a company continuing next year and (2) there is a paycheck next year.
I am amazed at the shortsightedness of these banks' compensation plans. If your bank has a bad year, your compensation plan may just bankrupt the whole thing.
The primary goal of the small business' compensation plan is to share the wealth in good years and to get by in bad years in order to see another good year. The banks' compensation plans seems to miss the point of surviving to see another good year.
The argument about losing skilled labor is not a valid argument because there are so many quality people currently available. If the people weren't considered a commodity by the banks, why would there be such large layoffs?
Banks (and other groups) need a paradigm shift in their thinking about compensation to focus on surviving the hard years.

Posted by James McMonagle | Oct 23, 2009 9:42 AM ET