8. Remuneration has to be sensitive to market forces, although it is difficult to get good data on what competitors are paying. Much depends on what people understand to be going rates and all sorts of rumours and exaggerations surround that. This is why advertisements rarely state pay, although wide scales may be mentioned.
9. Using remuneration as the major way of influencing motivation and satisfaction is misguided. Money as ‘carrot’ or ‘stick’ has very limited effects. Other factors like work autonomy, interest and management style are more important in the long run and short run. This seems to be particularly the case with millennials.
10. The relative attractiveness of aspects of the remuneration package (eg shares, deferred payments and housing/health benefits) are very different for individuals, depending on their background and demography.
What makes asset management different
Compared to most other jobs asset managers are very well paid (they are in the top 5 per cent of the population). It is an extrinsic motivation factor that clearly attracts many to the job and retains them (given other factors are in place). In short, money seems more important, more motivational and more sensitive than any intrinsic motivational factor suggested by the gurus.
The ratio of bonus to base pay is high, relatively similar to some sales jobs. This means the reward stress is on personal effort and ability rather than contribution. It also means that people at the same level, with similar title and experience may be very differently remunerated from one another.
Many asset managers, but by no means all, have some equity ownership in their organisation, which has implications for how all others are motivated in the business. We know that having a real stake (shares) in the business can change commitment, and influence a long versus short-term horizon.
A significant proportion of their pay is often deferred. This has an effect on all sorts of decisions in the job, depending on the terms. It can easily change time horizons and commitment to others.
It is often possible to obtain reasonably robust, objective, money-based measures of success that can be expressed nearly always in monetary terminology, making subjective judgements less central to the whole exercise. Numbers do not lie and are easy to compare.
Pay systems are often company-wide with nearly everyone in the same system, which may have implications for social comparisons. This can lead to all sorts of jealousies and certain areas/specialities are seen as easier (to make money) than others. Pay secrecy/privacy is maintained which has many consequences, both very positive and negative.
Pay, performance and your business
The stereotype of people in business is that they are highly competitive, numerate and materialistic. They are attracted by the money and are prepared to work very hard, leading highly stressful lives.
