ohai, to be frank (and no offense), that’s a stupid argument to make. They sound like 2 year olds who just realized fire is hot. IB analysts don’t do anything in order to be compensated for performance. They don’t bring in business, they don’t trade anything, they don’t create reports for others to trade, etc. They are told what to do and they run numbers in excel with models which have already been made by someone else. The majority of the people working in this world are paid a fixed amount regardless of their performance. The prize for working better/harder/smarter than others is to get promoted and to get recognition. Compensation should increase a little bit if you are a tier 1 analyst when compared to tier 2’s and it does. Now, if their group is so much more profitable than the other groups then they should break off and start their own firm, a la, Moelis & Co. Being compensated for performance is also a double edged sword and I bet if the people polled do poorly one year, they will turn around and cry about working 100 hour weeks all year and not getting compensated for it. bchadwick, the problem with hiring more people for the same job is threefold. 1) tradition, 2) the nature of the work, and 3) the cost of training. I’ll address 2 because 1 and 3 are pretty self explanatory. Let’s say I’m working on a model for company X and I’ve made some tweaks to it. The MD calls me to change something at 2am, I pop open my laptop, change it, email it to him, go back to bed. If there are two of us, then the other person might be “on call”. The MD will tell that person what to do, then that person will have to open my excel file and try to understand the file (if he’s not familiar with the general form of the file) and then try to find any changes I made which might screw with things, and then figure out where to make the changes the MD wanted. By the time he does all of that, the MD will have fired him. They don’t want to take that risk so that’s why they would rather hire one person, pay them more and expect a lot more out of them in return.
I just wanted to add, it may seem like I’m taking a dump on analysts. This is not the case. They are very important to the functions of an IB, however, they need to realize they’re not that important, not that special, and can be replaced fairly easily.
So you are saying that all analysts are the same? There is no difference at all between analysts with respect to productivity, pleasantness, or other things?
Does that productivity or pleasantness of the lowest guys in the food chain make an impact on the top line or bottom line?
No, no, I never said that. A bad analyst gets fired. An average analyst gets X bonus. A great analyst gets X + 10%. The difference between analysts however is small. In order to be a great analyst you have to pay attention to detail more and make less small mistakes. A bad analyst makes big mistakes. This will propagate itself in such a way that the bad analyst gets the stupid menial work, e.g., make sure the page numbers are correct, go staple these, check the font sizes, etc. because they are not considered trust-worthy. In-turn, the better analysts will get the work that requires more thinking and creativity and be given more responsibility, e.g., make a model, meet a client, do recruiting, etc. An analyst is essentially just helping out the associate with his work. If an analyst is bad, the associate will have to work harder. If an analyst is good, the associate can relax more and give more of his work to the analyst and instead focus on more project management stuff (VP work). The analyst in turn will stay an extra year and/or be promoted to associate (rare but happens).