HSBC manages a smooth succession

The promotion of Chief Executive Stephen Green to Chairman shows the dilemmas created by the governance code of practice. In an ideal world the ultimate owners would be intimately involved in controlling the executive management of a company and select the managers directly rather than delegating power in effect to a self-perpetuating hierarchy. But this ideal world does not exist and we have to make do with a 'second best' solution. In HSBC's case, this solution may well be the first choice. The bank has avoided the pitfalls that befell many of its (sometimes more glamorous) competitors, there are no revolving doors in the top management floor and struggles between individuals - if they persist - are kept away from the eyes of the public.

Hedge Funds a boon to employment

As we predicted earlier in the year the job market in the financial service sector is vibrant but there is probably no net expansion in overall employment levels. The one factor that should not be ignored is the tremendous support that the job market has received from the extraordinary growth in the hedge fund industry.While most Funds are small and even the largest group employ at best a couple of hundred people the sheer number of funds and supporting firms or divisions in the traditional securities industry means that many an analyst, salesperson or investment manager that would otherwise have been unemployed is secure for now. This in turn supports salary levels for those in employment in firms that are not directly involved in Hedge Funds.

Bonus payments cannot favour the few

Recent court decisions make it dangerous to allocate the bonus pool in a discriminatory fashion. It is sometimes said that the major share of the bonus pool may be given to the proverbial big hitters which bring in the lion share of the revenues. This can only be acceptable as long as the distribution of the bonus pool is justified by production numbers.Any deviation leaves firms and their line managers open to law suits by professionals who consider themselves treated unfairly.Every firm and department always will have a few big producers among staff. Often they are just lucky to be allocated the best clients. This may be due to the fact that they are the best professionals, - but even then their production numbers are only made possible by the presence of an infrastructure supported by their team colleagues. This aspect will always exert a levelling influence on the disparity of bonus levels among staff.