Staff Performance Reviews under Fire

A recent article in the Wall Street Journal takes aim at staff performance reviews. Temple Associates has long argued that the present performance review system is a ritual and platform for political power plays - especially in large, bureaucratic organisations. In addition, the secretive and arbitrary way that bonuses are awarded does little to alleviate this problem. While well-intentioned, making awards too dependent on subjective opinions (even worse on a 360 degree basis) would often turn out to be ludicrously discriminative if it would be brought out into the open - or even subjected to legal test. While maligned by regulators making performance-based pay dependent on numbers would be a more objective and less controversial way of establishing fairness. In addition, company-wide bonus schemes on an equal percentage basis could be administered for all employees. This would allow to incentivise those employees who work in areas where performance cannot be assessed based on numbers alone.

Pitfalls of Acquisitions

The 2005 takeover of Eurohypo by Commerzbank is just another example in a long list of acquisitions that led to disastrous consequences for the acquiring party. While not many people could have predicted the Credit Crunch at that time it confirms the conclusion of many studies that say that at least half of all acquisitions are not successful. Utmost due diligence is therefore the order of the day when undertaking M+A projects. Unfortunately, too many deals are driven by egos - especially those of CEO's who brush aside all concerns - quite often even those voiced by their internal strategy and planning departments.

Bankers need to find bonus accord?

That seems to be the opinion of Mark Kleinman (FT). But quite apart from the legal aspect of companies coming together on a sensitive subject I would be sceptical about the success chances for any such accord. As long as economic pressures lead to competition for the services of quality professionals there will be upward pressure on the compensation packages for those most in demand. Salaries (and employment numbers) among the run-of-the-mill employees may well be under downward pressure at the same time but top performers should remain well bid for. This trend is exacerbated by the fact that alternative investment managers in the hedge fund and private equity sectors are continuing to benefit from an extremely lax regulatory environment that gives them a leg-up when competing for staff with banks, traditional fund managers as well as industry and commerce in general.