Author: Site Staff

After a dismal 2008, bonuses in the financial services industry are on pace to increase 25 to 35 percent this year, according to a report from Johnson Associates Inc., a compensation consulting firm based in New York.

“The industry is getting back to some degree of health,” said Alan Johnson, managing director of Johnson Associates.

“The industry is moving from pneumonia to a bad cold,” he said. “Six months ago, things were looking a lot more gruesome.”

Some in the financial services world will, of course, be awarded significantly higher bonuses than will others, Johnson Associates predicts. Bonuses for traders at investment and commercial banks, for example, are expected to be 20 to 50 percent higher in 2009 than last year.

Financial professionals in the asset management business, however, should expect to see a drop of 25 to 35 percent in bonus compensation this year, the report found.

“In the asset management space, compensation is linked to asset levels,” Johnson said. “The industry is based on fees based on the assets. The markets are down, and they are not managing the same amount of assets.”

Those in the business of trading equities or fixed-income securities are not as affected by the markets, Johnson said.

“Trading businesses are trading to make money for their clients,” he said. “They are not managing assets. They are not directly impacted by the ups and downs of the market.”

Filed Sue Asci by of InvestmentNews, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Stay informed and connected. Get human resources news and HR features via Workforce Management’s Twitter feed or RSS feeds for mobile devices and news readers.

Honda Motor Co. is adding overtime Saturdays starting in September at two U.S. plants in response to dwindling inventories spurred by rising sales.

Honda’s factory in Lincoln, Alabama, will add three Saturdays in September and October, said spokesman Ed Miller. Its plant in East Liberty, Ohio, will add multiple Saturday workdays from September to the end of the year. Miller declined to say how many overtime Saturdays that plant will have.

“In the last couple of months, we’ve noticed these upticks in sales of certain models, so we felt we had to adjust upward,” he said.

Although dealers could legally complete Cash for Clunkers transactions any time in July, Honda has not assessed the impact of the federal voucher program on its inventory levels, Miller said.

“Not in the Honda way of having real, nailed-down data, which we always like to have,” he said.

Honda’s Alabama and East Liberty plants will operate with their usual two shifts during their weekend production. Honda is also gradually ramping up production at its plant in Greensburg, Indiana, as the company had planned to do when it phased out Civic production from East Liberty earlier this year, Miller said.

Cash for Clunkers has been so successful that Congress tripled its initial $1 billion in funding. The National Highway Traffic Safety Administration, which administers the incentive, said dealers had submitted 358,851 clunkers transactions as of August 14. Those are worth $1.5 billion in voucher reimbursements.

The federal program’s success lifted U.S. light-vehicle sales to an 11.1-million-unit sales rate last month. That was the first month demand had risen above 9.9 million units this year. For comparison, sales totaled 16.2 million in 2007.

Some analysts are predicting August will be even stronger than July.

General Motors, Ford, Toyota and Mazda are among automakers joining Honda in boosting North American production as supplies of some models shrink.

General Motors Co.’s third-quarter production schedule is set, and the automaker can make only slight adjustments, said Mark LaNeve, GM’s vice president of U.S. sales.

“We’re kind of running all out,” LaNeve said. “We are lean on inventory right now. We are looking at adding production to the current schedule in the fourth quarter and the first quarter.”

So far, GM has ample stocks of fuel-efficient vehicles that are popular in the Cash for Clunkers program.

Ford Motor Co. is adding 10,000 units in the third quarter. That brings planned North American production for the period to 495,000 vehicles, up 18 percent from year-earlier levels. Ford plans to produce 570,000 vehicles in the fourth quarter, up 33 percent from a year earlier.

Ford added 15,000 vehicles to the fourth-quarter production plan from an earlier internal forecast to replenish inventories depleted by clunker sales.

Toyota says it is increasing production by 65,000 units of its most popular vehicles.

Mazda has pulled forward some Japanese production. Mazda also is ramping up production at its plant in Flat Rock, Michigan.

Mazda spokesman Jeremy Barnes expressed concern that automakers might overcompensate with their production runs, leaving dealers stuck with oversupplies of 2009 models if the Cash for Clunkers fund runs out quickly.

“It’s a challenge to re-spool up and get suppliers back online,” Barnes said. “You can’t just switch it on and off overnight. So it’s a juggling act. We hoped the program was going to be brilliant, but no one knew how well the program was going to go.”

Filed by Chrissie Thompson and Amy Wilson of Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Stay informed and connected. Get human resources news and HR features via Workforce Management’s Twitter feed or RSS feeds for mobile devices and news readers

 

As Sallie Krawcheck takes charge of Merrill Lynch’s retail brokerage firm, it is priming the pump to recruit reps of all stripes—not just the jumbo producers so coveted on Wall Street.

In a teleconference with external recruiters August 10, the first such confab since midwinter, Merrill recruiting head Don Geisler outlined the specific details of Merrill’sstrategy to attract new talent and expand its brokerage force.

It’s a plan that involves luring young and relatively inexperienced advisors all the way up the chain to top veteran brokers. Recruiters who participated in the call noted that Geisler’s message—which was delivered just days after Krawcheck assumed her new post—was loud and clear.

“We want brokers, brokers, brokers,” said one recruiter, who declined to speak for attribution, when summing up Geisler’s call.

For top producers who generate in the range of $800,000 or more in fees and commissions per year, Merrill is offering one of the most competitive packages on Wall Street, said another recruiter on the call, who also asked not to be identified.

The deal starts with an upfront bonus of 140 percent of the broker’s previous year’s fees and commissions.

A broker can add to that each year for the next five years and receive a bonus based on a percentage of assets the broker delivers. In the first year, the broker must bring 65 percent of his assets to Merrill from the prior firm to qualify.

By year five, the broker needs to increase those assets to a level of 1.5 times what he or she had with the prior firm to get the bonus, the second recruiter said.

And this comes as New York-based Merrill Lynch & Co. Inc., which was acquired by Bank of America Corp. of Charlotte, North Carolina, at the end of last year, is reopening its training program for brokers.

In addition to the reps generating $800,000 or more in fees and commissions, Merrill is targeting brokers who range from the first to the third “quintile,” or the top 20 percent to 60 percent, in production, recruiters said.

“Merrill is giving recognition to the fact that there are phenomenal brokers whose numbers are off because of the market,” the second recruiter said.

The firm is also looking to hire potential rising stars, the recruiters said. That would include a broker with a couple of years’ experience who annually generates $200,000 or more in fees and commissions.

Just last week, Bank of America CEO Kenneth Lewis tapped Krawcheck to replace Dan Sontag and run the bank’s global wealth and investment management sector.

With the historic collapse and the credit crisis that wiped out a number of storied investment firms, Merrill clearly has lost its foothold as the biggest retail brokerage firm on Wall Street.

Merrill’s reputation as the world’s largest brokerage army has been eclipsed by New York-based Morgan Stanley, which this year formed a majority-owned joint venture with Smith Barney—Krawcheck’s former firm—that gives it about 18,445 advisors around the world and client assets of $1.4 trillion.

At the end of June, Merrill had about $1.2 trillion of client assets and 13,000 legacy financial advisors (excluding about 2,000 Bank of America brokers who had adopted the Merrill brand), down from almost 16,100 six months earlier.

Merrill Lynch spokeswoman Selena Morris said the firm wouldn’t comment on a conference call. She added: “As always, recruiting and retaining quality advisors is a top priority for Merrill Lynch wealth management.”

Filed by Bruce Kelly of Investment News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Stay informed and connected. Get human resources news and HR features via Workforce Management’s Twitter feed or RSS feeds for mobile devices and news readers.

 

Dear Shell-Shocked:

Your management team should seriously consider being more open about the company’s pay system for two reasons. First, you are converting to a new methodology for administering base pay (banding) that is more complex and challenging. Open communication about reasons for the change and the impact on employees drives understanding and acceptance by supervisors and employees. Second, you’ll want to avoid the appearance of a “secret” pay system, which will damage your employee relations.

Open and proactive communication about your pay philosophy, your exempt pay structure and how market rates are determined is an important component of employee engagement. Employees want to know whether they are paid competitively, relative to the marketplace. If you don’t tell them, they’ll go to Salary.com, Monster.com or other sources to obtain the information. Whether or not the information they receive is correct, however, isn’t important. What is important is that you will have relinquished control of the conversation. Employees also want to know where they stand relative to the market rate of their next job. They want to know where they are going, and pay advancement opportunities are part of the calculation.

Employees will piece together a puzzle, however inaccurate, of how pay is administered in the organizations. Some supervisors may end up sharing the information with trusted staff members, thus creating extra animosity. All this adds unnecessary stress at review time, as managers must obfuscate about the reasons for pay changes and “market rates of pay.” A pay-banding system such as you propose makes this task even more difficult, as it is a complex system.

For employees to offer full commitment to your company, they must sense a level of trust both with supervisors and your management team. Indeed, companies in which managers willingly share market data and pay information tend to have higher rates of employee engagement and retention.

Being open about pay does not mean that you have employees running around sharing details about their paychecks. Paychecks are still confidential data; however, the process for determining employee pay levels is not.

You should also ask your management team why it no longer is open about the structure and administration of company pay. Remind them that most employees will support any changes—as long as you help them understand why they are being made.

SOURCE: Bob Fulton, the Pathfinder’s Group, Chicago



LEARN MORE: Please read how some companies have soured on pay-for-performance plans.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

Ask a Question

Dear Workforce Newsletter

Dear Out of Touch:

 

Your first step here is to back up a bit. Numerous pieces of research show how getting promoted to supervisory roles is a highly stressful move for people. Also, many of today’s supervisors feel unprepared for (and unsupported in) their new roles. This can contribute directly to the discontent you’re seeing.
Instead of focusing solely on the tool kit, start preparing supervisors three to six months before they take on the added responsibilities of the promotion. More often than not, employees are promoted due to technical ability rather than management skill. Supervisory candidates need to be developed, coached and possibly mentored so that they are fully equipped to start achieving results through others.

It’s also important to pay attention to what’s going on at the senior manager level. If senior managers aren’t communicating corporate strategies, goals and expectations, then that disconnect will affect the way supervisors manage their employees. “Transition talks”—one-on-one meetings between supervisors and managers—can resolve this issue. Topics could include strategies, goals, priorities, how to work within the system, and who the resource people will be.

As for a tool kit specifically, a variety of information and activities should be available that support real skills development. Ideally this will follow initial leadership training. These skills are necessary for success in any leadership role, such as planning and organization, time management, communication (including listening skills), delegation, building effective teams and motivating others.

For example, let’s assume a deficiency in giving feedback is identified. While having the supervisor read a few articles might help, it alone won’t achieve lasting behavior change. People need key behavior steps that help them apply skills to real-world situations. With this in mind, the tool kit could include a comprehensive online tool with a number of interactive sessions. The supervisor could select information about feedback, then listen to a scenario and respond to questions about it. This type of integrated approach provides the kind of support needed to apply the skills back on the job.

Once the right development and reinforcement structures are in place—from initial guidance and support to a supplementary tool kit—your supervisors will be better positioned to provide the kind of leadership that engages employees and contributes to higher productivity.

SOURCE: Chris Blauth, AchieveGlobal, Tampa, Florida, July 20, 2007

LEARN MORE: An interesting take on management skills is contained in this article by Gershon Mader and Josh Leibner. Also, companies are spending more money to equip managers with needed competencies.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

Ask a Question

Dear Workforce Newsletter

Dear Overwrought:

 

Companies all too often establish new operations, or relocate existing operations, in far-flung regions without giving extensive thought to labor issues. The desire to take advantage of cheap labor and push production costs down is understandable, but selecting a location without proper diligence could result in the opposite: soaring production costs despite lower labor rates. The first action items on your to-do list should include:

1. Find out if any of your strategic partners, vendors or customers have operations in or near the target area. These organizations have a vested interest in helping you be more successful, and are more apt to share their learning with you.

2. Find out if any current employees are immigrants from the target location. If you are lucky enough to have someone, find out from them what the trusted news sources are in the region, and if they would be willing to help translate online news sources so that you can develop a better understanding of the labor climate. If you do not have any current employees who emigrated from the region, consider reaching out to a local university to find a current student from the region who is studying business, language/journalism or a field related to your industry. Having someone native to the region help you review news relating to labor issues helps ensure that you interpret the news—and the social/cultural ramifications—more accurately.

3. Use the Internet to find professional conferences and events that relate to HR in the region. A number of international-conference companies are active in Eastern Europe, including IIR and Management Centre Europe. Brochures from recent and upcoming events will tell you what topics are emerging and which vendors (sponsors) are active in the region.

4. If possible, hop a plane and get a feel for the land. If you are going to play a role in deciding when and what to do in a region, it is critical that you understand that region. Take a week to 10 days, travel to the region, and stay in a hotel outside the business center. Eat where the locals eat, talk to people, meet with the faculty of local schools, meet with civic leaders and build your learning network. Assembling a network of people who represent the region’s character, and who do not have a financial interest in your organization, will help you evaluate the massive array of outsourced services and products that vendors will try to sell you as a new entrant to the region.

Building a world-class workforce abroad is all about understanding the local labor force, specifically what motivates and frustrates them. If you can learn this, and engineer an HR strategy/function that coordinates all of your “deliverables” under a shared vision, you will be successful.

SOURCE: Dr. John Sullivan, San Francisco State University, July 16, 2007

LEARN MORE: Please read advice about how to launch a new HR division. Also, How HR Keeps Pace in Growing Companies.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

Ask a Question

Dear Workforce Newsletter