Want to Get Paid Like a Trader?
The other day I was in the car with some friends, all traders, and they were talking about work. The discussion was all about trying to find a balance between making good, aggressive trades without losing a lot of money and playing it safe.
It got me thinking about how traders’ bonuses are given out: they typically get a percentage of whatever money they made for their firm. So that’s why they want to be very careful about the balance between making lots of money and losing it—their bonus depends on it.
And it got me thinking: What if everyone got paid according exactly in proportion to how well they did their job?
For traders, it’s pretty easy to figure out—all you have to do is look at the numbers.
For the rest of us, well, it’s a little more complicated.
Is there a way of breaking down what you do into a formula that you would feel comfortable with? Something as clear cut as a percentage of what a trader makes? Would this be more or less fair than the current system?
If it was done well, it would at least eliminate some of the drama and jealousy involved in knowing what coworkers make. Maybe.
Can it be Done?
Could you really boil down everything you do into a formula? If you work in a sales position or a job where you can directly measure how much money you make for your company, then it’s easy. You just follow the money.
But for those of us that don’t, what should be in the formula? Let’s try to take a crack at the kinds of things that would need to be included:
- Job performance: This would be really subjective, but it would kind of be like getting a grade. Say from 1 to 10. If you have quarterly reviews and you let your employees know where they stand every step of the way, this would make them work harder (presumably) to get their “grades” up. It may not have worked in school, but you weren’t getting paid in school (at least I wasn’t).
- Beyond the job: Tough to quantify, but it would again be measured very subjectively by the bosses. Same 1 to 10 scale that measures what you bring to the table that’s outside your given duties. In other words, do you go beyond the scope of your job or not?
- Extras? This is where it gets tough. What else do you bring to your job? Another language? Specific software knowledge no one else has? This one is kind of hazy.
I’m not sure what else you could possible throw into this formula, but either way it sounds like it would be at the mercy of the bosses and their opinion of your job, which is kind of how it works now, right?
Gaming the System
Sure, some people would try to game the system by just sticking to whatever “factors” make up this formula we’re talking about.
But if you construct the formula correctly, you wouldn’t care if employees gamed the system—it would lead to an increase in productivity and the business would be better off.
Everyone would win. Right?
I’m guessing most people wouldn’t want a system like this at their job—it’s just too rigid and strict. Plus, it’s at the whim of whatever the bosses decide goes into this formula.
But I think it would be an interesting experiment if done right.
What do you think? Would this fly at your job? And if so, what else would you put into that formula?
Some Interesting Reading
- An interesting Newsweek article from a trader’s perspective.
- This Wall Street Journal piece goes over the current landscape of traders and how they make their bonuses.
Photo by Petrick2008
This post was included in the Carnival of Internships, Careers & Employment