Part 8: Bonus time
Retired metal merchant, Anthony Lipmann, illuminates trading for the young about to enter the world of metals
So, it’s bonus time and you have been in the metals trade for just one year. Around you, older members of the company peel off into huddles to talk about pensions, offshore blind trusts, or foundations. At one company at which I was employed, as much time appeared to be spent on pension calculations as trading. It was all about personal money.
The younger trader might do well to note that in most forms of employment bonus time is not a date in the calendar. Perhaps the reason bonuses are such a vexed subject in the metals industry is that none of us know from one day to the next how we are going to do. The idea of the bonus is to keep basic salaries manageable while rewarding staff when things happen to go well. In 1979 my first boss told me, while offering me my salary of £1400 a year, that if I worked hard bonuses should probably make me a £1mln by the time I was thirty. I’m not sure I believed him but when this did not happen, I still judged myself a failure.
Metals is a honeypot, and it is an accepted fact that so long as you are in its vicinity a good portion will get stuck to your fingers – that is, unless you have the proclivities of Pooh Bear. Pooh is so greedy for honey that when he is invited to Rabbit’s house, he eats all the honey and swells to the extent that despite all the pushing and pulling of his friends he cannot get out. He must slim. This is an allegorical story that needs to be read to all young metal traders. [Be hungry but not greedy.]
My first boss was generous. He gave me £600 at the end of my first year in which I had excelled at writing Shakespeare-style metal reports circulated to clients. Today, I look back surprised at my confidence – and that my lack of experience did not stop me. It must have sounded good enough as my boss used to call me his ‘scholar’ because of my spelling. Writing an evening metals report was the type of low-key advertising brokers on the London Metal Exchange went in for at the time – and I blew that years’ entire loot on a party. In the evening, after work, my boss liked to put his feet up in a cat-launcher chair and watch the Rugby. His bonus was to be driving a Ferrari, but his tastes and creature comforts were homely and personal. The next year he gave me a Sony Trinitron Television as well as a bit of dosh.
At another company, where I had ambition, I fancied myself as a director. But for reasons I do not understand, the call never came. As I waited at my desk at bonus time to be called in, I experienced a tingling sensation of anticipation coursing through my veins. Weighed down by mortgage debt and the responsibilities of a young family, bonus anticipation was like a lottery number you hoped would come up. I think I was always a bit disappointed.
There were of course, all around me, what you might call metal trading stars – traders who had pulled off something special; perhaps shipping a hundred thousand tons of alumina into a smelter or being on the right side of an arsenic bull market. Of course, I was always jealous, imagining negotiations in which the bosses felt they had to pay out to the employee, or they would take their skills elsewhere.
On one such occasion in the 1950s my father’s boss of the time rashly agreed to a percentage of the aluminium profit for the year in question. When it came to bonus time, though, the figure was so large, his boss reneged, and my father gave him an ultimatum. Pointing to the door Dad said, ‘That’s my hat and coat and I’m walking towards them. If you don’t agree to pay my bonus by the time I t to the hat stand, you’ll never see me again’. My father soon found himself out in the street ̶ and out of a job. As a result, I vowed never to have High Noon moments in my career.
It can take years sometimes before you realise that if you are in metals, you are basically spoiled. Nurses, ticket collectors, builders, bus-drivers, council workers, rarely have bonus times. Mostly they have – if they are lucky – collective bargaining, a £50 employee-of-the-week award, or nothing. So, my killjoy advice to the young trader is to not obsess about the metals bonus (it’ll be better than most professions) but to watch your trading.
When a bonus is linked too directly to a single employee’s performance it gets tricky. Does the boss allocate specific metals or geographical regions to a trader? What incentive do you then give to those working on the critical functions of shipping and accounting? In a restaurant, the cook is important, but the waiter often gets the tip.
In our private company we think we are quite generous with bonuses, but they are not related to an individual’s work but to the success or otherwise of the company. We think that a small team needs to work together, and no trader should feel shipping or accounting is menial. It’s not just the person who signs the deal who requires reward. Perhaps there are those who think this a rather communal or even communist idea, but the employee needs to remember that they are part of a team, and the owners must live through both the good years and the bad. As Noël Coward wrote in the song of the same name… ‘There are bad times just around the corner’.
Employees usually focus on present success. Bosses wonder where the next storm is likely to come from.
Written by Anthony Lipmann