1. What is the likely result of bidding wars of this type for top brokers? Will most firms benefit? Who will be the winners and losers? What about the brokers?
The result of bidding war for top brokers will be beneficial to the organization since the payment they are receiving will be higher. The offering for the organization can go up to 3 to 4 times their current value.
Yes, most of the firms will benefit from bidding war since the market value of the firm will go, the previous owners will get good sum of money out of it.
According to Best Fit policy, HR strategies and organizational strategy must be aligned. The current employees will work toward the organizational goal whoever be the owner. The organizational owner should come up with the applicable and reliable strategy in order to fit the organizational goal. The organizational structure, culture, behavior and work process are the basic needs of an organization.
According to Best Practice model, it leads to high motivation and employment commitment. This will bring positive effect in overall organization performance with highly motivated and committed employees.
If the new owners can implement either best fit or best practice model, they will be the winners and previous owners will be the losers since the lack of strategy of organization will overcome and step toward profitability.
2. Explain why there is such a strong relationship between pay and performance for brokers. Why isn’t this true of many other jobs?
The more you get better payment, the more you perform well and desire to get high paid remains in all. Payment is one of the most desired attributes to get the task done. Most of the people relates their performance with the payment, there are lesser people who work for the passion.
In case of brokers, they do not work on salary basis, they work for the commission. So there is direct impact on brokers with their performance with the payment. If you do not perform or achieve the deal, you are not paid. So it's necessary for them to perform well to get the payment.
This might not be the case for other jobs where they are being base pay. Paying for performance is extra earning. So these jobs are only done to achieve the organizational goals not for their own betterment. For 9 to 5 job holders, they get monthly payment and get increment on time basis. It's not necessary that they get paid double on the day they performed well. So people in such case limits their performance to what organization needs but nor for their enhancing performance rate.
3. Should Bank of America change its compensation strategy to include more subjective assessments of performance and a greater emphasis on cross-selling? What effect might this have on its success in the bidding war for top brokers?.
The clients are more loyal to the brokers than the institution so the firms have to offer high compensation packages in order to maintain the competitive advantage with other institutions.
The unusual high up-front signing bonuses and decentralizing authority to take such offers can be described as incentive and sorting effects at Merrilll Lynch. This compensation strategy clearly attracts top performing brokers and helps them to keep within the firm with loyalty and perform well for the firm.
If they change the compensation strategy, they might not be able to retain the performing brokers. There is high risk of brokers not being attracted towards the firm mainly the top performing brokers. If the company is not able to retain the top performing brokers, they will lose the competitive advantage in the market.
