what happens when you earn more than your boss?

One of your favourite stories on FT Edit this week was about a banker who earned more than his boss.

Nick O’Kane, a star trader at the Australian investment bank Macquarie, announced his departure this week having taken home more than $37mn over the past year. That’s 75 per cent more than the bank’s chief executive, and $1mn more than the JPMorgan chief, Jamie Dimon, received in in the same period.

In 2018 an unnamed employee at insurance company Prudential earned £16.6mn, more than double the salary of the chief executive. The company refused to name the employee, although most people believed it to be one of the group’s star fund managers.

But what are the implications of this inversion of the natural order? What are the benefits — and the pitfalls — for the prized worker, their boss and their colleagues.

Some research suggests that superstar employees can have a positive impact, improving co-workers’ productivity. A 2014 study by the US National Bureau of Economic Research on high-performing academics suggested that planting one overachiever in a team increased overall output by 54 per cent.

But there are plenty of dangers to bringing a highly paid star on to your team, including tanking team moral when workers think the star is getting special treatment. One investment banker speaking to Harvard Business Review drew a similarity to an organ transplant. “Other parts of the body start to resent it, ache, and . . . demand attention . . . or threaten to stop working. You should think about it very carefully before you do [a transplant] to a healthy body. You could get lucky, but success is rare.”

Making sure the transplant goes well often sits squarely on the shoulders of the person managing the star. “Not only does the boss have to make sure all their employees are happy,” says Andrew Hill, senior business writer for the FT, “they have also got to make sure the mega-sum recipient isn’t going to flounce off and leave them high and dry.”

Macquarie only suffered a 2 per cent drop in its share price when it announced O’Kane was leaving. But in 2010 Gartmore, a multibillion-pound asset management group, lost two of its key traders in a few months, one to retirement and another to a regulatory investigation. Within a year the business had shed half of its share price and was soon swallowed by another firm, Henderson Global Investors.

Coming up next week

Continuing on the theme, look out for Soumaya Keynes’s intriguing column on pay transparency and the unintended consequences of forcing companies to reveal wages. Nosy as you might be about how much your colleagues earn, are you really prepared to hear the answer?

Our favourite pieces

I hope you’ve enjoyed our Chinese News Year series over the past week, highlighting thought-provoking stories about the world’s second-largest economy. From this fascinating look at one man’s bid to capitalise on China’s millions of noodle joints and karaoke bars to this punchy opinion piece on the demise of Hong Kong, you can catch up on the whole series in the EDITIONS section of your app.
Hannah Rock
Deputy editor, FT Edit (@HannahRockFT)

The article I shared the most this week was Janan Ganesh’s commentary on what President Joe Biden could learn from Sir Keir Starmer. Several of Janan’s points ring true about the Biden we see today compared to the Biden we’ve known as US Senator and as the former vice-president. It’s rare that UK politics in recent years has been worth emulating, but Starmer’s leadership of the Labour party should be Biden’s template.
Caryn Wilson
US editor, FT Edit (@CarynAWilson)

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