Jefferies Rethinks Bonus Culture in Bid to Emulate Goldman Sachs
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By The Venture Focal | Summary based on original reporting by the Financial Times (24 August 2025)
Jefferies, Wall Street’s last major independent broker-dealer, is shifting away from its traditionally individualistic pay structure in an effort to foster internal collaboration and better serve complex corporate clients. Known for handing out hefty cash bonuses based on personal performance—$385 million in 2024 alone—the firm is now rethinking how it incentivises bankers.
CEO Rich Handler, once an advocate of high-performance-driven rewards, appears to be softening his stance. Drawing inspiration from management theory and decades-old business school teachings, he is steering Jefferies towards a compensation model that prioritises collective achievement. The goal: reward teamwork over solo wins to land and retain larger, more sophisticated clients.
The Thinking Behind the Shift
The logic is clear. If bonuses are tied almost entirely to individual output, there's little reason for bankers to share insights, leads, or resources. That kind of culture can fragment a firm—particularly one hoping to scale its corporate advisory and capital markets business. Collective rewards, meanwhile, are meant to motivate employees to think beyond personal deals and toward long-term client relationships.
Still, the approach isn’t without risk. Critics argue that shared rewards often create free-rider problems, where some benefit from the efforts of others without contributing themselves. There’s also the concern that top performers could flee if they perceive the new structure as flattening or capping their upside.
“If a new bonus scheme redistributes without enlarging the overall pot, the highest flyers may start to look elsewhere,” the FT notes.
Why It Matters
Jefferies’ culture has always leaned more “eat what you kill” than “we’re all in this together.” But even as its share price has surged over 250% in the past five years—outpacing Morgan Stanley and JPMorgan—there’s growing awareness that long-term institutional success demands more than individual brilliance.
The move mirrors a broader trend in investment banking: rebuilding internal culture to compete at scale. Goldman Sachs, the firm Jefferies increasingly seeks to emulate, has invested years into its “One Goldman Sachs” initiative aimed at breaking down silos. Though the slogan has often been mocked, the strategic intent is now influencing competitors.
Research suggests that collaborative cultures can succeed if the environment is healthy, trust is high, and employees feel supported beyond just their paychecks. In other words, culture matters—especially when money alone no longer keeps talent loyal.
Our Take
This isn't just about changing comp formulas—it's about changing DNA. Jefferies is betting that a collaborative mindset, paired with a competitive edge, can attract big clients and retain top talent. But shifting from “lone wolf” to “team player” in investment banking is notoriously difficult. Execution will be everything.
Original Source:
Financial Times, 24 August 2025
Original article: https://www.ft.com/content/2ed00ea4-c2d6-42c6-8cf6-2e40ec420367
Excerpt used under fair dealing: “If a new bonus scheme redistributes without enlarging the overall pot, the highest flyers may start to look elsewhere,” the FT notes.
