BofI Federal Bank Reviews

The "self-evaluation" system may have made sense years ago when the bank was small, but it has degraded into a charade in which managers jigger their subordinates' numeric scores so that annual merit pay increases and semiannual bonuses fit a predetermined budget. Mid-level managers seem to have their personal objectives weighted heavily toward cost control, with little emphasis on talent retention. Pay has become quite disconnected from actual job performance, extra effort, long hours, dedication, loyalty, etc. To anyone who has studied psychology, it is obvious that the compensation system at BofI is based on principles of Operant Conditioning originally described in B. F. Skinner's classic text "Science and Human Behavior" originally published in 1953. Skinner's fundamental discovery was that behavior is controlled by consequences. The use of unpredictable bonus amounts paid out at surprise dates roughly every six months creates what Skinner described as a "variable-ratio and variable-interval" schedule of reinforcement (i.e. pay) in exchange for work done. Payments to employees are treated as the equivalent of rewarding a pigeon for pecking a target (work) by giving it kernels of corn (pay). Skinner discovered that randomizing the amount of corn paid out and randomizing the timing of payments tends to increase and sustain the rate of pecking (work done) as compared to a simple schedule of a fixed amount of corn per peck. But it seems that BofI's senior management read through Chapter VI (Shaping and Maintaining Operant Behavior) then dropped out of college (or at least Psych 103) thinking they had all the information they needed to get the most work out of people. Later chapters of Skinner's book deal with the particular complexities of trying to control human behavior, one of which is a need to provide meaningful increases in reinforcement (pay) over time. This need is partly addressed by BofI bonuses being paid partly in Restricted Stock Units that vest incrementally over three years. That provides some incentive for people to stay past the next scheduled vesting date, and also creates an ever-growing pool of potential earnings that some people find difficult to walk away from. But the very short median duration of BofI employee tenure demonstrates that people can and do walk away. BofI has more than a typical rate of involuntary terminations, but by far most people who leave do so of their own free will. Especially in an environment of very low unemployment, BofI is putting itself at risk of a mass exodus event. Good people cost money. Replacing them frequently costs a lot more money.