The Amount of Bonus Money that Managers take Home has Declined Through The 1990s

Reading Passage Question

The amount of bonus money that managers take home has declined through the 1990s, causing an exodus of experienced financial services advisors to a variety of nontraditional industries. These industries, while unable to offer competitive salaries and bonuses, have been forced to find creative methods of compensation for productive managers.

The reward for this movement to such diverse industries as ice-cream manufacturing, microbrewing, and institutional art-dealing is reaped by both the managers and their new employers. While net profits at investment firms have declined by an average of sixteen percent over the past three years, those of small businesses in nontraditional industries have risen a whopping thirty-eight percent; as managers bring their investment acumen to their new jobs, internal investment plans, pension plans, and health-care plans for small businesses also seem to have entered a more competitive phase.

Moreover, the cutthroat politicking found in the corporate culture of the financial services industry is lacking in smaller firms. Faced with the choice between an all-consuming business career and a more flexible work environment that accommodates family and outside interests, managers choose the latter. Such freedom to choose their own level of work commitment may encourage a longer tenure at each company and greater job satisfaction.

Preliminary studies completed by Drs. William Meyers and Beverly Chue seem to indicate that while monetary remuneration is on the decline, the community involvement of these transplanted executives has resulted in unanticipated levels of satisfaction. Executives who had moved from the financial services industry to nontraditional industries were four times more likely to report involvement in extra professional organizations as "rewarding" or “very rewarding." Not surprisingly, incidents of stress-related illness among these executives were only half as frequent.

Drs. Meyers and Chue are quick to point out, however, that the contributing effect of various cofactors could not be completely assessed. Such possible contributory factors cited were location, age, marital status, prior health history, and the state of personal financial affairs prior to switching occupations. Any of these, both authors point out, could be statistically significant with respect to the effects cited as results of changing occupations.

“The amount of bonus money that managers take home has declined through the 1990s”- is a GMAT reading comprehension passage with answers. Candidates need a strong knowledge of English GMAT reading comprehension.

This GMAT Reading Comprehension consists of 4 comprehension questions. The GMAT Reading Comprehension questions are designed for the purpose of testing candidates’ abilities in understanding, analyzing, and applying information or concepts. Candidates can actively prepare with the help of GMAT Reading Comprehension Practice Questions.

Solution and Explanation

1. The primary purpose of the passage is to

1. explore an old phenomenon in the light of new evidence
2. reevaluate the contributions of one occupation
3. point out increasing difficulties in the financial sector
4. examine the reasons behind and impact of a phenomenon
5. explain the reasoning behind a proposed change in corporate structure

2. The author of the passage cites “ice-cream manufacturing, microbrewing, and institutional art-dealing" (Highlighted) in order to

1. show the diversity of nontraditional industries that financial managers have entered
2. describe the industries most significantly harmed by this exodus of talent
3. illustrate the variety of problems associated with the financial industry's corporate downsizing
4. provide examples of industries with a higher level of job satisfaction than that found in the financial services industry
5. explain the reasons for contemporary profit increases in smaller, more nontraditional industries

3. Which of the following is an assumption underlying the information presented in the first paragraph of the passage?

1. There was no cause for the managerial exodus more significant than the decrease in bonus levels.
2. Nontraditional industries provide more comprehensive benefits than does the financial services industry.
3. The rise in profits at nontraditional industries is due to the influx of financial managers.
4. A longer tenure at a given company leads to greater managerial and experiential efficiencies.
5. Prior to 1990, bonus levels in the financial services industry were consistently rising.

4. The author believes that the “corporate culture" described in line 24 is best characterized by which of the following?

1. A massive exodus of financial managers to nontraditional businesses
2. A creative method employed by nontraditional businesses of remunerating managers
3. A mental stress associated with the long hours of an all-consuming occupation
4. A deteriorating effect of the demands of certain jobs on time and family
5. A competitive and unsupportive environment fostered in the financial services industry

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