Banks are looking to grow, according to the Crowe Horwath LLP 2017 Bank Compensation and Benefits Survey.
Crowe, one of the largest public accounting, consulting and technology firms in the U.S., conducts the annual survey, now in its 36th year. The survey, which compiled data from 375 banks, also shows salary and bonus benchmarks for 263 job positions.
For the first time since the Great Recession, more than half of the banks surveyed said they plan to increase total employment during the coming year, either through normal growth (42 percent) or through expansion (13 percent). Meanwhile, the number of banks that plan to maintain current staffing levels held relatively steady at 35 percent, which is near the lowest levels in years. “As banks look to increase their staffing levels, they’ll be competing against other institutions to secure talent, so we can expect to see upward pressure on salaries,” said Timothy Reimink, a managing director in the Crowe financial services performance consulting group.
In addition to the upward pressure on salaries, for the third consecutive year banks reported that employee turnover rates climbed again and have reached record high levels – 19 percent for nonofficers and 7 percent for officers.
This year, the survey also asked about CEO/executive succession planning. Thirty-seven percent of banks surveyed did not have a documented plan for executive succession, with the most equipped being banks with less than $250 million in assets and the least equipped being banks with assets greater than $5 billion. “Executives at smaller banks are heavily involved in the day-to-day operations, so an abrupt change would be disruptive – which may be why smaller banks are more likely to have a formal plan in place,” said Reimink. He noted that a documented succession plan can be helpful for banks of all sizes as it allows for a smooth transition, defines expectations and a reporting structure, eases tensions for employees and gives confidence to the community the bank serves.
Other key survey findings include:
- CEO median salaries increased 3.5 percent since last year, for a compound 9.6 percent increase over the past two years. Reimink noted that this is not surprising, as CEOs typically do well in environments where banks are performing profitably.
- Salaries also increased for a number of retail positions. Top retail banking officers had a one-year increase of nearly 6 percent, new accounts representatives’ salaries increased by 3.3 percent and personal bankers had one-year salary growth of more than 3.5 percent. “The rise in retail banking salaries indicates banks are devoting extra resources toward increasing retail sales and growth and improving branch customer service,” Reimink added.
- Administrative assistants’ median salary increased 2.3 percent since last year for a compound 13.3 percent increase since 2015. Commercial loan processors’ one-year salary increased 2.5 percent for a 7 percent increase over the two-year period. Reimink noted that the higher percentage increases for these lower-level positions could be due to banks reacting to the tight labor market and higher levels of turnover.
- Chief human resources officers saw a one-year salary decrease of nearly 2.5 percent. “Unfortunately, the drop in human resources officers’ median salary levels suggests some banks have not yet recognized the coming challenges posed by today’s tightening labor market and rising employee turnover levels. This position should lead a bank’s strategy for hiring and retention, so this data point is particularly concerning,” said Reimink.
- Board member recruitment could be another area of concern, with only 39 percent of respondents reporting that they have an organized board member recruitment effort. Since the average age of board members is approximately 62 years old, more efforts to prepare for board member retirement seem warranted.
Employees with above-average performance ratings received the highest percentage pay increases at 5.2 percent as compared to average (3.7 percent) and below-average (2.1 percent) performers. Additionally, the percentage pay increase for all three performance levels has increased steadily during the past two years. “The across-the-board pay increases could be a sign of an increasingly healthy industry, more competitive labor market and greater investment in employees,” said Patrick Cole, a specialist in human resources consulting for Crowe tax services. “Pay increases directly relate to increases in total rewards and support the assertion that increased compensation is necessary to attract and retain current and future employees. When competitors show an interest in your high-performing workforce, you’re more likely to make an effort to protect and keep it, using pay increases or increased benefits.”
In addition to the national survey, Crowe prepared regional compensation reports for the Midwest, North Central, Northeast, South Central, Southeast and West Coast regions, as well as state reports for Illinois, Kentucky, Indiana, New Jersey, Minnesota, Ohio, Tennessee and Texas.
For more information on the survey findings, including an infographic, please visit www.crowehorwath.com/compsurvey-nr.