The talent shortage has claimed another victim: the banking industry. Turnover continues to increase and retaining and recruiting talent are major considerations banks have to take into consideration. One way for banks to stand out in the war for talent is to offer more pay as a means to attract talent, finds new survey data.
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Crowe—a public accounting, consulting, and technology firm in the U.S. with offices around the world—recently released its 2019 Bank Compensation and Benefits survey data, which includes information from 778 banks and credit unions; making it the largest survey of its kind in the industry. The survey includes information on benefits, incentives, director compensation, and Human Resource practices, as well as bank salary and bonus benchmarks for 273 job positions.
Turnover Remains High
Turnover for nonofficer and officer positions rose again in the 2019 survey, a continuation of a longer-term trend. Over the past 6 years, the turnover rate for nonofficer positions has more than doubled to 23.5%. Although the officer turnover rate for banks is not as high percentagewise, it’s also more than doubled in the past 6 years, from 3.6% to 7.5%.
Attracting younger talent is crucial for any industry, and this focus is especially evident in the banking world. Fifty-six percent of banks reported that retaining younger talent is somewhat or very challenging. This percentage coincides with 71% of banks that reported having no strategy for recruiting younger talent but plan to develop one.
Recruiting Talent Remains Difficult
“Banks are finding it more difficult to recruit younger talent as this age group places greater expectations on their employer regarding their careers and work/life balance,” says Timothy Reimink—a Crowe performance improvement managing director specializing in financial services—in a press release. “Banks must deal with the sometimes stodgy reputation that banking holds in the minds of younger generations, compared to the interesting and flexible employment options available in other industries. This reputation makes hiring and retention issues even more complex.”
Issues with recruiting younger talent may further be amplified when examining the age breakdown of current bank employees. The percentage of professionals younger than 25 is only 11%. This recruitment gap causes concern as the largest group of employees by age (55 to 65), constituting 22%, approaches retirement. “Banks need to hire and develop talent to fill positions opened by retiring employees or by employees promoted to replace retiring managers,” adds Reimink.
However, Pay Gaps Are Being Remedied
On a positive note, more respondents than the prior year reported taking action in response to correcting gender pay differences. Ways of doing this include:
- Performing an analysis of pay differences between men and women (21.5%),
- Making necessary adjustments during salary review (19.7%),
- Being more transparent with staff (9.9%),
- Raising awareness of women’s issues in the workplace (2.4%), or o
- Other actions (10%).
According to the survey findings, more banks have started using these strategies since last year’s survey was conducted. “It’s interesting to note that the percentage of ‘other’ actions has increased the most since last year, so banks may be coming up with their own unique initiatives to address the gender pay gap issue,” says Reimink.
Other key survey findings include:
- CEO median salaries averaged $231,082 in 2019, a nearly 5% decrease since last year. Reimink notes that CEO compensation is often an indicator of the underlying strength of profitability in the industry.
- The chief information officer (CIO) position saw an above-average increase in salary for the second year in a row, this year at more than 10%. As data quality and data protection continue to be high priorities, IT departments will continue to be highly valued.
- The position of chief human resources officer (CHRO) reported an average annual salary of $112,586, a nearly 8% increase over last year. Given the industry’s reported focus on HR initiatives, this increase coincides with current priorities.
- Investment in branch staffing rose this year with an average yearly salary increase of 6% for branch managers and 4.7% to 6.7% for tellers, depending on their experience level.
- Since 2012, 15% more banks have implemented a rewards system based on years of service to encourage lower turnover and increase officer retention.
- This year, 20% of banks reported a pay strategy of being more than 10% above market levels, a figure that more than doubled from 6 years ago. As turnover rates increase, and younger generations demand more competitive wages from their employers, banks have little choice but to offer more compensation to attract potential new hires.
Banks also reported the average time elapsed between posting a job to filling the open position. Although the length of time ranges from a few days to multiple months, just over half of the banks reported an average time of one month. Banks with turnover rates above 20% have a higher rate of taking 2 months to fill positions than those with lower turnover rates.
“As turnover rates increase, it is critical for banks to reduce the time between job posting and job fulfillment,” adds Mark Walztoni, a Human Resources consulting managing director at Crowe. “Open positions result in additional work for remaining employees, which often leads to lower job satisfaction and increased turnover.”