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Survey shows financial institutions are banking on talent

Crowe Horwath LLP releases findings from its 2016 Financial Institutions Compensation Survey
Bank Comp 2016 Spotlight

CHICAGO (Oct. 5, 2016) The battle for talent is heating up at banks, according to several findings from the Crowe Horwath LLP 2016 Financial Institutions Compensation Survey: turnover is up, staffing levels are increasing and plans to pay employees at an above-market rate also increased. Crowe, one of the largest public accounting, consulting and technology firms in the U.S., conducts the annual survey, now in its 35th year. The survey, which compiled data from 378 financial institutions, also shows salary benchmarks for 255 job positions.

According to the survey, bank employees are changing jobs at the fastest pace in 10 years, with nonofficer turnover at 18.7 percent and officer turnover at nearly 7 percent. “Turnover is expensive because of the costs to replace lost employees and train new ones, and because of the resulting loss of productivity,” said Tim Reimink, a managing director in the Crowe financial services performance consulting group. “Two practices for banks to help minimize turnover are assuring periodic, worthwhile performance conversations between employees and their managers, and surveying employees to understand their concerns and level of engagement.”

During and after the recession, many more banks reduced or held back on staffing increases. This year, banks returned to pre-recession levels with only 3.6 percent planning to reduce staffing and 34.1 percent planning to maintain staffing levels. Thirty-six percent are planning for normal growth and 13.8 percent are aiming to expand. Reimink noted that the planned staffing increases combined with the increased employee turnover imply that the battle to find and retain talent is becoming even more heated, and many leading firms have implemented strategies and tactics to attract more millennials as part of this battle. “Banks realize that attracting and engaging millennial employees requires some different approaches, and we’re starting to see relaxed dress codes and more ability for employees to work off-site. A community bank in Texas recently located its new call center in a city with a high number of colleges to purposely attract tech-savvy millennials,” he said.

The percentage of banks that plan to implement an above-market compensation strategy has increased steadily over the past four years. This year, 28.5 percent of banks reported plans to pay more than 10 percent above market, which is a 5 percent increase over last year. “Putting more emphasis on pay is a good way to attract and retain high performers who are motivated by money,” Reimink added.

Banks reported upward trending base salaries this year for the customer-facing roles of tellers, receptionists, loan processors, credit analysts and branch managers. “The pendulum has swung from years of driving down costs back toward driving revenue, and the survey results illustrate that. Banks are taking care of the people who take care of their customers, with the ultimate goal of increasing revenues” Reimink said.

Other key survey findings include:

  • CEO pay stayed even or decreased from last year. At large banks ($1 billion to $5 billion in assets) the median salary increased 5.4 percent but bonus pay decreased 28 percent. At mid-level banks ($500 million to $1 billion in assets) CEO median base salary showed no change from last year and a 0.9 percent increase in bonus pay. At smaller banks ($250 million to $500 million in assets), the reported CEO median base salary declined 0.4 percent compared to last year and bonuses declined 6.6 percent. “CEO compensation is a reflection of the financial performance of the industry. As the sector’s financial performance has plateaued, the CEO’s compensation has as well,” Reimink noted.
  • This trend is also reflected in reported pay for chief financial officers (CFOs). CFOs at large banks saw their median base salary decrease by 3.9 percent and their bonus pay decrease by 3.7 percent compared to last year; CFOs at medium banks saw their median base salary increase 2.2 percent while their bonuses decreased by 17.9 percent; and CFOs at smaller banks saw their median base salaries decrease by 1.2 percent and their bonuses decrease by 5.8 percent.
  • At large banks, one of the largest one-year increases in reported median salary went to commercial loan processors at a 12.7 percent increase. Medium banks reported a 1.8 percent salary increase and smaller banks reported a 7.2 percent increase for this role.
  • Bonus pay for chief credit officers at large banks decreased 16.5 percent compared to last year, but increased 31 percent at medium banks and 57.1 percent at small banks. Reimink noted that the pay for this position is tied to the credit cycle and asset quality in a bank’s loan portfolio. This past year, medium and smaller banks may have put more emphasis on new commercial loan growth and may have finally put their portfolio problems behind them, something larger banks likely had addressed earlier.

In addition to compensation trends, the survey also looked at employee benefit costs. Benefits cost as a percentage of base salary averaged nearly 17 percent. The health, retirement and insurance components are at similar levels to the 2015 survey.

“Banks face the same rising benefit costs that other industries are facing, and like most, have passed along portions of the fee increases directly to employees,” said Pat Cole, a senior manager in Crowe tax services who specializes in human resource consulting. “It was refreshing to see benefit cost sharing stabilize this year, but that may be temporary since nearly 70 percent of respondents anticipate raising premiums this year and more than 60 percent report they’ll be raising deductibles.”

In addition to the national survey, Crowe prepared regional compensation reports for the Midwest, Northeast and Southeast regions, as well as state reports for Illinois, Indiana, New Jersey, Ohio, Tennessee and Texas.

For more information on the survey findings, including an infographic, please visit www.crowehorwath.com/compsurvey-nr.

 

About the 2016 Crowe Horwath LLP Financial Institutions Compensation Survey 
The 2016 Crowe Horwath LLP Financial Institutions Compensation Survey was completed by 378 financial institutions. Using data as of March 31, 2016, the participant breakdown is as follows: 107 institutions had less than $250 million in total assets; 118 had between $250 million and $500 million in total assets; 88 had between $500 million and $999 million in total assets; 56 had between $1 billion and $5 billion in total assets; and 5 had more than $5 billion in total assets.

About Crowe Horwath
Crowe Horwath LLP (www.crowehorwath.com) is one of the largest public accounting, consulting, and technology firms in the United States. Crowe uses its deep industry expertise to provide audit services to public and private entities while also helping clients reach their goals with tax, advisory, risk, and performance services. Crowe serves clients worldwide as an independent member of Crowe Horwath International, one of the largest global accounting networks in the world. The network consists of more than 200 independent accounting and advisory services firms in more than 120 countries around the world. 

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