The hiring environment remains tough and compensation costs have continued to climb, but in 2023, bank leaders renewed their focus on aligning pay with performance as succession planning concerns edged up.

Forty-four percent of the bank executives and directors surveyed in Bank Director’s 2023 Compensation Survey, sponsored by Chartwell Partners, cite tying compensation to performance as a top challenge this year. That was more than double the proportion who picked that as a top concern last year and represented a swing back to sentiments revealed in prior years.

Rebounding interest in tying pay to performance could indicate underlying concerns around attracting and retaining C-suite talent, particularly among private and mutual banks, says Scott Petty, a partner at Chartwell.

“Private banks have had to come up with more performance-based pay in order to reward talent and attract talent to run the institutions. Before, you could just get away with a base and bonus,” he says. “Now, these smaller institutions have had to get more savvy … just because the competition for C-suite talent is really at an all time high.”

In this year’s survey, respondents also point to managing compensation and benefits (47%) and retaining key people (41%) as important compensation-related challenges.

Concern about succession planning for the CEO and other key executives ticked up from last year, with a little over a quarter of respondents citing it as a top compensation-related challenge. Moreover, 17% say their CEO is over 66 years of age, and another 29% say their CEO is between 61 and 65 years old. The survey also found that bank leaders have less confidence in their long-term succession plans for the CEO than they do in shorter-term plans in the event of a sudden departure or leave of absence.

Eighty-two percent of respondents are confident about their succession plan in the event that the CEO or another key executive were to abruptly leave the bank, but fewer are similarly confident about long-term succession plans for the CEO (63%) and other key executives (61%). Looking at their bank’s talent pipeline, 65% feel their organization has a strong bench to prepare for C-suite roles over the next five years.

Seventy-one percent of respondents say their bank coaches mid-level talent to prepare them for C-suite roles, and 55% say their bank uses external career development programs. Special projects to high potential candidates (39%) and rotational work in other departments (12%) were less popular options for grooming succession candidates.

Key Findings

Hiring Pressures Ease?
A smaller proportion of bank executives and directors report difficulty hiring; 56% of respondents this year report that hiring was more difficult in 2022 than it was the year before, down from 78% who said as much a year earlier.

Demand for Business Bankers Cools
Concern around hiring and retaining commercial bankers have lessened somewhat, likely due to a dampened outlook for business borrowing amid higher interest rates. The percentage of respondents who expect their bank to add commercial lending staff fell to 61% in 2023 from 70% a year earlier. Similarly, the proportion who say their bank has difficulty hiring commercial lenders (52%) fell slightly.

Pay Continues to Climb
Large majorities of respondents say their bank increased employee pay (97%) and executive compensation (88%), reporting a median increase of 5% in overall compensation expenses in 2022. Layoffs remain rare: 78% say their bank is not considering laying off staff in 2023. Just 5% say layoffs are likely at their organization.

Hiring Challenges
Almost three-quarters of respondents cite an insufficient number of qualified applicants as a key obstacle to hiring new talent. Bank directors and executives also cite rising wages in their markets (69%) and rising wages for key positions (47%) among their top hiring challenges.

Casting a Wider Net
Forty-one percent say their bank is more open to hiring from other industries than it has been in the past, while 10% report that their organization has always recruited aggressively outside of the banking industry. But 32% say their institution mainly recruits from within the industry, with no plans to change that approach.

Retention Bonuses Gain Ground
Nearly a third of respondents (32%) say their bank has offered retention bonuses to key staff as a carrot to delay retirement, up from 21% who said as much in last year’s survey.

Remote Work Persists
A majority (80%) of survey respondents say their bank continues to offer remote or hybrid work options to at least some of their employees, while just over half (52%) offer remote or hybrid work options to executives. Smaller banks were somewhat less likely to offer remote work.

To view the high-level findings, click here.

Bank Services members can access a deeper exploration of the survey results. Members can click here to view the complete results, broken out by asset category and other relevant attributes. If you want to find out how your bank can gain access to this exclusive report, contact [email protected].


Laura Alix

Director of Research

Laura Alix is the Director of Research at Bank Director, where she collaborates on in-depth strategic research for bank directors and senior executives, including Bank Director’s annual surveys. She also writes for and edits online video content. Laura is particularly interested in workforce recruitment and retention strategies, and environmental, social and governance issues facing the banking industry. Previously, she covered national and regional banks for American Banker, and before that, she covered community banks for Banker & Tradesman and The Commercial Record. Based in Boston, she has a bachelor’s degree from the University of Connecticut and a master’s degree from CUNY Brooklyn College. You can follow her on Twitter or connect on LinkedIn.