Getting the talent your bank needs – even just getting candidates to apply and turn up for an interview – has increasingly challenged financial institutions as the country emerges from the Covid-19 pandemic. And the cost to pay them a competitive wage – and benefits – keeps climbing.
Every year in Bank Director’s annual Compensation Survey – which is sponsored by our firm, Newcleus Compensation Advisors – bank executives and directors identify managing compensation and benefit costs as a key challenge for their institution. In this year’s survey, it rates as the second-highest challenge for bank leaders, behind tying compensation to performance.
These tensions are particularly felt by community banks. Those located in urban or suburban markets face stiff competition from large employers like Bank of America Corp., which recently announced plans to increase its minimum wage over the next few years to $25 an hour. Rural banks face similar challenges along with a smaller pool of talent, particularly in high-demand areas including technology, lending, and risk and compliance.
How can your bank attract and retain the talent it needs to survive in today’s environment? We suggest that you consider the following questions as you weigh how to become an employer of choice in your community.
How flexible is your bank willing to be?
Most banks introduced or expanded remote work options and flexible scheduling in 2020. Now that operations are returning “back to normal,” more or less, bank leaders are left to question what worked and what didn’t from a nationwide experiment that occurred during abnormal conditions.
Expectations have shifted over the past year, particularly for younger, digitally-native employees – resulting in a generational divide between staff and management teams. Consider the following from MetLife’s 2021 U.S. Employee Benefit Trends Study:
- More than two-thirds of employees who can work remotely believe that they should be allowed to choose where they work – not their employer.
- Half of young employees in their 20s – young millennials and Gen Z – say their work/life balance has improved during the pandemic, and they’re happier as a result. Just a quarter of baby boomers agree.
- And, crucially: More than three-quarters of employees say they want more flexible scheduling, perhaps splitting their time between remote work and the office. Conversely, the majority of companies surveyed by MetLife expect staff to return to their pre-Covid status quo.
Some employees are interested in returning to the office, but others aren’t. They’ve had months to enjoy a break from long commutes and create an environment that’s comfortable for them.
Will remote work be a passing fad, or a permanent part of the talent landscape? Even if you believe that remote work isn’t a cultural fit for your bank, be aware that you’re competing against it.
Can talented employees from outside the industry strengthen your organization?
Opening your bank up to remote work can broaden the talent pool; so can having an open mind to hiring talent from outside the financial sector. Employees can be educated on the fundamentals of banking; there are training programs all across the country. But a skilled salesperson or someone with deep technology or cybersecurity expertise can fill critical roles at your institution – no matter their background.
Do you have a good reputation?
Bank leaders often tout the value of their culture – but it can be difficult for leadership teams to truly understand how staff down the ranks view the organization. Conducting employee engagement surveys can help bridge this gap, but also consider how your current and former employees rate your company on external review sites such as Glassdoor, Indeed and Monster.com.
While these websites often attract more negative comments than positive ones, they still can provide a clearer picture of how you’re viewed as an employer – and the perception that prospective employees may have of your organization.
Does your compensation package really stack up?
Your bank isn’t competing solely with other financial institutions for talent – it’s competing against all kinds of companies in your market. We received several comments touching on this in the 2021 Compensation Survey:
“Competing employers (not just banks) in our markets can sometimes offer better benefits. We now participate in an internship program at a major state university to develop a pipeline of young talent.” – Chief executive of a public bank between $1 billion and $10 billion in assets
“We operate in a highly competitive market, so retaining and attracting technology talent is always an issue. We are competing with Amazon[.com] – hiring 50[,000] workers in our market, as an example.” – Director of a public bank between $1 billion and $10 billion in assets
Compensation surveys help banks compare their pay packages to peer institutions, but your leadership and human resources teams need to know how your bank compares to local competitors outside the industry, too. This is where boards can provide valuable insights based on their networks and experience, since they’re likely facing the same challenges in their own industries. Leverage that advice.
And consider asking your employees what they value. We’ve found this information to be invaluable to banks, allowing them to review compensation benefits and culture from the employee’s perspective.