The banking business became more expensive last year, as banks were forced to pay up to attract and keep talent. Some of the talent pressures stem from temporary hurdles, such as inflation. But Bank Director’s 2022 Compensation Survey, sponsored by Newcleus Compensation Advisors, points to broader existential challenges the industry faces in cultivating talent for the long term.
Respondents almost unanimously report that their banks raised non-executive pay last year to keep talent, and a majority also raised executive compensation. But higher pay did not necessarily translate into an easier time recruiting, with clear majorities of bankers and directors indicating that it had also become more difficult to attract and retain talent in 2021.
“Banks are just one industry. I don’t think they’re going to be spared what every other industry is experiencing in terms of the shortage of talent and a reluctance, perhaps, of some people to come back,” says Flynt Gallagher, president of Newcleus Compensation Advisors.
Of course, the banking industry has some unique nuances to its particular talent challenges. Competition for commercial bankers has always been stiff, for instance, and it’s likely to intensify as banks look to commercial lending to offset net interest margin compression.
Demand for talent hasn’t been limited to specialty roles; entry-level and branch staff were also difficult to hire and retain in 2021. Some of that, no doubt, was influenced by the pandemic and its ripple effects, but banks also had a lot more competition for even entry-level workers. Job candidates with cash handling experience pretty much had their pick of opportunities, and banks weren’t competing solely with other financial institutions.
“In many of our markets we’re not just competing with banks anymore,” says Eric Thompson, chief human resources officer at San Antonio-based Vantage Bank Texas. “We’re competing with the grocery store that’s now offering $20 an hour.”
To read more about talent challenges and managing compensation expenses, read the white paper.
To view the survey results, click here.