Amid 'Great Resignation,' banks see lowest turnover in years

14 October 2021 Consulting.us 3 min. read
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Even though many industries are struggling to retain talent amid a wave of mass resignation, banks have managed to cut down on employee turnover, according to Crowe’s 2021 Bank Compensation and Benefits Survey. The accounting and consulting firm polled 437 financial services companies on their benefits, incentives, director compensation, and HR practices in the 40th annual edition of the survey.

The median turnover rate for bank nonofficer roles dropped from 23.6% in 2019 to 16.2% in 2021, the lowest level in four years. Officer roles, meanwhile, saw turnover drop from 7.3% in 2017 to 3.3% in 2021.

"The data shows that banks have been making great progress in reducing turnover, even during a time when many industries are seeing severe attrition in their workforce," said Timothy Reimink, a managing director specializing in financial services consulting and performance improvement at Crowe. "Banks are investing in their people and have taken steps to improve retention and their recruiting efforts by offering better benefits, more flexibility, and higher raises."

Banks aren’t necessarily a high turnover sector to begin with, offering competitive salaries and benefits for their mostly skilled roles. Even for lower-skill and higher turnover customer-facing roles (i.e. teller) many financial institutions offer opportunities for advancement and, thus, retention within the organization. Most banks aren’t exactly struggling to get by, either, so they also have adequate wiggle room to continually sweeten their total compensation packages to retain talent, as well as offer the kind of employment stability that is only rivaled by public sector roles.

Median employee turnover

Sixty-two percent of banks told Crowe that they have performance-based pay increases – which are among the best pay strategies to increase employee morale. The average pay increase for top performers in 2021 was 5.5%, the highest increase in a decade.

Banks are also being more generous with paid vacation in their recruitment and retention drives, with approximately one-third of banks offering at least three weeks of PTO to officers at hiring, according to the report. “Fewer banks are requiring extended tenure to qualify for three or more weeks of paid time off and are shifting towards increasingly generous PTO plans for new hires, especially at the officer level,” said Mark Walztoni, a managing director specializing in employee benefit plans at Crowe.

As for remote work – a particularly critical piece of the total employment package, especially for younger workers – 75% of banks said they allow some employees to work remotely at least one day per week. Many financial institutions were hostile to the idea of remote work prior to the pandemic, so it will be interesting to see how remote work evolves in the industry over the next several years.

Median salary, 2019-2021

The average salary increase for nonofficers was 3.4% in 2021, down slightly from 3.5% in 2020. Average salary increases for nonofficer roles has remained above 3% since 2017.

The entry-level “teller I” position had a 4.6% increase in median salary, likely as a response to rising minimum wages and competing benefits from other industries straining to fill entry-level positions.

The average salary increase for officers remained flat at 3.7% in 2021. The median salary of CEOs and presidents increased by 2.5% to $251,082.

As digital banking has accelerated in the pandemic and the importance of data collection and security has increased, so too has the compensation for related leadership roles. Chief information officer and chief compliance officer positions saw the highest median salary increases in 2021, at 6.8% and 6.7% respectively.

“Many customers shifted to digital banking solutions as a result of the pandemic, so the importance of analytics and better data governance cannot be overstated," said Reimink.

Only 11% of banks are expecting smaller-than-normal raises in 2022, down significantly from 44% in 2020. This likely reflects a more confident outlook on the performance of their organizations and the economy at large.