Stephanie White, Financial Services Senior Manager, Crowe LLP
Dana Lori, Financial Services Manager, Crowe LLP
A competitive labor market has afforded job seekers an opportunity to redefine job expectations within the financial services industry. By doing so, job seekers have sparked a movement that is also redefining the post-pandemic office environment. To acquire and retain top talent, financial institutions will need to be creative in building strategies that set them apart from other potential employers in the marketplace.
Talent Acquisition in the Post-Pandemic Labor Market
According to the 2023 Compensation and Benefits survey results, 85.7% of financial institutions in Tennessee, cited a “limited talent pool” as the most difficult obstacle to overcome when seeking new talent, with another 71.4% of respondents citing “salary expectations.” These are the same concerns identified at the national level and indicative of a new generation that is vested in finding employment that meets their salary expectations, as well as their professional and personal needs.
To bridge generational gaps and institutional “norms,” financial institutions will need to search for nontraditional solutions that attract both the younger generation and top performers they seek.
A competitive salary will remain important, but employers may want to consider promoting alternative amenities such as career advancement programs, remote work flexibility, corporate responsibility and community engagement as part of their talent acquisition strategies.
One potential solution is to focus on expanding the “limited talent pool.” Talent acquisition strategies that include remote work options are gaining in popularity. Results of the 2023 Compensation and Benefits survey, show that nationally 69.7% of employees are working remotely at least one day a week. Tennessee has shown a greater ability to adapt to change with 72.9% of financial institutions in the state adopting remote work practices.
Another potential solution to a “limited talent pool” is to consider hiring more candidates outside the financial institution’s geographic footprint. Not every position is suited to be fully remote, but survey results are indicating that financial institutions in Tennessee are beginning to consider this a viable option. According to survey respondents, 9.3% of financial institutions are hiring fully remote positions outside their geographic region. This is in alignment with survey results at the national level, where credit analysts are considered to be most adaptable to a remote work environment.
Retaining Talent Through Career Development
Retaining talent at all levels remains difficult for financial institutions in 2023, a trend that will likely continue into 2024. Results of the 2023 Compensation and Benefits survey show that employees are not only seeking better compensation, but desire to work for an employer that values career development and advancement. In Tennessee, 62.2% of respondents cited “inadequate total compensation” as the number one reason for employee turnover with another 48.9% of respondents citing “lack of career development and advancement.” This was a deviation from what was seen at the national level, where “lack of career development and advancement” was the number one reason employees sought employment elsewhere in 2023.
As part of a talent retention strategy, financial institutions may want to consider focusing on the growth and development of new employees and top performers. Survey results have indicated that employees are looking for organizations that provide long-term opportunities for personal and professional growth. In the state of Tennessee, approximately 50% of financial institutions have leadership development and management training programs in place. This means there is significant opportunity within the state to implement this type of programming and potentially reduce turnover. Likewise, financial institutions that currently offer leadership development and management training may want to consider this an opportunity to evaluate the effectiveness of their existing programs.
The Importance of Succession Planning
Developing employees for future leadership roles, is not only critical for retention, but it will also ensure financial institutions are prepared for succession. 2023 Compensation and Benefit survey results indicate that at a national level, one out of every five banks is unprepared for the succession of executive leadership to the next generation. This number increases to one out of every four banks in the state of Tennessee, where 10.7% of executives are over the age of 65 and nearing retirement. Succession planning should remain top of mind as talent acquisition and retention strategies are evaluated and redefined in 2024
Moving Forward as an Industry
Financial institutions recognize that the industry is evolving, and results of the 2023 Compensation and Benefits survey show that there is a willingness to adapt to change. Between 2022 and 2023, financial institutions requiring employees to work full-time from the office decreased from 48% to 30%. Survey results indicate that many of the financial institutions, that do not currently offer a management training program, intend to implement one. A cultural shift in the industry has even encouraged some financial institutions to explore initiatives such as Diversity, Equity and Inclusion “DE&I” and Environmental, Social, Governance “ESG.” In Tennessee, 22.9% of financial institutions are already developing a “DE&I” strategy. Financial institutions will need to be targeted and intentional when adopting new strategies in 2024, but survey results indicate that the financial services industry is open to change.