Bank Director, the leading information resource for directors and officers of financial institutions nationwide, released the results of its 2023 Compensation Survey, sponsored by Chartwell Partners. The findings reveal that a growing number of bank leaders have increased concerns around compensation, attracting and retaining talent, and succession planning.
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The hiring environment remains tough and compensation costs have continued to climb, but many bank leaders have stayed focused on aligning pay with performance. According to the survey, conducted in March and April, 44% of respondents list tying compensation to performance as a top challenge, more than doubling from those who said the same a year ago.
“Last year’s survey found bank executives and board members most concerned with the rising cost of compensation and the ability to offer competitive pay as they sought to compete for talent,” says Emily McCormick, vice president of editorial & research at Bank Director. “Those remain important concerns, but incentive compensation has been thrust back into the limelight on the heels of recent bank failures, as regulators focus on aligning compensation and risk.”
Concerns about succession planning for the CEO and other key executives also ticked up from last year, with a little over a quarter of respondents citing it as a top compensation-related challenge. In addition, the survey 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.
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“While it is common for a firm like Chartwell to be engaged for a sudden departure, what many boards struggle with is a comprehensive succession plan that includes assessing internal candidates, engaging in a multi-year development plan for these internals and an eventual comparison with external candidates to make a confident decision,” says Scott Petty, managing director, financial services, at Chartwell.
Although concerns around succession planning have grown, 71% 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.
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