Pub. 7 2017-2018 Issue 4

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S January • February 2018 17 increase was noticeably more modest than in the previous two years. This could be interpreted as a sign that the labor market is beginning to stabilize to some extent. This impression is reinforced by the results of another survey question, inwhich participants were asked to compared their compensation strategies to those of their competitors. Specifically, the survey asked them to characterize their total rewards packages—that is, the combination of salary, benefits, bonuses, and other incentives—and rate them as being more than 10 percent above the market average, at or within 10 percent of the market average, or more than 10 percent below the market average (see graph 3). In the 2017 survey, the number of banks that reported us- ing an above-market compensation strategy declined slightly, while the number that planned to stay near themarket average increased by almost the same amount. This reversed what had been a strong four-year trend and could be seen as another indicator that bank executives are sensing a stabilizing labor market. Pay and performance. One of the most obvious mea- sures of the heat of the labor market is salary increases. Here again, the 2017 survey results seem to suggest that the compe- tition for talent is continuing, but possiblymoderating. Average annual salary increases for both officers and nonofficers have been on a general upward trend since the depths of the reces- sion. In addition, the actual salary increases typicallymatched the survey respondents’ projections fairly closely from 2011 through 2015 (see graph 4). In 2016, however, actual average salary increases spiked rather sharply, exceeding survey projections noticeably as the battle for talent intensified. In 2017 that trend moderated somewhat. While average salary increases in 2017 were still higher than 2016, they once again were very close to respon- dents’ expectations. The upward pressure on salaries is seen in the C-suite as well. According to the survey, total compensation packages for top bank executives have risen noticeably over the past five Business growth and staffing plans. One of the most striking trends in the 2017 Crowe survey relates to banks’ overall employment strategies (see graph 1). For the first time since the 2008-09 recession, more than half (54.9 percent) of the survey respondents reported they planned to increase staffing levels during the coming year, either in response to normal growth (41.7 percent) or as a result of expansions or acquisitions (13.2 percent). Moreover, the number of banks that planned to increase staffing levels solely in response to normal growth shot up sharply in 2017, significantly surpassing the number that planned to maintain current levels. Those positions had been reversed for more than 10 years, before the two numbers became roughly equal in 2016. The 2017 results suggest em- ployment growth is now the dominant expectation among survey participants. Turnover rates and compensation strategies. As more banks plan to increase total employment, other factors— particularly rising employee turnover rates—are adding fur- ther upward pressure on salaries. Average employee turnover rates among both officers and nonofficers climbed for the third consecutive year in 2017, reaching their highest levels inmore than a decade—7.3 percent average turnover for officers and 18.9 percent for nonofficers (see graph 2). It is worth noting, however, that while reported turnover levels were slightly higher in the 2017 survey, the rate of Graph 1: Staffing Plans Graph 2: Employee Turnover Graph 3: Compensation Strategies   continued on page 18