Thinking outside the bonus box: How to attract talent when monetary compensation is limited

compensation As banks and other financial service institutions find their compensation systems under increased scrutiny — and regulation — many hiring managers are at a crossroads. Pay is still the number one priority for executives considering new employers in the industry.
However, with regulatory agencies placing ever greater restrictions on monetary compensation, and with other industries entering the competition for talent, new solutions must enter the equation.


Heightened bonus regulation

In the UK, bonuses are currently capped at 100 percent of a banker’s salary (200 percent if shareholders agree), and for senior managers they must be paid out over a period of seven years. In the United States, regulators are considering new restrictions — the toughest since 2008 — that would require large institutions to defer payment of at least half of their executive bonuses for four years, one year longer than is common practice in the industry.

These regulations, and others like them around the world, have diminished the ability of hiring managers in the financial industry to attract top talent with the potential for large bonuses. Some banks and other institutions have adjusted by simply shifting their compensation funds from bonuses to salaries; however, many are slow to do so, as salaries offer less flexibility and leave the bank more vulnerable if the economy worsens.

Broader field of competition

As technology plays an ever larger role in the financial services industry, many firms are finding it a challenge to attract talent for their cybersecurity, IT, and big data teams. Here they face stiff competition not only from other financial services firms, but from tech companies like Amazon and Google.

As a recent report from Accenture stated, “Technology giants such as Amazon and Google are continuing to increase their graduate intake, as the “trendy” industry image, created by a perceived relaxed corporate culture, amplifies the appeal of technology as a career choice.”

While most financial services firms can still compete with tech companies in terms of salary, many face an uphill battle trying to convince young tech talent that they can offer similar cultural advantages.

Creative solutions wanted

As hiring managers in financial services find themselves between the proverbial rock and hard place — with tighter regulations on one side and increased competition on the other — many are turning to non-monetary perks to restore their competitive edge. With salary and bonuses off the table, financial institutions and professional services firms are thinking beyond their usual benefits by considering “lifestyle” perks such as

  • Flexible schedules and work-from-home opportunities: These are especially attractive for executives with young families and those who live in congested urban areas with long commute times.
  • Increased time off: The classic image of the “workaholic” banker is beginning to fade, especially among millennials who value their leisure time higher than did previous generations. UBS, for example, recently introduced the “take two” policy, which allows junior employees to take two personal hours per week as long as someone on the team can cover for them.
  • Extended maternity and paternity leave: This year Bank of America introduced a new parental policy extending paid time off for new parents, which workers can take any time within the first year of a child’s arrival.
  • Family-friendly policies: Deloitte now allows employees to opt for three- and four-day work weeks, allowing parents to work around busy family schedules, and the company’s “time out” policy offers four weeks of unpaid leave each year in addition to the standard paid leave, which many parents use to enjoy more time with their families.

Strategies for the future

As banks and other financial institutions review their hiring plans for 2017 and beyond, external forces are necessitating a new perspective. In previous years, all hiring managers had to do was wave large compensation packages in front of candidates to attract the best talent; however, those days are now behind us. Faced with the dual challenge of increased regulation and increased competition, the financial industry must broaden its perspective if it is to attract the talent to lead its organizations into the future.

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