There were 11 million job openings in the U.S. at the end of 2022, roughly double the number of people unemployed nationwide. While there are various reasons for this gap, it’s clear the pandemic has shifted employee expectations regarding work-life balance, benefits, flexible policies and compensation, which in turn has created challenges in attracting and retaining talent.
The banking industry has been particularly affected by this “Great Resignation.” Crowe Consulting’s 2022 Bank Compensation and Benefits Survey found that banking turnover for junior and mid-level employees surged to 23.4% in 2022, and two-thirds of banks struggled to hire young talent. But looking ahead, banks may find themselves a talent lifeline in America’s ongoing pay transparency movement, if they choose to embrace it.
New York City’s pay transparency law took effect in November, requiring employers of four or more employees to provide “good faith” salary ranges in all listings. Some companies, however, opted to skirt around the new law by adding inaccurate salary ranges to their job listings. While technically complying with regulations, these extended ranges can yield an unfavorable company perception among applicants. With New York being the banking capital of America, banks in other states may be tempted to follow suit in providing the wide ranges, which would ultimately prove detrimental to recruitment and retention goals.
According to our 2022 Compensation and Culture Report, 79% of job seekers were more likely to apply to roles that included salary ranges in the job descriptions. Bank Director’s research found that 40% of banks experienced difficulty offering competitive compensation at a time when attracting new employees is especially challenging. However, 68% of respondents to beqom’s Employee Expectations in Hiring Report would consider a lower salary if the organization was transparent about pay from the start, demonstrating transparency’s role in building trust with candidates.
For banks and other financial services firms struggling to fill vacancies, including salary information upfront can help get more candidates in the door and accepting offers, as long as that information is realistic.
Banks and financial institutions that have traditionally shied away from external transparency would benefit from leading conversations internally around pay decisions to ease and own that transition. Striving for a more open culture around pay will help organizations embrace the kind of pay transparency needed to attract new talent, and advance trust among current employees.
Crowe’s report highlighted retaining talent as a top concern for 92% of banks. Our own research found that 60% of workers would consider a new role at an organization with greater pay transparency than their current employer. Additionally, less than half (48%) understand their total compensation. At best, limited internal transparency confuses employees, and at worst can drive them toward opportunities elsewhere.
Banks can begin raising transparency and boosting retention by providing employees with a detailed breakdown of their total compensation, including the value of benefits and perks, when they join. The breakdown should also be updated accordingly when employees earn raises or promotions or when benefits change.
Employers can also kickstart important internal conversations that provide employees with more insight around how their compensation is determined. For example, setting clear salary ranges for roles internally and sharing the factors that help determine where within the range an employee would fall can be a helpful way to increase transparency and drive understanding of fair pay.
The banking industry, like any other, relies on its talent to achieve success. Without paying attention to and strategizing around the growing pay transparency movement, banks will continue struggling to attract and retain talent. However, those who embrace transparency will not only attract more talent and streamline their hiring process but will also foster a more engaged and trusting workforce.
Clearly, today’s employees value transparency, and employers who don’t take the initiative and address worker concerns risk losing out on talent to those who do.
Tanya Jansen is chief marketing officer at beqom.
