Early in the pandemic, the number of job openings at Zions Bancorp. plummeted to less than 200. A year later, the Salt Lake City company has three times as many positions available.
Zions is offering certain perks to new employees, including signing bonuses for select positions and the opportunity to enroll in benefits immediately, instead of waiting the standard 30 days. But sometimes those enticements aren’t enough.
The $87.2 billion-asset company has seen a sharp decrease in applicants across its 11-state footprint, and it is now negotiating compensation on virtually every job offer that it makes, according to Trina Eyring, its director of recruiting.
“This is the most challenging recruitment environment I’ve seen in my career,” Eyring said.
“Everywhere I go I see ‘help wanted’ signs,” she said. “Candidates today know they have bargaining power when they’re applying for jobs, because there are so many different options.”
Like other companies, banks are grappling with an unusually competitive labor market that is leading to higher wages and giving many prospective hires the leverage to demand a continuation of the remote-work arrangements to which so many Americans have become accustomed.
At Synovus Financial in Columbus, Georgia, executives are providing raises to all employees who earn less than the company’s median salary. Synovus is also providing pools of money to managers to “match or combat what’s becoming a fairly competitive landscape,” Kevin Blair, its president and CEO, told analysts last month during the company’s quarterly earnings call.
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Some banks are trying to get ahead of the competition for workers. Bank of America will
Across the industry, salaries have been climbing fast. Among the 50 largest U.S. commercial banks, the median salary expense per full-time-equivalent employee rose to $148,000 in the first quarter of 2021, up from nearly $129,000 in the same period a year earlier, according to data from S&P Global Market Intelligence.
An analysis of the second-quarter data, which is based on information that banks disclose in regulatory filings, will not be available until mid-August. But the data will likely show another increase in salary expenses, as banks boost wages to attract and retain workers, especially those who can bring in new business to counteract persistent revenue headwinds, according to Jennifer Demba, an analyst at Truist Securities.
She expects wage pressure to keep building throughout the next year because “there is so much demand for revenue producers” across business lines.
“The war for talent has definitely heated up in the last several quarters,” Demba said.
Economists and other observers have been waiting to see how increased access to COVID-19 vaccines will impact the labor market, which was battered when the pandemic delivered widespread layoffs and double-digit unemployment rates. In June, employers added 850,000 jobs, the highest number since August 2020.
Still, companies say they continue to struggle to find workers, especially lower-wage employees. Some are hopeful the situation will change in September, when the end of enhanced unemployment benefits could change the calculus for many people who are currently out of the labor force.
In the banking industry, hiring activity is stronger than it has been in three or four years, partly because of the rapid digitization of banking, which has increased the demand for technology workers, and partly because of the retirement of baby boomers, according to Eric Pikus, head of North America global financial services at the consulting firm Korn Ferry.
To lure prospective hires and keep existing employees on board, banks are granting more bonuses and equity awards, ditching relocation requirements and retraining those already on the payroll, he said.
“It is a red-hot job market,” Pikus said.
The human resources team at The Cooperative Bank of Cape Cod in Yarmouth Port, Massachusetts, is feeling the effects. The $1.2 billion-asset community bank has always faced recruitment challenges because of its rural location, but the struggle to find and keep talent reached a whole new level this spring, said Lee Ann Hesse, the bank's chief engagement officer.
The company — which employs 175 people and currently has eight job openings — recently lost an employee of eight years who decided to take a remote job in another industry for almost the same compensation, Hesse said.
This week the bank plans to launch a program that will allow nearly 60% of its employees to work remotely three days per week, Hesse said. “If we don’t do this, we are not going to be competitive,” she said.
Similar decisions are being made at Norway Savings Bank in Norway, Maine. The $1.6 billion-asset bank normally has five or six job openings at this time of year, but this summer it has 14 positions available, including eight front-line jobs and two manager-level positions.
The bank is increasing its starting pay, offering hybrid and fully remote work options and providing more flexibility than it did in the past, said Richelle Wallace, senior resources officer at Norway Savings.
She said in an email that the bank expects its average wage increase in 2022 to be higher than in previous years, as Norway Savings seeks to keep pace with competitors. The bank also is investing in technology in an effort to become more efficient, so that it can continue to grow while minimizing the addition of new employees, Wallace said.
Codorus Valley Bancorp in York, Pennsylvania, has adopted a “long-term remote work policy” that will allow certain employees to work off-site on an as-needed basis, the $2.2 billion-asset company announced in its second-quarter earnings release.
“This new employment strategy provides more work flexibility, broadens the employment geographic market, allows for the redeployment of office space and ensures that we remain competitive in a tightening labor market,” the company said in the release.
More banks, large and small, may take similar stances in order to attract and retain workers, said Cameron Boyd, director of the financial services practice at the executive search firm Smith & Wilkinson. This month, he recruited a credit analyst who initially accepted an offer from an unnamed bank, but later turned it down because the employer would not offer remote work.
“The bank wanted this person in the office, five days a week, and this person’s current employer said, ‘Not only will we pay you more to stay, you can stay home to work,’ ” Boyd said. “That’s the first time that I’ve had that happen, where it’s directly related to remote work.”
“And we know, and our clients know, that if they don’t afford flexibility, they’re going to lose people,” he added.
At Zions, job candidates have turned down positions because they would not be allowed to work from home, Eyring said. She noted that the company has not made an across-the-board decision on remote work, in part because it is waiting to see whether the tightness in the labor market continues.
Zions also has not made any policy changes on salaries in response to wage pressure. But such decisions could be up for consideration if the tight labor market persists, according to Eyring.
“I think we’re moving right into the time that will tell if we have to offer retention bonuses to get people to stay, if we have to make counter-offers, if we have to increase salaries for internal equity purposes,” she said.
There are bright spots for Zions, where the relatively high number of available positions is due to both turnover and job creation. The pool of applicants appears to be rising in recent weeks, and the time it takes to fill positions has not changed despite the recruiting challenges, Eyring said. The company still fills about 80% of job openings within 60 days of posting them.
“I think we’re making progress with people who were not participating in the workforce who are now getting back to work,” Eyring said.
It remains to be seen how long the tight labor market in banking will persist. But if strong economic growth continues, Pikus said, “I think we’ll have a good couple of years of this kind of market.”
