Bank executives telecommuting is one reason it’s necessary to use national compensation peer groups.Competition for top executive talent in the financial industry is high, and this has led banks to find new, innovative strategies to reward and retain talent. It’s vital to be competitive on both a regional and national level through the benefits your institution offers to its team members, so you need to understand how your peers are compensating their talent.

Crucial metrics to look at include direct pay, total pay, realized pay, realizable pay, actual pay, and potential pay. Without understanding the distinction between these metrics and examining all of them, you won’t have a full picture of your peers’ compensation practices.

You can look at performance when comparing yourself to institutions in your regional area, but your peer group for compensation needs to be national. Here are three reasons to convince you to use national compensation peer groups when thinking about executive benefits.

1. Many bank executives are working remotely, so location is less of a limitation.

If you think you can count on the fact that your executives aren’t likely to leave their current home for a better opportunity, think again! Advances in technology have made it easier for executives to work from home, and they don’t need to physically be in a particular city to accept a job there.

If you’re open to the idea of your bank’s executives telecommuting to work, your talent pool will grow much larger. The flipside of this is that you have to pay attention to competition on the national level. When determining your compensation strategy, it’s vital to look at your national peer group because the trend of bank executives working remotely is changing the landscape.

2. Differences in cost of living between cities don’t eliminate the need for bank executive benefits that are competitive in the national arena.

You still need someone in the “war room,” so you likely wouldn’t want all your top executives to work remotely. If the executives you want to attract need to relocate to take a position with your bank or credit union, you are likely to be competing with the benefits offered by financial institutions in other geographical areas.

Typically, the cost of living is highest in areas that are very popular to live. For example, if you’re located in a smaller city or suburb, it’s a compromise for the talented executives your institution needs to move to your area rather than a more popular area such as Manhattan. Understand that differences in the cost of living don’t mean your benefits shouldn’t be competitive with those offered by financial institutions in other areas. Banks in smaller cities need to pay more to attract top tier executive talent to their institutions.

3. There may not be enough public reporting data available about executive compensation for banks in your region.

Not yet convinced that you need to use national peer groups for compensation? If you try to look at public reporting data about competitor banks in your region, you may end up hitting a wall. It is difficult to get public reporting data for compensation in a regional area. Prior to the JOBS Act in 2012, an organization had to be an SEC reporting entity if it had more than 500 shareholders, but the threshold was raised to 2,000 shareholders. The cost to be an SEC reporting company is high, so many smaller banks started to delist once they were able.

There may not be many banks in your region that are comparable to you according to metrics like asset size and number of employees, and there may also be a limited number of banks local to yours that release reporting data.

Your pool of talent is national, so make sure you don’t ignore national compensation trends

As we’ve examined, the current landscape demands that financial institutions compete for talent on a national level, so it’s absolutely important to use national peer groups when evaluating executive compensation practices. A compensation consultant can help your bank create competitive executive compensation strategies to attract and retain the right talent.

Download the whitepaper on developing peer groups for your bank.