There are a number of reasons why financial institutions must stay ahead of the curve when it comes to technology. On the one hand, customers want convenience. This comes in the form of technology like online banking and mobile applications. Many larger financial institutions are already offering this convenience,and community banks and credit unions need to follow suit. At the same time, online banking comes with cyber risk, which is on the mind of regulators, so financial institutions need workforces that are able to not only implement technology solutions but address cybersecurity concerns.
Financial institutions have therefore put a greater emphasis on hiring those who have experience in the world of technology, including executives in IT positions, and they need to properly compensate these professionals. There are a number of concerns related to attracting and retaining the right IT talent. Here are 4 considerations related to compensating IT professionals and ensuring that they’ll work with your financial institution, stay with your organization long term, and hit the right benchmarks.
1. Understand that traditional “bank pay” may not attract the talent you need
Security concerns are pressing, and other IT duties are crucial, so IT professionals are in high demand by financial institutions such as banks and credit unions. This makes it necessary to keep up to date on IT compensation trends in finance, and finance is far from being the only industry with requirements to keep up with advancements in technology. Know that you are not just competing against other financial institutions; you’re competing against all corporations needing IT professionals. Skills such as protecting an institution from security threats are highly valued. IT professionals who have worked in the financial sector and have experience dealing with stringent regulatory concerns are highly desirable.
When positioning for recruitment, financial institutions need to look outside their industry for comparative compensation. If you’re a bank, you may be used to using certain compensation packages to attract and retain talent, but IT professionals may not be enticed by the same compensation packages as bankers. Your organization may therefore need to pay more or compensate differently to secure your IT staff.
2. Define benchmarks and goals, and have incentives for IT professionals to hit them
If you have IT professionals in your organization and want to insure that they are performing according to the right standards, you need to consider what you are doing to incent these professionals. Similar to developing compensation packages, building incentives for IT professionals differs from standard measures for financial institutions. In many cases, IT incentives are completely disconnected from metrics like bank performance. In order to tie incentives to IT performance, here are some performance measures that could be considered:
- Documentation: Having all documentation in place is crucial for continuity, and the process should be formalized. Are you confident that this is being done in your institution?
- Succession: It’s a best practice to make sure all contingency plans are actively updated. You need a plan in place so your institution can continue operating successfully without your current IT professionals. If your bank lacks an IT operational manual, there could be significant risk.
- Reliability: Are there backup plans in place for “disaster recovery” situations? Having the right technology can ensure that you are prepared.
- Security: Is your institution running tests for security? Are you working with the right vendors for technology solutions, and have you done your due diligence when vetting these vendors?
Your in-house IT professionals do not necessarily have to handle all these duties on their own, but they should help facilitate them through engaging outside resources. Incentives for hitting these goals could be incorporated into both long and short term incentive plans. Certain duties should be maintained annually and can be rewarded with bonuses, but there can also be incentives to hit longer term goals.
3. Be aware that education and certifications pair well with short and long term incentive plans
Having your IT professionals obtain education and certifications can be extremely beneficial for your organization. Certifications can be costly and are an investment you make in your employees. However, you don’t want to unintentionally train your IT professionals for your competitors by funding a certification for an employee who quickly moves on to another organization.
Incorporating education and certifications with both short and long term incentive plans helps you to avoid this problem. You can make an agreement with your employees that you will pay for certain courses and certifications under the condition that they stay with your organization for a determined period of time, and you can compensate them accordingly. For example, a bonus for attaining a certain certification could be delayed, or a greater amount of the bonus could vest each year that the IT professional stays for your organization.
4. Be flexible with cultural shifts and be prepared to factor them into how you retain IT professionals
Many IT professionals have the impression that they just don’t fit into the culture of a financial institution. Since it is vital to have IT professionals in your organization today, you need to be willing to adapt and meet certain cultural demands. IT professionals may be used to flexible hours and wearing casual attire as these are perks often available to them in other technology jobs.
It’s not uncommon for IT professionals to leave the financial industry and go work in another industry, especially if offered more attractive perks. This is where compensation plans that encourage IT professionals to stay with your organization become crucial. Consider incorporating compensation plans that work in tandem with perks that appeal to IT professionals.
As financial technology advances, competition for IT professionals will increase
As the financial technology field and industry continue to evolve in complexity, the prevalence of IT professionals in financial institutions and competition for them will only increase. Your financial institution will need to be aware of how to attract IT professionals, how to compensate them, and how to set benchmarks for their performance. Compensation consultants who specialize in the financial field and have experience with compensating IT professionals are an excellent resource as your institution works to attract the right technical talent. Choose your compensation advisors wisely.