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Analyzing the 2025 Compensation and Talent Landscape in Banking

The recent release of Bank Director's 2025 Compensation & Talent Survey offers valuable insights into the pressing challenges facing banks, particularly in the wake of succession planning and executive transitions. As the lead information resource for directors and officers across financial institutions, Bank Director aims to shed light on hiring expectations and C-suite dynamics in today’s evolving banking environment.

Succession Planning: A Call to Action

One of the key findings from the survey indicates that a staggering 30% of banking executives feel their organizations lack an adequate succession plan for C-suite positions other than the CEO. This gap points towards a broader issue within the industry—a hesitance to strategize for future leadership transitions. The results signal a need for banks, particularly smaller and rural ones, to concentrate on nurturing internal talent while simultaneously drawing in external candidates who possess the right expertise.

To combat these challenges, an impressive majority of respondents (73%) stated their organizations will offer more coaching, and 53% will invest in career development programs aimed at enhancing their executive talent. Despite these efforts, there remains a reluctance to recruit senior talent from outside the banking sphere; only 22% of surveyed banks successfully hired professionals from other industries in the past three years.

The Potential of External Recruitment

Interestingly, while few banks have tapped into external hiring, those that did reported tangible successes in various roles including human resources, risk management, compliance, and even CEO positions. Scott Petty, managing partner at Chartwell Partners, suggests that “this makes sense, especially with many veteran professionals retiring from the industry.” A notable 44% of bank leaders expressed openness to the idea of hiring from different sectors, contingent upon the candidate’s suitability.

The Current State of Diversity, Equity, and Inclusion Initiatives

The survey also unveiled concerning trends surrounding diversity, equity, and inclusion (DEI) programs. Following a pullback on DEI initiatives witnessed in recent years, a significant 57% of bank executives acknowledged that their institutions lack a formal DEI strategy, which is a notable increase from the 42% reported last year. This raises questions about the persistence and commitment to DEI goals within the banking sector. However, among those with established DEI programs, more than half (53%) plan to maintain their current practices despite external pressures.

Emily McCormick, Bank Director's vice president of editorial research, highlighted that banks are re-evaluating their DEI practices while larger institutions continue to monitor DEI-related metrics closely.

Key Findings of the 2025 Compensation & Talent Survey

1. CEO Performance Metrics: Bank executives and board members cite that their CEO’s performance is primarily measured by return on assets (53%), income growth (47%), asset quality (42%), and operational efficiency (40%). This underscores the emphasis on financial health as a measure of leadership success.

2. Hiring Plans Stabilization: While just over half of the banks plan to expand their commercial and business lending staff, this marks a slight drop from the previous year (57%).

3. Mishires Management: Twenty-six percent of respondents revealed that their institution had hired or promoted a candidate at the C-suite level who ultimately did not fit well within the organization. This emphasizes the need for better vetting processes during selection phases.

4. Hiring Dynamics: Interestingly, bank leaders observed that the general difficulty of hiring did not significantly differ from previous years, negating concerns of a labor shortage in the sector.

5. Compensation Increases: A noteworthy 85% of respondents indicated that their compensation costs rose in 2024, showing a minor dip from the previous high, yet affirming the enduring trend of rising executive compensation.

Conclusion and Further Insights

The findings from Bank Director’s 2025 Compensation & Talent Survey serve as a crucial benchmark, reflecting the current attitudes and strategies within the banking sector regarding leadership and talent management. For further insights and to explore detailed findings, stakeholders can visit BankDirector.com.

About Bank Director

Since its inception in 1991, Bank Director has been dedicated to providing board-level research and in-depth insights tailored for America’s banking leaders. To learn more about the valuable resources and insights offered, explore BankDirector.com.

About Chartwell Partners

Chartwell Partners is a respected retained executive search and leadership advisory firm dedicated to guiding clients through their C-suite leadership and board decisions. Discover more about their services at chartwellpartners.com.