The rising costs of consumer goods and a tight labor market are leading to increased wage pressure for Kansas banks.

Individuals are leaving their jobs at historically high rates as they pursue a career change and/or re-evaluate what they want to be doing in general. Workers are more empowered to not accept wages and working conditions that have been deemed acceptable in the not-so-distant past.

“The pressure is real,” says Doug Wareham, President and CEO of the Kansas Bankers Association. “It’s just a very competitive market.”

Wareham says coping with wage pressure is a regular topic of discussion during association board and committee meetings across Kansas as bank leaders try to figure out how to best navigate the challenges of the changing market.

Wage analysis

Increased wage pressure is leading to a general uptick in businesses conducting a wage analysis, either on their own or with the help of a third-party service provider. One of the most common requests that Syndeo — an outsourced human resources service provider — is getting from its clients is for assistance conducting an unbiased wage analysis.
That discovery often involves determining whether a company’s base pay is within an acceptable range for the market conditions and making adjustments accordingly. A wage analysis could also take the form of re-evaluating a salary being offered for highly specialized or otherwise hard-to-fill positions. A wage analysis should also be conducted for non-exempt employees.

These types of pay-structure assessments may have to be made more frequently as markets change and wage pressures intensify. Employers are increasing their base pay, often in conjunction with offering sign-on bonuses, in hopes of attracting more job candidates. Kansas banks also are taking a hard look at whether their wages are competitive in the market, with many increasing rates for employees in response to increased wage pressure.

Wareham says in some cases banks have increased the starting wage for entry-level tellers by $2 to $4 per hour. Wareham says that’s equivalent to what someone with three or four years of industry experience makes. Starting rates for other positions have increased as well.

Increasing starting wages is important, but don’t lose sight of the retention piece of this equation. Hiring managers say employers should also apply similar diligence to evaluating the pay of existing employees.

“Yes, you will be attracting new talent, but you will not be retaining your current talent if all you’re doing is increasing the wage you are offering new employees,” says Connor Cross, Director of HR for Syndeo. “What I would suggest is find an acceptable balance between budgeting for new hires and budgeting for retention activities.”

Additionally, consider how offering performance-based incentives and employee-referral bonuses can aid your recruiting and retention efforts.

Grow your own

The importance of retention isn’t lost on banking leaders.

Wareham says Kansas banks also are responding to market changes by re-evaluating their benefits packages and increasing the pay rate for existing employees. Community banks are not only competing for workers with larger financial institutions but also other industries. Many Kansas banks also have the added challenge of being able to recruit people to rural areas and smaller communities.

Wareham says that is why retention initiatives are so important. Recent efforts from Kansas banks include an added emphasis on growing employees within an organization. “Banks have learned they need to grow their own talent, especially when you are a rural community bank,” Wareham says.

Other efforts are focused on attracting the next generation of banking professionals through internship programs and initiatives aimed at educating high school and college students about career opportunities within the industry.

“Rural community banks simply cannot afford not to be proactive,” Wareham says.