Financial Services Sector Projects Flat 2016 Performance Bonuses and Modest 2017 Base Salary Increases
09 2월 2017 - 11:50PM
Business Wire
- Highest 2017 base pay increases
projected in Asia and Latin America, followed by North America and
Europe
- Non-financial performance measures
increasingly allowed to override financial outcomes among
banks
- About half of companies (48%) have
increased fixed pay for control functions
Salary increases are set to be modest in 2017 as financial
services companies worldwide feel the impact of slow economic
growth, low inflation as well as continued low interest rates,
according to the latest data from Mercer. On average, 2017 base
salary increases for all roles are expected to be between 1.9% and
2.4%. Mercer’s research finds that the majority of organizations
predict 2017 annual incentive levels to remain similar or unchanged
to 2016.
Mercer's Global Financial Services Executive Compensation
Snapshot Survey was conducted in October/November 2016. The survey
reviews the pay practices of 42 global financial services companies
— banks, insurers and other financial services — based in 14
countries in Europe, North America, Asia, and South America.
Forecasted base salary increases are expected to be lower in
Europe (1.4% to 2.0%) than North America (1.6% to 2.6%).
Projections for India (6.0% average salary increase) are higher
than any other growth market across Latin and South America (3.5%)
and Asia (3.8%). Approximately two-thirds of organizations predict
that the 2017 actual corporate incentive pools will be similar
(within +/- 5% range) or unchanged to 2016 levels. Almost
one-quarter of companies surveyed predict the actual 2017 incentive
pool to be significantly lower than 2016 levels, while only 11%
predict it to be significantly higher. A similar trend was observed
last year.
“With compensation remaining relatively flat, firms are
challenged to go beyond pay and emphasize their broader employee
value proposition to continue to motivate and retain people,” said
Vicki Elliott, Senior Partner and Financial Services Leader, Mercer
Career. “To protect key talent, companies should also put more
focus on recognizing and differentiating high performers.”
The most prevalent changes in remuneration policy and practices
planned by organizations in the next 12 months are job
evaluation/global levelling (63%), parental leave policies
company-wide (38%) and flexible benefits (33%). Pay equity policies
remain an area for change, particularly in European firms where 40%
say they plan to make changes to their formal pay equity policy
company-wide in the next 12 months.
Performance measurement
According to Mercer’s research, a growing number of
organizations are implementing the use of non-financial performance
measures as a way of aligning performance with sound risk-taking.
Non-financial performance measures of conduct, compliance and risk
management are increasingly being allowed to override financial
outcomes. Approximately one-third of organizations allow for
non-financial measures to override financial measures in their
annual incentive plan (38%) and multi-year incentive plan (32%).
This is more common in banks (55%) than insurance firms (15%).
Dirk Vink, Mercer Principal and Project Manager for the study,
said, “Allowing non-financial measures to override financial
performance measures provides greater emphasis on risk management,
compliance and conduct, and thus, puts a lot more teeth into their
effectiveness as performance criteria.”
Compensation for control functions
Organizations continue to respond to regulatory developments and
talent shortages by increasing fixed pay in the compensation of
control functions. Mercer’s data showed around half (48%) of
companies had increased fixed pay for control functions, one-third
had decreased variable pay, and 19% showed an increase in total
compensation levels. On a regional level, far more European
organizations reported a shift from variable to fixed pay: about
half (52%) of European organizations reported an increase in pay
linkage to function performance compared to 21% in North America.
One-third of both insurers and banks reported that regulatory
impact decreased the link between pay and business performance.
Mr. Vink said, “Compensation for control functions is usually
linked to the performance of their function and overall corporate
financial performance rather than line of business performance.
This is to ensure there are no conflicts of interest in exercising
their oversight role for specific business practices and
decisions.”
Mercer’s research showed that less than 30% of banks overall
report a linkage of compensation for control functions to line of
business performance.
About Mercer
Mercer is a global consulting leader in talent, health,
retirement and investments. Mercer helps clients around the world
advance the health, wealth and careers of their most vital asset —
their people. Mercer’s more than 20,000 employees are based in 43
countries and the firm operates in over 140 countries. Mercer is a
wholly owned subsidiary of Marsh & McLennan
Companies (NYSE: MMC), a global professional services firm
offering clients advice and solutions in the areas of risk,
strategy and people. With annual revenue of $13 billion and 60,000
colleagues worldwide, Marsh & McLennan Companies is also the
parent company of Marsh, a leader in insurance broking and
risk management; Guy Carpenter, a leader in providing risk and
reinsurance intermediary services; and Oliver Wyman, a leader in
management consulting. For more information, visit www.mercer.com.
Follow Mercer on Twitter @Mercer.
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For MercerStacy Bronstein,
215-982-8025stacy.bronstein@mercer.com
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