Most Salary Surveys Are Fatally Flawed

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As the year waxes to a close, banks and credit unions across the nation are turning their attention to impending salary adjustments for the coming New Year. Staffing services, industry trade groups and consulting firms produce their annual salary guides to assist with the difficult task of gauging market competitive salaries, often charging a hefty fee for the results of their latest market surveys. Financial institutions gobble up these surveys as valid, research-based data upon which they can rely to justify company-wide salary adjustments. Unfortunately, a fatal flaw in these surveys makes their results dubious at best and may lead to inappropriate salary adjustments.

Virtually all compensation surveys conducted for the banking and credit union industries are based on the asset size of the institution. Any tenured banking professional knows that assets, i.e. the combination of loans and investments resulting from bringing in deposits, are easily acquired. Just offer 50 more basis points on a CD rate than your competitors, and watch the money flow in. It can sit as cash or a short-term investment while it waits to be turned into loan assets. Given the right amount of capital, an institution can grow its assets exponentially in a relatively short time.