Financial services firms trying to lure executive talent are increasingly relying on signing bonuses.
A survey by the New York executive search firm Thorndike Deland found that nearly 75% of the 700 businesses contacted offer signing bonuses to job candidates.
One-third of the respondents were financial services companies, and the finding holds especially true for this industry, according to Thorndike Deland partner William W. Venable.
Banking consolidation "would seem to suggest there is a surplus of people available," Mr. Venable said, "but this is far from true when it comes to specialists or executives who can bring along established client relationships.
"The bonus issue is very strong for people who can come in and instantly build an institution's business."
Susan H. Fowler, a Sanwa Bank of California executive vice president, said that signing bonuses also are useful for hiring employees who must give up financial benefits at their old jobs.
For example, Los Angeles-based Sanwa sometimes requires a waiting period before it begins matching a new employee's retirement plan contributions.
Signing bonuses are also used sometimes when an employee is hired a few months before annual bonus time at his or her former employer.
"When we feel people are going to have to leave something behind, we'll use a bonus to compensate them," Ms. Fowler said.
Bonuses and other incentives are increasingly important because the organizational structures of banks and other financial services companies are becoming more flat and, thus, offering fewer chances for advancement, the survey said.
"Companies that have fewer prestige positions to offer executives they're recruiting or seeking to retain have no choice," said Mr. Venable of Thorndike Deland.
The survey also found that three of four respondents have compensation packages that include performance bonuses. Most businesses surveyed said they had recently revamped executive compensation packages. Of those, 71% said pay structures had been changed to give greater weight to performance- related bonuses.
"In the end, bonuses always become the most important issue for employees at financial services firms," Mr. Venable said. "Base salary tends to peak out, so the real money is always perceived to be in the performance bonus."
The survey also asked businesses who is doing their hiring. It found that line managers at 56% of the companies had been given more authority to make hiring decisions.
Russell Goldsmith, chief executive of City National Corp. in Beverly Hills, agreed that a manager tends to have the best sense of what qualifications his or her employees should have.
"The ability of our managers to hire people immediately below them is quite extensive," he said.
However, even banks like City National, which has a reputation for attracting talented executives, hire search firms.
"While we are well-connected in Southern California, we maintain a relationship with a couple of executive search firms to broaden our reach," Mr. Goldsmith said.
