The economy may be looking up, but many financial services executives do not expect this to immediately improve hiring and pay conditions at their firms.
About 20% of banking executives say that their companies will increase hiring in the next six months, but almost 25% expect job cuts, according to a survey released Tuesday by Grant Thornton LLP, the U.S. arm of Grant Thornton International Ltd.
The survey of 846 chief financial officers and senior comptrollers included 42 executives at financial institutions, who were slightly more pessimistic about hiring and job cuts at their companies than respondents in other industries. Grant Thornton did the biannual national survey online from Sept. 21 through Oct. 2.
Banking executives were also more pessimistic than other executives about the state of the economy: About 40% said they expect it to improve in the next six months, compared with 49% of overall respondents.
"The timing of the survey was still at the point at which there's not certainty" about the recession's ending, Henry Oehmann, Grant Thornton's director of national executive compensation services, said in an interview Tuesday, and "there's many out there that continue to fear another wave of concerns."
Oehmann said that, in the wake of the Federal Reserve Board's proposed guidelines on executive pay and other regulatory interest in bankers' pay, "compensation will continue to be the top of mind issue in the banking industry."
The banking executives surveyed said they expect to see more cutbacks in bonuses than in their salaries: As with all executives surveyed, 55% of banking executives said they expect to see bonuses reduced and 33% said they expect to see salary increases limited.
But bankers have a better chance at a raise — or a bonus — than those in other industries. Almost 12% of banking executives expect their companies' bonuses to increase next year, compared to 7% of all respondents.
Oehmann said that better-than-average bonus growth in the banking industry would be difficult to understand. But "there are really two groups of banks out there: banks with real problems and banks that are well-capitalized," he said, and bonuses are likely to grow at the better-capitalized banks.