It's a rare bank executive who doesn't extol his employees, at least publicly. But productivity is not only about working hard but also about working smart. And banks, of course, have to design jobs that lead to greater employee productivity and efficiency.
One way to measure this is by looking at the ratio of salary expense to revenue, or what it costs a bank in salaries to generate $1 of revenue (see chart at right).
Not surprisingly, the banks that perform well on this ratio also boast some of the lowest efficiency ratios in the business.
But analysts caution that this measure, like the efficiency ratio, can be a bit misleading.
Denis Laplante, a Fox-Pitt, Kelton analyst, noted that a bank that uses outsourcers might rank higher than an institution that pays its own employees to handle those tasks. And companies with more labor-intensive operations or fee-based revenues wouldn't fare as well as banks with a more traditional business mix.