New Blood: A Cost of Doing Business

What you're willing to spend on new talent is the price you pay to compete in financial services today, and it could very well cast the dye for your institution's prosperity in coming years. Thankfully, an increasing number of bank CEOs recognize that talent has a price, and meeting it can arguably generate more revenue than is worth nickel-and- diming someone over.

True, we're not talking about wooden nickels here. In most cases, compensation for senior executives is in the mind-boggling millions, once you figure in stock options and bonuses (see cover story, p. 8). If you eyeball the numbers, compensation levels for commercial bank CEOs are beginning to look like that of Wall Street. If you're a banker, this is encouraging, to say the least. But compensation levels just scratch the surface of what's emerging for banks in their search to recruit-seemingly at any price-financial services talent.

For bank CEOs, even more important than appropriately compensating key senior executives is knowing where to look for them. Traditionally, banks recruited from within the industry; in recent years, many commercial banks have turned to Wall Street for new recruits.

The impact of technology on banking and financial services- particularly in the electronic distribution of retail products and services-is giving rise to new talent pools. Citibank, among others, has been recruiting talent from the entertainment industry, successfully luring Edward Horowitz, for example, from Viacom to head up its Advanced Development division. The logic is clear: Horowitz wields valuable perspective of future opportunities and growth that Citi cannot find from traditional candidates within the industry.

What's really at issue for most top producers is not compensation, but rather opportunity to exact a difference within the organization based on performance. Opportunity is the operative word; this implies that the recruiting institution maps out not only its own organizational mission, but also a game plan-complete with performance-based incentives-for how senior executives can flourish. This is critical to staving off competition from courting rivals-traditional or otherwise.

But the implications of this rigorous new talent search cut both ways. There are arguably as many unforeseen new employers of financial services talent as there are new opportunities for banks to make financially competitive offers to prospective candidates. Consider Microsoft Corp.: In a bid to better penetrate vertical markets such as financial services, the Redmond, WA-based software giant went looking for the industry's best and brightest to help steer the organization's financial services initiatives. At the same time, technology-savvy bankers saw opportunities in Microsoft that couldn't be had within their own organizations. The net result: Microsoft received a landslide of bankers' resumes from which to choose.

And Microsoft isn't the only technology provider that boasts both opportunity and robust compensation packages. So what are the Janey Places of the world worth? More than NationsBank's Hugh McColl can imagine-and if he doesn't see it, there are plenty of companies that do.

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