As talent wars rage in call center meccas like Dallas and business booms, the Westlake, Texas firm commits to a leap in overhead
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The Charles Schwab Corp. is preemptively paying most of its 32,500 employees 5% more as it battles Fidelity, Vanguard and even Robinhood in a call center staffing grab the likes of which the industry has never seen.
The Westlake, Texas, firm will pay on average an additional $4,500-per-year per-staffer to reflect its aggressive offensive and defensive play after a harsh year of managing through a pandemic. But corporately, it's being crazily well-rewarded for its efforts. See: Fidelity, Schwab, Robinhood and even (days numbered) TD Ameritrade are hiring thousands of staff -- even as Merrill Lynch hits a snag-- what's that say about free trading?
The raise is about in line with the average for private workers in California but more than double the national average, according to the U.S. Bureau of Labor Statistics.
Yet, the decision to crow about the raise is unconventional, according to Kelli Cruz, ex-Schwab staffer and founder of Cruz Consulting Group, a human resource advisory in Mill Valley, Calif.
"Why would you do a press release?" she asks. "Wouldn't you just want your employees to be happy?
"I think it's a great gesture but some employees are going to scratch their head and say: I worked my my tail off for a 5% increase?"
Schwab's average salary is $89,000, or roughly $43.45 an hour, according to Zippia. That includes a range of $28,000 annually for an administrative assistant to $230,000 for an investment advisor at its Corte Madera, Calif., branch.
Rough math suggests that the raise adds in the ballpark of $140 million annually to its expenses. Wall Street didn't love the expense shock.
Schwab shares (SCHW) fell more than a dollar to $70 after hours on the news release. It closed at $71.06, down $0.94 or 1.31% in regular trading, while the NASDAQ, on which it's listed, posted a modest gain.
Hiring frenzy
The raise is effective late Sept. 2021 and excludes the company’s executive council and colleagues already rewarded through Schwab’s incentive-based compensation plans, the release adds.
"This year a record number of investors turned to Schwab for help in navigating unprecedented market conditions," the company said in its release announcing the raise.
Schwab previously paid $1,000 spot bonuses in April of 2020 to recognize staff for dealing with the fresh exigencies of working in a pandemic.
"The firm’s core net new assets reached a record $257 billion for the first half 2021, more than double the results achieved during the same period last year.
"During the same period, clients opened 4.8 million new brokerage accounts representing the company’s second and third consecutive quarters in excess of a million new accounts."
It's the latter reporting of new accounts that compels hiring as Schwab strives to keep its service levels up to snuff.
It's battling Fidelity and Vanguard, which are also hiring, seemingly every talent that fogs the mirror. See: Fidelity Investments is set to make 4,000 new hires at the same time senior staff may accept buyouts, an arbitrage to match talent with digital needs
Vanguard, positioning for growth, just set up shop right in Schwab's Westlake backyard. See: Vanguard Group to open CFP-poaching battle front in Schwab-Fido-Pershing backyard, after its human RIA grows AUM 72% to $231 billion
Rewarding talent
Bettinger positioned the raise as a "results" bonus for past Schwab success.
“Our teams’ focus and dedication have resulted in outstanding results for our clients and growth for the company,” said the president and CEO.
“This increase is a way to reward our talented employees for their contributions and their relentless commitment to see the world through clients’ eyes, even during the most challenging times.”
The company’s Executive Council framed the raise as a way to show staff that it is grateful for all its work to make them and all shareholders far better off.
“You all have gone above and beyond to ensure our clients are well cared for, our culture remains strong, and our business remains sound under the most extraordinary circumstances. Thank you once more from all of us on the Executive Council for helping this company live up to its promise.”
The modest size and inclusivity of the pay bump can be a double-edged sword, with some staff being feeling damned by a faint raise, Cruz adds.
'Great gesture ... but'
Cruz questions whether Schwab wouldn't be better off spending the hundreds of millions in future comp in a more nuanced and merit-based way.
"Not everybody made the same extraordinary effort. That's why I don't like it."
Schwab also offered a non-compensation reward that may be greeted with universal enthusiasm by its staff.
The decision to get back to normal office attendance is postponed until at least 2022 but employees can return to the office on a voluntary basis. See: Charles Schwab & Co. is following an 'omni-channel approach' to fully open 406 branches, while rival Fidelity is taking a more cautious approach to COVID
"That's definitely the right call," Cruz says.
Schwab doesn't have a formal vaccine policy, but it is participating in efforts in the Dallas suburb where its located to assist with vaccination efforts.
Texas has one of the worst COVID-19 infection rates in the nation and a below par vaccination rate.
Correction: A previous version of this article stated Schwab had 21,000 employees. It is about 32,500.
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Citing 100% increase in net new assets, Charles Schwab Corp. will give staff 5% 'special' pay raise that leaves one HR analyst doing a double-take - RIABiz
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