Treasury and finance professionals earned an average 2.9% base salary increase in 2020, a 0.8% decrease from the 3.7% gain in 2019, according to the 2021 Association for Financial Professionals (AFP) Compensation Survey. The base pay increase of 2.9% is the lowest salary increase reported in the past seven years, according to the report. Some 2,268 financial professionals responded to the survey, providing salary information for nearly 5,000 incumbents. 

The 2021 AFP Compensation Survey reveals base-salary raises for executive-tier positions at 2.6%, which is 0.7% less than reported a year ago, while there was a 0.5% decrease in salaries for staff-tier positions. At the management-tier level, the average 3.1% increase in base salaries during the calendar year 2020 is 1.2% less than the base salary increase reported in last year’s survey.

Bonuses also down

In 2020, 69% of organisations awarded bonuses to their employees - a slightly lower percentage than the 72% that granted bonuses in 2019. Of the three job tiers, executive-tier financial professionals received the largest average bonuses at 32% of base salary. The average bonus for management-tier professionals was 17% of base salary and the average bonus for staff-tier was 9% of base salary. However, the share of bonus pay for all three tiers was lower than in past years.

Education and professional certifications

Data from the 2021 AFP Compensation Survey continue to reflect the importance of education and professional certification in financial professionals’ careers. In 2020, financial professionals with an MBA earned an average base salary that was nearly US$15,000 higher than that of their counterparts who held only a bachelor’s degree or high school diploma or associate degree.

Incumbents in some positions who hold professional certifications tend to have higher salaries than those in similar jobs who do not. Survey data show that vice presidents of finance who hold a Certified Treasury Professional (CTP) designation earned on average 20% more in 2020 than their colleagues without the certification. In addition, job titles with at least five incumbents holding the Certified Corporate FP&A Professional (FPAC) certification earned on average 3% more than their peers without the certification.

Impact of COVID on compensation

As organisations faced steep challenges due to the pandemic, business leaders implemented various strategies to curtail costs and minimise impact of the crisis on their bottom lines. These measures are evident in the decrease in base salary raises and bonuses observed in this year’s survey findings.

One approach was to restrict hiring any new employees, as 41% of organisations mandated a hiring freeze. Another method included a reduction in workforce, which occurred at 45% of organisations. Nearly half the respondents reported that their employers either eliminated salary/performance raises or these were impacted to some extent. Meanwhile, bonuses and/or incentive compensation were impacted at 44% of companies.

"It’s not surprising that the pandemic may have played a role in the decrease in salary raises, bonuses and more," said Jim Kaitz, president and CEO of AFP. "However, this year’s report also underscores the importance of treasury and finance professionals focusing on upskilling by earning relevant professional certifications and/or advanced degrees."