While the labor market may not be quite as tight as it was a few years ago, banks are still grappling with recruitment and retention issues, and many are taking unconventional steps to alleviate some of the sting.
Industry heavyweight Bank of America recently implemented a sabbatical program, offering longer-tenured employees four weeks of paid time off to recharge their professional batteries. In Massachusetts, the $1 billion-asset Martha's Vineyard Bank is acquiring a stock of housing units for staff grappling with the high cost of living on a resort island and is renting the units at subsidized rates. And TriStar Bank in Tennessee rolled out an incentive program that rewards existing employees with cash when they refer people they know to open jobs at the bank — $50 for each referral and another $500 if that person gets hired and successfully completes 90 days of work.
"This program encourages our bankers to look for candidates that they would want to work with," TriStar President and CEO Ted Williams said.
Several banks of varying sizes on American Banker's 2024 ranking of Best Banks to Work For have reported that employee recruitment and retention is an ongoing challenge. NebraskaLand Bank and Peoples Bank of East Tennessee also said it remains difficult to hire and keep workers.
To be sure, customized perks like sabbaticals and subsidized housing aren't the norm. But offering such perks gives forward-thinking employers the opportunity to differentiate themselves in a crucial area, according to Timothy Glowa, a consultant and founder of HR Brain in Toronto.
"It's essential to identify what causes pain for your employees, what keeps them up at night, and provide targeted, cost-effective solutions to address those concerns," Glowa said. "When employees feel their specific needs are being met, the bank stands out as an employer of choice."
Turnover is a challenge. Is AI part of the answer?
Employee turnover has been a thorn in the side of banks for years, in part because of a low national unemployment rate and the increasing demand for remote jobs.
At the $908.3 million-asset NebraskaLand, recruiting new employees "has been somewhat of a challenge and takes patience through the hiring process," said Michael Jacobson, president and CEO of the North Platte, Nebraska, company. "We want the right people in the right seats, and sometimes we have to wait longer for the right person to come along."
Similar challenges have unfolded at First National Bankers Bancshares in Baton Rouge, Louisiana, according to Joseph Quinlan, president and CEO of the $880 million-asset bank. While the pinch eased somewhat over the past year, it's still hard to build the necessary "bench strength" to accommodate the bank's growth, Quinlan said.
In response, the bank has "implemented higher employee referral incentives for our staff, expanded our approach regarding remote work where feasible and made attracting talent a more deliberate part of our culture," Quinlan said.
In addition to
Part of the challenge relates to "a changing workforce," said Mark Viner, who leads the interim solutions practice for ZRG, a talent solutions firm in Rochelle, New Jersey.
"We know there's a worker shortage. We know people are changing jobs more often [and] open positions are staying open longer," Viner said. "A company can't just think like they have for 20, 30, 40 years — 'you just hire people.'"
Increasingly, "you can't find certain people," he said.
That level of churn comes at a price. Among other things, replacing an employee means paying for advertising and marketing, background checks, drug testing and sign-on bonuses. Factor internal expenses into the mix and the cost can climb as high as $4,700, according to the Society for Human Resources Management.
According to a 2023 survey of 388 banks by Crowe, turnover among nonofficer employees was just under 20%. Among bank officers, turnover totaled 6.5%.
Kevin Green, chief operating officer of Austin, Texas-based fintech Hapax, believes Crowe's survey understates the scale of turnover that banks face. "You're seeing almost 40% of current employees are considering leaving the industry because of burnout. That's substantial," Green said, citing research conducted by Hapax.
"Most banks aren't aware what [employees' mindset] is[or] what they're feeling," Green said.
Another technology firm, the U.K.-based Unily, found in a recent survey that workers are being bombarded with electronic alerts — Unily termed it "digital noise"— that stress and distract them. Among financial services respondents, 62% reported being distracted at work at least once every 30 minutes.
Overall, one in 10 of the employees Unily surveyed said they would consider switching jobs to escape excessive digital noise.
Both Unily and Hapax said artificial intelligence could be effective in reducing turnover. While some companies are considering AI for staff reduction, Unily pointed to the promise of AI-driven solutions to streamline workflow and drown out digital noise. Green sees it as a tool to combat burnout.
"Not many people are thinking of AI as a staff augmentation or enhancement solution," Green said.
Green highlighted AI's usefulness as a source of information on policy procedure and practice.
"We need to diversify and distribute that knowledge more effectively than we have previously," Green said. "That's really where AI comes in. It essentially becomes a mentor or a guide for your entire staff. … Having access to that information quickly is creating an environment where people are more confident in their work."
Flex time is "table stakes" and freelancers are an option
Charles Potts, chief innovation officer for the Independent Community Bankers of America, likened the human resources arena to a "talent war," adding that in this fight, flexibility equals firepower. "When you look across recruiters and market analysis, you find salary and compensation is usually the third, fourth or fifth [item] on the list of what people are looking for," Potts said. "Banks themselves and community banks find they have to be more flexible in the way they're structuring jobs."
The paid sabbatical program that Bank of America launched in 2023 is a case in point. Offering a month off to employees with at least 15 years of service, the program has gained widespread acceptance,
While many banks may be reluctant to embrace monthlong sabbaticals, flex time has become "table stakes," Potts said. "Banks are able to work creatively to create more flexible schedules."
Banks are also rethinking hiring requirements, demonstrating increased willingness to hire employees who live outside the footprint. "For the vast majority of jobs, they don't have to be in the same physical presence [as the bank]," Potts said. "Why don't you hire them where they live or want to live, and create that kind of virtual workforce? We're seeing more and more community banks do that."
Potts said he supervised a 358-employee operation center for a bank in the mid-1980s. "I had a four-story building that people came to. Everything was there," he recalled. "Every single one of those jobs can be done from any place, any time, anywhere."
Banks can set themselves up for success by fine-tuning their hiring process, said Rob Loy, an industrial psychologist with HighMatch, an Atlanta-based pre-employment assessment firm. They should focus on more accurate, transparent job descriptions and a more careful effort to ensure potential hires mesh with the corporate culture.
"By aligning job expectations, hiring for key competencies and cultivating a strong workplace culture, banks can effectively overcome retention challenges without having to rely solely on pay and benefits," Loy said.
ZRG's Viner advises banks to be open to interim staffing solutions and to get to know providers in their markets "so you have a contact … that can help you if you're in a pinch."
According to Viner, interim staffing has been on the rise in the U.S. for the better part of a decade. What was once mainly a tool that firms used to bolster strategic projects has gone mainstream, as more and more employers tap what Viner termed "freelancers" to fill open positions. "For the past six or seven years, that has been the soup-of-the-day for companies driven by a tight labor market."
Viner linked the trend to the rise of the so-called gig economy, where workers opt for temporary, short-term work. "You probably know all these monikers," Viner said. "There was the
"Companies are going to have to consider that the workforce may not want your traditional job," Viner added. "For you to run your company, you may have to consider using freelancers in certain cases."
