Call it a sign of the times.
Robb Rempel, executive vice president of consulting services at Lincoln, Nebraska-based Haberfeld, had just finished a recent session with the board of a client credit union, when a member suggested he drive past a nearby McDonald's restaurant on his way home.
"It had a banner in the parking lot facing the busiest street in town that read, `Starting wage $25 an hour,'" Rempel recalled. "This credit union paid $15 and already felt like they were stretching."
A year after a Crowe survey found
"I have gone to a lot of bank events this year, conferences, workshops, all over the country," Rempel said. "At almost every single one of them, no matter the headline issue, talk pivoted to talent-retention issues…They all wanted to talk about people problems."
No surprise there. Replacing departed workers is costly, with various studies putting the price tag anywhere from 50% to two times salary, according to Rempel.
"With every role that needs to be filled, banks incur costs related to job advertisements, recruiting and training," said Kolby Goodman, a San Diego-based career coach.
Then, there are effects that are difficult to quantify but equally serious, impacting employee morale and customer experience. "What does it do to customer [satisfaction] when on the front lines of your organization, you're turning over 20% to 30% of your folks on a regular basis," Rempel asked, adding that "we're seeing those kinds of numbers."
"Our data would indicate that somewhere in the ballpark of 20% to 25% of customer relationships come as the result of a referral," Rempel said. "If you're turning over a fifth or a quarter of your staff every year…what is the downstream cost of referrals you don't get because your service doesn't live up to your standards?"
December bonuses, quiet Wednesday afternoons
While no bank is immune to the kind of staffing woes that erode customer service, limit referrals and dampen team morale, many of those on American Banker's 2023 ranking of Best Banks to Work For have developed a mix of strategies and benefits that minimize turnover and the turmoil that accompanies it.
At the $350.5 million-asset First Federal Savings & Loan Association in Pascagoula, Mississippi (No. 9 on American Banker's Best Banks to Work For ranking this year), that means a cash bonus in December, along with a work week that leaves employees time for family and personal pursuits, President and CEO Alan Renfroe, who joined the institution in 1977, wrote in an email to American Banker. First Federal continues to observe what Renfroe described as an "old Southern tradition" of closing early on Wednesdays. "This gives our staff the very valuable and much appreciated opportunity to do their shopping, run errands and make doctor's appointments without taking time off from work," Renfroe wrote.
More important, perhaps, is First Federal's culture and the value it places on employee input. "We listen to and encourage individuals to provide their thoughts and ideas," Renfroe wrote. With six branches and just over 50 employees, there are few if any barriers to communication between management and staff. "We make it a point to make people feel like we are all in this together."
For employees, acknowledgement by managers plays a critical role in retention. According to Rempel, face time with the boss is the No. 1 indicator of job satisfaction. "If you have a boss who knows you, who cares about you, who is in the community, that has value and resonates with most team members," Rempel said.
That appears to be the case at First Federal. The bank's website cites an average employee tenure of 16 years. "Employees appreciate the salary and benefits but they value the work environment and the people they get to work with on a daily basis even more," Renfroe wrote. "Working alongside good people is a privilege, working alongside people that you consider part of your family is a blessing."
Doing things differently
For Brydget Falk-Drigan, chief human resources officer at the $6.5 billion-asset Peapack-Gladstone Financial Corp. in Bedminster, New Jersey (No. 25 on the Best Banks to Work For list), the banking industry's personnel woes can be traced back to an image problem. Younger workers "tend to be attracted to tech-type jobs," Falk-Drigan said in an interview. "Banking is not an industry the younger generation automatically thinks about. The repercussions of that are the talent pool from which [banks] can draw is smaller."
Many young people entering the workforce see banking technology as dated, with the pace of innovation held back by regulatory scrutiny and the industry's innate conservatism, said Chris Rice, a partner at San Francisco-based search firm Riviera Partners. Faster-moving tech startups are hurting banks from two directions, Rice added. They're attracting a disproportionate share of talented young people entering the workforce. Where that's not enough, they're luring older, established workers with offers current employers — frequently banks — can't match. Tech firms "are willing to pay for that talent to move over and disrupt a slow-moving industry," Rice said.
One solution to filling the growing number of vacancies is for banks to temper the traditional stress they've placed on hiring college graduates, according to Michelle Sims, CEO of the Boston-based recruitment firm YURPRO Placement. For some positions, requiring a four-year degree actually acts as a barrier to successfully filling open jobs, she added.
"Our financial clients are embracing skills-based hiring strategies for their entry and middle career talent roles and it's paying off," Sims said. "They're able to fill these roles with talent skilled through alternative routes who are more diverse and end up staying with the company longer."
It's a step Peapack-Gladstone, holding company for the 102-year-old Peapack-Gladstone Bank, has already taken, Falk-Drigan said, noting the company no longer requires a college degree as a condition of employment for some positions. What's more important for Peapack-Gladstone, a wealth-focused bank that has made
Beyond more inclusive hiring, Peapack-Gladstone goes to extraordinary lengths to keep high-performing employees from leaving, including an annual exercise where Falk-Drigan and her staff work with the management team to map the careers of individuals identified as possessing leadership potential. "We're investing in a lot of talent planning, talent mapping," Falk-Drigan said. "We've put career development plans together. We've talked to these people about what their future opportunities are. That's one way to really have people stick around for the long haul. They see the process of being able to continually grow their careers."
Once those plans are in place, Falk-Drigan's team makes sure they aren't pushed aside by the pace of day-to-day business. "We have people on my team that are very closely working with those [emerging] leaders," Falk-Drigan said. "Leaders and my team engage them and really talk about where they see themselves going, what they think they need from a development standpoint."
Those types of mentoring and career-development services can act as a powerful recruiting tool, Rempel said. "You have to be willing to make some commitment to people," Rempel said. "If you come to work for us, we'll make up this promise: Whether you stay three years, 13 years, or 30 years, we're going to help you grow. We want the best for you. That requires leadership. That requires people who value others and are willing to make those investments."
Like First Federal, Peapack-Gladstone has adjusted its work schedule to boost employee satisfaction levels. While the company doesn't give them Wednesday afternoons off, it does utilize a hybrid work schedule, permitting employees to work from home Mondays and Fridays. Tuesday through Thursday, they're expected in the office.
The simple step has proved a big hit, Falk-Drigan said. "People love it. It gives them the balance they need to be able to manage home and work life."
