Banks are addressing an array of challenges to attract new hires and retain them.
By John Hintze
The red-hot market for bank jobs, from branch staff through executives at the corporate level, has cooled somewhat from early 2022 but remains strong, requiring most if not all banks to provide a range of carrots to retain personnel.
The Labor Department recorded 1.7 jobs available for every unemployed worker in October 2022, down slightly from earlier in the year but still a challenging time for employers. Banks are not alone struggling to hire and retain employees, although talk of a looming recession has boosted their leverage.
“Because of the economic chatter, people are more willing to commit to taking positions,” says Brandi Britton, executive director at talent recruitment and consulting firm Robert Half. “They still have quite a few options out there, but from their eyes that may not last forever.”
Nevertheless, Britton says, it is still difficult for employers to find good talent and retaining it is critical, requiring some banks to risk advancing junior level entry staff quickly to fill vital positions.
“At our bank, we are mitigating this issue by having robust internal development and training for entry level candidates with less or no experience in banking and developing them to fulfill these roles,” says Maxine Hart, chief human resources officer at Reading Cooperative Bank, in Reading, Massachusetts.
Hart adds that the most challenging positions to fill at Reading have been experienced customer service banking specialists since candidates are either seeking higher level positions for which they lack sufficient experience and skills, or positions outside of retail banking.
“Candidates with solid customer service and retail banking experience are being snapped up by other industries, so they have wider options of jobs available to them,” Hart adds.
Susan Pardus, partner at KLR Executive Search Group, agrees that demand for retail staff is very high, but also for business and commercial banking lenders and senior executives, especially financial professionals, as well as human resources professionals.
“The HR demand reflects both COVID burnout, with HR professionals leaving and needing a change of scenery, as well as companies realizing they need to invest in talent development, employee engagement, and diversity, equity and inclusion efforts,” Pardus says.
Given the high turnover since the pandemic started and the ongoing dearth of available talent, banks have adopted an array of carrots to attract new hires and retain them. Corporate culture is a key consideration, Hart says.
“As we’re interviewing candidates, they’re interviewing us,” she says. “And because they have more choices, they’re shopping around for an organization that best fits their values.”
That fit clearly depends on what the candidate wants and the bank offers. However, compensation is typically a priority, and given the pandemic’s trials and challenges, employees increasingly demand a fair and transparent approach.
Pardus strongly recommends banks institute a merit system quantifying the success of strong performers and subsequent rewards, to justify paying them more to stay. Such a system requires carefully documenting employees’ performance, to ensure compliance with equal-pay laws that can vary by state.
For example, Reading Cooperative, with $760 million in assets and 10 branches, bases all employees’ bonuses on the same scorecard, whether a part-time teller or senior manager, and they receive the same bonus percentage. Employees are given feedback and information bimonthly on how their scorecard is tracking and how to increase the bonus percentage.
In place for a decade, the bank’s “Stakeholder Scorecard” was a boon in the wake of the pandemic. It deepened engagement with employees, Hart says, and helped them “better understand the successes and challenge that the bank is navigating connecting their activities to the organization’s objectives.”
Cash compensation is more important than flexible work arrangements for lower-level employees in an inflationary environment, according to Pardus. She noted bank clients adjusting salaries by 2.5 percent to 3 percent in early 2022 and then again mid-year, to retain employees. In a recent meeting with bankers, a few were planning on giving every employee a one-time bonus of $2,500, and another 3 percent of salary, “Just for sticking around,” she adds.
In addition, banks have long reimbursed tuition, relocation expenses and other employee costs that ultimately benefit both the employee and the bank. Claw-back clauses that require them to pay back the bank if they leave before a specified time are effective retention tools, Pardus said.
“We heard in a recent bank CFO forum that that the need to repay is more effective to keep someone at the bank than a bonus promised in 12 months,” she said.
She adds, however, that larger long-term bonuses, say, at the end of a three-year period, have proven to be effective retention tools for money center, regional, and more recently midsize to smaller banks.
“Over the last few years, we have seen long-term incentive plans being used more actively by all banks, regardless of ownership structure or size,” Pardus says, adding that awards have increased in complexity and are now more tied to long-term company performance. “It’s a great way to keep people because if they move someplace else, they’ll be leaving too much behind.”
Working remotely, at least in hybrid form, is another carrot banks are dangling, if at times unwillingly. “Many smaller banks are trying to require employees to work in the office five days a week, whereas midsize banks are offering more flexibility,” Pardus says. “One of the first questions candidates ask is ‘What is the company’s flexible work policy?’”
She says that requiring employees to come to the office the same three days of the week is a common approach. Some banks may ask for three days but require everyone to come on one specific day to interact.
When remote work is not possible, such as in a bank branch, Britton says, then offering flexible schedules is key. Reading Cooperative Bank offers a hybrid work environment when it is practical but has found that employees prefer a flexible work arrangement more than locking in a few days of remote work each week.
“We’re finding our younger professional employees value the in-office work for the mentorship and development they receive from being in the office and having access to their manager,” Hart says.
Several of the very largest banks, such as JPMorganChase and Goldman Sachs, have strongly encouraged employees to return to the office four or five days a week, with mixed results. Robert Iommazzo, managing partner of SEBA Executive search, notes that when banks are competing for talent in sectors such as technology that provide significant flexibility and often the option to work remotely, they may have to opt for candidates with less experience if they want new employees mostly in the office.
He adds that hybrid work is likely here to stay for a while, but it’s too early to say if it will remain, and he would not be surprised if banks return to a pre-COVID-type work environment, eventually. Asked whether a COVID surge this winter, as some are predicting, could reverse progress in the push to return to the office, he says: “I don’t see a potential surge in COVID having longer-term impact on return to office. COVID is old news at this point.”
John Hintze is a frequent contributor to ABA Banking Journal.
