Bankers: Give Your Employees a Bucket of Balls

Very few financial institutions commit to the level of employee development found in some of our largest corporations. The fear, aside from the cost of a homegrown development program, is that employees will leave. I have news for you, you should be afraid the untrained will stay.

What banks do you know that have a formal employee development program?

~ Jeff

Fiserv: Give Your Clients a Test Bank

Community banks are struggling to build a training curriculum to develop branch bankers of the future. Aside from moving from a transaction to an advice, sales, and service culture, they also struggle with operational training.

Why?

The story of declining branch traffic, and the resulting reduction of branch transactions, is reducing the repetition of common and uncommon transactions alike, and therefore the opportunity to improve operational skills of branch employees.

When I was a branch banker over 20 years ago, I went to headquarters, stood at mock-up teller lines with a dozen of my colleagues, and a trainer drilled us on running common transactions with enough repetition to imprint the "how to" in our brains. Well, at least my colleagues brains. I never claimed to be an operational wizard.

Some banks still do this. But with branch turnover down due to a weak job market, and the industry moving to universal banker, these training test beds are on the decline, in my experience. As they should be. No reason to institutionalize what is quickly becoming an outdated model... tellers standing behind the rigid teller line anxiously awaiting for the flood of customers that no longer come.

So how do banks increase proficiency with transaction processing? Most accomplish through on-the-job training (OJT), in my experience. But with common transactions being done less frequently, particularly in smaller or more rural branches, and uncommon ones perhaps happening once per month or less, how are branch bankers getting the reps needed to become proficient?

Some are being deployed to a bank's busiest branch, typically the headquarters office, for some OJT before being deployed into the branch network. This is a natural reaction to get reps, and be productive once sent to their primary branch.

But how can your core processor be helpful?

Those that have been through the painful core processor conversion experience know that the Fiserv's and Jack Henry's of the world establish a "test bank" to get your people proficient at all sorts of interactions with your soon to be deployed core.

My question: Why give this up?

I reviewed all data processing expenses for Southeast banks with assets between $800 million and $1.2 billion in total assets. Community banks. The results of my analysis are in the chart below.

In terms of the Call Report, Data Processing Expense category, these banks spent on average almost $1 million in 2015. And the trend is decidedly up. Not a small sum.

In my firm's profit improvement engagements, we see wild fluctuations in core processing expenses. Telling me: 1) banks buy different services from their core processor, and 2) there should be negotiating flexibility given the dollars involved.

What I suggest is negotiating a "test bank" that remains open for continuous training with your employees. Not just branch employees, but everyone that interacts with the core. This will improve the effectiveness of your OJT program, increase transactional proficiency, and allow your bank to dedicate more resources to higher level employee development. It will also retire "Mickey Mouse" and "Donald Duck" as customers. Bankers know what I'm talking about.

There's enough margin in that Fiserv contract to make this happen. Make it so!

~ Jeff

Banking School: The ivory tower could be yours.

I am sitting at Gate 124 in Orlando waiting for my ride home from a long journey. Prior to Orlando, it was Dallas. In Dallas, I taught bank profitability and strategic planning at the ABA School of Bank Marketing Management. The school is a two year program designed to transform up-and-coming marketing professionals into well rounded bank leaders.

I have written a post on these pages regarding training programs (see Are your employees ESWS qualified?). My firm asked Are you training for the gold? in one of our quarterly newsletters. Clearly this topic remains on my mind.

Much like the Kansas City Athletics was the training ground for the New York Yankees, large banks served as the training ground for community bankers. Those big bank training programs are long gone. In strategy sessions today, senior leaders are wondering how to replace aging bankers that benefitted from those programs.

I have a few suggestions.

1.  Get your own training program. Lack of resources is the most often cited reason for community FIs not training their own. Their are several resources outside of your FI with outstanding and targeted curriculum taught by qualified instructors. National trade associations are a great resource for training your employees to be the leaders of your FI. See the ABA, ICBA, CUNA, and other trade associations to review what they offer and the relevance to your institution.

2.  Develop a curriculum by functional position. In my experience, many if not most FIs develop ad hoc training programs that reward high performing employees for a job well done by sending them to a school or conference in a nice location. But if execution of your strategy is largely in the hands of your employees, perhaps you should be serious about giving them the tools to execute that strategy. What skills do they need? How much can be accomplished in-house or via on-the-job training (OJT)? Are we teaching them to supervise, coach, communicate, and/or build a book of business. I perceive a training curriculum to be a focused mix of OJT, in-house classroom, coaching, and outside training (either industry training or academic training).

3.  Recognize high potential employees. One way to do this is to send them to a conference or school in a nice location. But another clear recognition is to prepare them to be leaders at your FI. Train them for the next level, or for another functional area. One risk we have in banking is keeping high potential employees in one functional area, developing a myopic view of your institution and our industry. Perhaps a controller or CFO should go to marketing school because they speak such a different language. In fact, there was a CFO at the ABA marketing school. Imagine that!

4. Recognize that training goes beyond the curriculum. Bankers that don't directly compete with one another openly share best practices with their colleagues. I saw it in action at the marketing school. Another benefit is developing lifelong industry contacts that you can call on for different perspectives. See the photo for a visual of the camaraderie that goes on at these schools. This not only builds morale, it can help your FI by expanding the knowledge base outside of your walls.

This may be the fourth or fifth time I have written or spoken about industry training. I intend to keep working the subject because there is not any other initiative you can undertake, in my opinion, to build a competitive advantage and to sustain your institution for future generations.

~ Jeff