Employee Retention: Keep the Keepers

You have a highly valued employee, and they quit. Why? The boss? The culture? The pay?

I'm sure if I searched for credible sources, I would get some version of one or a combination of the three. It is highly individualized. But what is universal is that each financial institution has employees that are highly valued and they want to keep. Yet rarely tell them so. For fear that the employee will recognize their worth and ask for more money or shop themselves around. Better to repress that employee, right? Shhhh. Don't say a thing.

The most recent Bureau of Labor Statistics analysis shows the number of quits, i.e. employee-driven departures, at 3.5 million in December 2018, the highest since pre-recession 2007. 

Best Strategy

The best single strategy for employee retention is management attention, according to Bill Conerly, a business economist and former banker. Employees may tell you they are leaving for more money, and if your compensation is not in the ballpark for the value they can get on the open market, then perhaps that is true. But if comp is in the ballpark, then it is likely the employee wouldn't be looking around if the company's culture was great and their boss paid attention to them.

Management and leadership are soft skills that are not on a financial institution's priority list. Seven years ago I wrote about this on these pages, and I haven't seen much improvement since. In that post, I wrote of a former military commander that worked for a large corporation that incorporated leadership into their development program. They hired psychologists to develop the curriculum, and actors to role play. 

So, in addition to the ideas below, it is important for financial institutions to develop good managers with leadership abilities. Because they are the ones that will be executing the following ideas to retain your high performers.

Three Ideas to Improve Retention

1.  Build a culture that salutes achievement. Accountability shouldn't be based on fear, recrimination, and public flogging. It should be built on open recognition of a job well done. Be it exceeding goals, achieving top quartile profitability, most improved, or proposing and implementing an innovative idea. Give that employee a trophy. Coach under-achievers that have an attitude of self improvement. Because, as one of my Navy Senior Chiefs once told me, if you have an employee that puts forth the effort and has a good attitude, and they don't succeed, that's on the supervisor.

2. Set career paths. And develop employees to achieve. So many financial institution development programs are ad hoc. No direction. But if you hire a junior credit analyst out of college, once they get the job, ask them what they aspire to be. Aside from compliance and functional training, develop them to hit their next level. Even if it is outside of Credit. Perhaps they want to be a commercial lender and some day, be CEO of your bank. That's great! If they achieve within their functional position, then we should be prepared to develop them for the next level. Instead of pushing them down in their current position because they are really good at it. Which is a sure fire way to have them shopping their resume, in my opinion.

3. Conduct stay interviews. Now, I will admit that I'm cynical about buzzwords. But I received a newsletter from a financial institution executive recruiter that caught my eye on improving employee engagement. Stay interviews will help your financial institution make tweaks to its culture and employee relations, and improve employee engagement, which I hear is a key reason why high performing employees stay. Because they matter to you. 

During our most recent podcast, we answered listener questions and one question was "what is the most effective way to recruit and find talent in a community bank?" My answer, build from within. 

Because there aren't many employees out on the street. And to woo them, you might have to pay up. And if you pay up, you may run into "equal pay" movements happening in many states, pricing up your existing talent. An unintended consequence.

What would you rather do to build an employee base capable of executing your strategy? Buy or build?

~ Jeff

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This article relates to my firm's Profit and Process Improvement and Management Advisory services. Click on the links to learn more.

https://kafafiangroup.com/services/profit-process-improvement/

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Five Ideas to Build an Accountability Culture at Your Bank

I recently spoke at the ABA CFO Exchange in Nashville on building an accountability culture. Talking banker accountability to a room full of CFOs is like a politician telling senior citizens that Social Security benefits should remain untouched. It was a friendly audience.

I tried to be provocative. For example, it has been my experience that when discussing accountability, CFOs sometimes fall into the trap of talking about other departments. What about the Finance Department? How does it stack up to benchmarks, and are they realizing economies of scale, using less resources as the bank grows? They didn't flog me.

So how do you go about building a strong accountability culture at your bank? Accountability suffers a bad wrap. Most think of out-of-reach goals, difficult meetings with the boss, and recriminations for under-achievement. Does this sound like an enviable corporate culture?

Part of my coaching school curriculum for being a US Lacrosse certified coach was the Positive Coaching Alliance (PCA). This portion of the certification was not lacrosse specific. Rather, it taught how to be a coach. And by the title of the course, it was not the coach that I knew. It has adherents like Joe Ehrmann and Phil Jackson. 

The PCA discussion on "filling the emotional tank" for players has direct applicability to creating a positive culture that leads to better adjusted and happier employees, and results. If this culture interests you, I have five ideas on how you can build an accountability culture without cracking the whip and taking names.

1. Make accountabilities measurable and transparent. When I was a branch manager in the mid 90's, our sales incentive system was called RAISE (Realizing Achievement in Sales Excellence). I could calculate my quarterly bonus to the penny. I ran a spreadsheet before spreadsheets were cool. Me and another branch manager used to bet a beer each quarter on the size of our bonus. It worked. The best performers got the highest bonus.

2. Link to your strategy. Precious few banks state as their strategy to do large commercial real estate loans at very tight pricing to get deals done. Yet they continue to measure lender success by dollar production and portfolio size, incenting them to do just that. Instead, look to your strategy when building incentive systems.

3. Have a little friendly competition. As previously mentioned, my branch manager friend and me created our own internal competition that ended in a beer at the end of every quarter. It was fun, and motivated us to excel. I didn't want to show up for that meeting getting my butt kicked by my friend. Who would? Why not create ranking reports that include multiple measures, such as lender ROE, branch profitability (both ratio and dollars), or best trends in support center productivity.

4. Include support centers. Everyone thinks if only those branches would shape up, all would be well. So we prune the branch network, and branch staffing, etc. But how about all of those people in Compliance or Audit? How are they performing? It is understandably more difficult to do because we are not measuring their P&L, but we can use trends and benchmarks to highlight highly productive support centers and reward them appropriately.

5. Have an awards ceremony. When in Nashville, my wife and I bumped into a bunch of country music celebrities because it was the week of the CMA Awards. Entertainers tend to award themselves a lot. So why can't bankers? Imagine having a ceremony that celebrates your "Most Improved Branch", or "Top ROE Lender", or "Most Productive Support Unit". Imagine your own awards ceremony that creates the positive environment that promotes friendly internal competition and peer recognition for a job well done.

How do you create a positive accountability culture?

~ Jeff