Which is more likely to attract talented executives to your bank, money or corporate culture?
When we asked that question in our 2014 Compensation Survey, I expected most of the respondents—the survey went to bank CEOs, other senior executives and outside directors—to pick money.
And I was wrong.
Question: Which factors do you believe make your bank attractive to potential hires at the executive level?
- Corporate culture: 69 percent
- Stability of the company: 53 percent
- Career opportunity: 30 percent
- Market leader: 19 percent
- Compensation program: 13 percent
Granted, this question measured the opinion of employers rather than the attitudes of prospective new hires, but I still thought it was fascinating that from the perspective of the survey participants, employees place a substantially higher value on the quality of the work environment than on the size of their paychecks. Unless the survey respondents were engaged in mass self-deception, I would say their perception is most likely an accurate reflection of reality. In a highly competitive industry always on the lookout for talent—especially lenders who can help move the revenue needle— banks should have a pretty good idea of what it takes to attract quality employees.
The importance of culture was driven home to me this past week by Scott Dueser, the chairman and CEO of First Financial Bankshares in Abilene, Texas, who gave the keynote address at Bank Director's 2014 Bank Executive & Board Compensation Conference in Chicago. The title of Dueser's presentation was "It's More Than Just the Money," and I thought it was fascinating that he said virtually nothing about the bank’s business lines, markets or plans for acquisitions. Instead, he spoke at length about the company's work environment and how its employees are trained, managed, empowered and recognized when they do something important. First Financial does provide its employees with competitive compensation programs, including profit sharing and widespread use of stock options throughout the company. But Scott clearly believes that First Financial’s culture is as big a retention tool as compensation.
First Financial is one of the top performing publicly-owned banks in the country, having won Bank Director’s 2014 Bank Performance Scorecard ranking for mid-sized banks. The bank also placed first in its asset size category in 2010, and since 2009 has never finished lower than third. This is a highly profitable and well-managed company, and yet the CEO places great importance on culture and the environment that First Financial provides for its employees. After his presentation I asked Scott why. Here is his explanation—and I am paraphrasing: First Financial prefers smaller markets such as Abilene, Orange, on the Texas-Louisiana border or a string of bedroom communities that sit outside the Dallas-Fort Worth Metroplex. It prefers those communities to big cities such as Dallas and Houston, where competition is greater and the bank would have to charge less for its products and services. The fact that First Financial can charge more helps drive its profitability. However, the main reason why the bank can charge more is because it also provides great customer service. And you can’t provide great customer service if your employees hate their jobs, which is why First Financial places so much emphasis on training, career management, empowerment, recognition and, yes, compensation.
It’s probably an axiom that only happy employees can provide great customer service, just like the best milk comes from contended cows. So if customer service is one of your core business strategies, make sure your bank is providing an environment where people enjoy coming to work every day and love what they do.