How HR Can Combat the Great Resignation

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Human resource executives continue to confront and address the ever-shifting priorities that are critical to helping companies maneuver current trends in the workplace.

The coronavirus pandemic, coupled with rising inflation, has disrupted the American workforce. In response, human resource professionals are responding intentionally and thoughtfully to tackle the rising challenges head on. But according to a Human Resource Executive’s survey published in January 2022, 86% report feeling more stressed as they continue to focus on remaining effective business partners. The following are some of the most pertinent talent and employment issues facing banks today and how they impact human resource divisions.

Pay Transparency Laws
An increasing number of states and municipalities require employers to disclose salary ranges to current or prospective employees, a trend that could spread nationwide as prospective employees seek pay transparency and equity at the interview and hiring stage. This requires HR executives to ensure that pay transparency laws are enforced, while demonstrating that salary expectations are commensurate with what the market will bear. Additionally, remote work further complicates the issue, as companies regularly recruit across state lines.

Aside from legal issues, employees today want to know how their current pay range is formulated and which promotional opportunities are available for their career path. Human resource professionals should be prepared for these conversations during onboarding. Without a proactive and well-thought-out message coming from management, employees may assume the worst and — at the very least — begin to explore what the market might pay them for their skills.

Explainable Salary Ranges
Wages are increasing faster than they have in the past 20 years. It is critical that HR professionals educate all internal stakeholders on the methodology they use to develop salary ranges. Typically, HR managers at community banks purchase a mere two or three third-party salary surveys that are used to formulate expected pay ranges for all positions in the company.

In contrast, a documented and communicated compensation methodology can decrease concerns about pay disparity and discrimination. Due to inflation, companies may want to analyze base pay levels semi-annually this year, as opposed to the end-of-year norm, to retain talent.

Reexamining Variable Pay
Strategic HR teams are often involved in crafting departmental scorecards that align performance with board priorities. Something I often say is, “The right bonus program, with the right incentives for the right people, can drive performance.”

Creating a stretch goal structure or modifying who is eligible to participate in an annual bonus program based on corporate results can alter the dynamics of a bank’s compensation strategy and overall financial performance, which is why this topic should be a conversation between the chief human resource officer and CFO. Banks can bolster their talent acquisition strategies by regularly reexamining their incentive payouts and targets to ensure they are delivering a positive return on investment and are competitive.

Embracing a Changing Work Culture
Many financial institutions are enhancing their benefits to demonstrate they truly value their employees. That ranges from shorter vesting periods for paid time off to pet insurance. However, one of the most desirable benefits is a hybrid/remote work arrangement. Banks that refuse to embrace this new model — where it makes sense — need to be prepared to pay more in order to get the attention of top candidates.

However, those benefits cannot be considered in a vacuum. Executives and their HR teams should consider work expectations and their impact on corporate culture as well. In the past, some firms expected employees to work long hours and on weekends in the office in order to advance. But studies are showing a different outcome: burnout. The expectation that employees will forgo a work/life balance for their career is no longer the norm. A culture of self-care for all employees will go much further in promoting a productive and purposeful workforce.

2022 is already proving to be one of the most taxing for HR teams in terms of talent acquisition, management and retention. Banks will continue to face challenges as inflation, salary expectations and work culture changes. But there are proven ways to produce an effective corporate strategy that builds and supports a healthy organization, and generates a good return for investors. Remaining agile, promoting a culture of self-care and paying competitive to market rates will remain fundamental to the success of high-performing banks.

A Bank’s Most Valuable — and Riskiest — Asset

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“Culture should be viewed as an asset, similar to an organization’s human, physical, intellectual, technological, and other assets. … Oversight of corporate culture should be among the top governance imperatives for every board, regardless of its size or sector.” — National Association of Corporate Directors’ Blue Ribbon Commission

A strong, clear culture that aligns performance to shared goals is the hallmark of a thriving and sustainable organization. Such a culture boosts performance and long-term value creation. It’s a non-replicable competitive advantage.

Culture is a substantial asset. Like all other assets — loans, cash, investments or fixed assets — banks should have a proper valuation of their culture asset and know what their return on that asset is. It is incumbent on them to proactively identify strategic cultural risks and opportunities to optimize asset performance.

The chief executive officer is responsible for shaping and managing the bank’s culture, but the board ensures that they do so effectively. The ultimate responsibility for a thriving and sustainable culture sits squarely with the bank’s board.

A board should never be surprised by culture-related issues — yet these often only reach the boardroom when there are problems. Recent scandals have brought culture to the forefront for companies, and many boards and executive teams want to know exactly how — or, alarmingly, what — their culture is doing.

An Incomplete View of Culture
It can be difficult for bank boards to assess a seemingly “soft” issue like culture. They typically rely on disparate and indirect metrics such as employee engagement surveys and comments, hiring, promotion and turnover data, net promoter scores, and leaderships’ opinions to form some notion of cultural health. Many banks have done some form of “culture work” as well. In Gallup’s experience, these efforts tend to be episodic and narrowly focused on a desired aspirational state, such as being “agile,” “innovative,” “customer-centric” or “inclusive.”

The results are drastically — and worryingly — incomplete. Directors are becoming increasingly aware that their efforts to assess their culture asset lack a meaningful perspective on the risks, performance or asset value of the culture overall.

Culture Asset Management
Gallup’s experience is that most organizations struggle to define their culture — much less understand and harness effective levers for shaping it. Most banks and boards manage culture by default rather than by design.

We regularly observe high levels of angst and frustration from board members and executives who know there should be predictive signals, but don’t know where or what to look for.

Bank boards need an objective and reliable approach to managing culture risk and maximizing the return on their greatest — and riskiest — asset to effectively govern and guide corporate strategy.

In partnership with bank executives and boards, and leveraging tens of millions of data points, Gallup has developed a solution called Culture Asset Management to help boards measure and strengthen their cultures. We’ve found the 10 most influential factors of a healthy culture that are predictive of positive business outcomes:

  • Ethics and compliance
  • Diversity and inclusion
  • Leadership trust
  • Leadership inspiration
  • Disruption
  • Employee engagement
  • Performance management
  • Well-being
  • Sustainability
  • Mission and purpose

These 10 dimensions serve as a framework for determining the real value of culture as an asset and for diagnosing the performance and risk factors in managing that asset.

Bank boards are ultimately responsible for the culture of the organization; they must elevate the way they manage culture to fulfill their duty to steward and guide the long-term sustainability of the organization. Culture is a bank’s most valuable and riskiest asset, and should be treated as such. Yet, boards lack reliable, valid and comprehensive tools to understand the risks and strategic opportunities of their culture, which often leads to surprises.

Bank boards should never be surprised. They need a predictive, clear and holistic view of their bank’s culture to understand what the actual value of the culture asset is — just like every other critical asset.

Jennifer Robison contributed to this article.