Attracting Talent in a Brave New World

Getting the talent your bank needs — even just getting candidates to apply and turn up for an interview — has increasingly challenged financial institutions as the country emerges from the Covid-19 pandemic. And the cost to pay them a competitive wage — and benefits — keeps climbing.

Every year in Bank Director’s annual Compensation Survey — which is sponsored by our firm, Newcleus Compensation Advisors — bank executives and directors identify managing compensation and benefit costs as a key challenge for their institution. In this year’s survey, it rates as the second-highest challenge for bank leaders, behind tying compensation to performance.

These tensions are particularly felt by community banks. Those located in urban or suburban markets face stiff competition from large employers like Bank of America Corp., which recently announced plans to increase its minimum wage over the next few years to $25 an hour. Rural banks face similar challenges along with a smaller pool of talent, particularly in high-demand areas including technology, lending, and risk and compliance.

How can your bank attract and retain the talent it needs to survive in today’s environment? We suggest that you consider the following questions as you weigh how to become an employer of choice in your community.

How flexible is your bank willing to be?
Most banks introduced or expanded remote work options and flexible scheduling in 2020. Now that operations are returning “back to normal,” more or less, bank leaders are left to question what worked and what didn’t from a nationwide experiment that occurred during abnormal conditions.

Expectations have shifted over the past year, particularly for younger, digitally-native employees — resulting in a generational divide between staff and management teams. Consider the following from MetLife’s 2021 U.S. Employee Benefit Trends Study:

  • More than two-thirds of employees who can work remotely believe that they should be allowed to choose where they work — not their employer.
  • Half of young employees in their 20s — young millennials and Gen Z — say their work/life balance has improved during the pandemic, and they’re happier as a result. Just a quarter of baby boomers agree.
  • And, crucially: More than three-quarters of employees say they want more flexible scheduling, perhaps splitting their time between remote work and the office. Conversely, the majority of companies surveyed by MetLife expect staff to return to their pre-Covid status quo.

Some employees are interested in returning to the office, but others aren’t. They’ve had months to enjoy a break from long commutes and create an environment that’s comfortable for them.

Will remote work be a passing fad, or a permanent part of the talent landscape? Even if you believe that remote work isn’t a cultural fit for your bank, be aware that you’re competing against it.

Can talented employees from outside the industry strengthen your organization?
Opening your bank up to remote work can broaden the talent pool; so can having an open mind to hiring talent from outside the financial sector. Employees can be educated on the fundamentals of banking; there are training programs all across the country. But a skilled salesperson or someone with deep technology or cybersecurity expertise can fill critical roles at your institution — no matter their background.

 Do you have a good reputation?
Bank leaders often tout the value of their culture — but it can be difficult for leadership teams to truly understand how staff down the ranks view the organization. Conducting employee engagement surveys can help bridge this gap, but also consider how your current and former employees rate your company on external review sites such as Glassdoor, Indeed and Monster.com.

While these websites often attract more negative comments than positive ones, they still can provide a clearer picture of how you’re viewed as an employer — and the perception that prospective employees may have of your organization.

Does your compensation package really stack up?
Your bank isn’t competing solely with other financial institutions for talent — it’s competing against all kinds of companies in your market. We received several comments touching on this in the 2021 Compensation Survey:

Competing employers (not just banks) in our markets can sometimes offer better benefits. We now participate in an internship program at a major state university to develop a pipeline of young talent.” —  Chief executive of a public bank between $1 billion and $10 billion in assets 

“We operate in a highly competitive market, so retaining and attracting technology talent is always an issue. We are competing with Amazon[.com] — hiring 50[,000] workers in our market, as an example.” —  Director of a public bank between $1 billion and $10 billion in assets

Compensation surveys help banks compare their pay packages to peer institutions, but your leadership and human resources teams need to know how your bank compares to local competitors outside the industry, too. This is where boards can provide valuable insights based on their networks and experience, since they’re likely facing the same challenges in their own industries. Leverage that advice.

And consider asking your employees what they value. We’ve found this information to be invaluable to banks, allowing them to review compensation benefits and culture from the employee’s perspective.

Pandemic Poses Path to Boost Employee Engagement

The coronavirus crisis has temporarily boosted employee engagement, giving companies and managers a chance to implement changes that could make those increases permanent.

Employee engagement has increased since the start of the pandemic, according to the analytics and advisory firm Gallup, even as negative emotions also have risen. One potential reason could be stronger and more-empathetic connections between managers and employees. Companies have an opportunity to continue making changes that could result in long-term employee engagement increases, such as shifting managers from bosses to coaches.

Stay-at-home orders caused many banks to move to remote work environments for their employees, which altered the way managers relate with and oversee their reports, says Andrew Robertson, a managing consultant in retail banking and financial services at Gallup. Those shifts occurred as the firm began to see lower reported levels of well-being and higher levels of emotions like stress and anxiety in its surveys.

Work has really shifted, so the dynamic of … command-and-control literally can’t work right now,” Robertson says. “A boss would be over-the-shoulder task managing or micromanaging. Employees are acutely aware that is no longer applicable.”

The firm has also seen an increase in the percentage of employees who wish to continue working from home in some capacity, as well as an openness from managers and executives to allow that. But adding a work-from-home arrangement can complicate management once employees go off-site. In response, some managers seem to be electing a more empathetic, personal and coach-like approach when it comes to connecting and managing remote workers.

Managers are key to a team’s success, especially in moments of pressure and crisis. Their ability to connect and lead their reports has huge implications for banks seeking top performance. But they can also be a major liability when it comes to preserving, enriching and engaging a bank’s workforce.

Gallup’s research indicates that 70% of a team’s engagement can be attributed to their manager. Bad managers are costly: The firm found that one out of every two people leave a job as a direct response to a manager.

“If you want to boil employee engagement down, it’s essentially the manager,” says Paul Berg, financial services thought leader at Gallup. “Most people are having a mediocre-to-poor experience with their manager.”

But Gallup has found that employee engagement has moved higher during the pandemic, from 34% to 38% — its highest level since it began tracking in 2000. That’s a critical opportunity for banks. Higher employee engagement can translate into higher customer advocacy, productivity and profitability, and lower turnover, absenteeism, safety and theft.

Some of the reasons behind the move include that companies quickly rolled out definitive and detailed plans that kept employees informed of how their jobs would need to change. Managers were empowered to support employees as they moved to remote work, and employees may be especially grateful to have a job right now.

But another reason may be that employees and their managers may be having more meaningful and more frequent conversations — a dynamic that can drive engagement. Managers are figuring out ways to keep their teams connected to their work and to each other, acknowledging their colleagues’ stress and trying to keep morale high.

This creates a natural opening for banks to continue cultivating this increased engagement by training managers to become coaches and not bosses. But not just any type of coach.

Berg says companies that adopt a coaching mentality for managers tend to focus on specific objectives, which winds up being “completely ineffective.” The secret to good coaching is focusing on an employee’s strengths. Just as the best coaches help their players identify and leverage their strengths as part of a team, the best managers “focus on what’s right with a person,” Berg says.

Shifting to a coach mindset may come more naturally for some managers right now, given that remote work has changed the types of conversations they have with employees. Robertson says effective managers during the pandemic are the ones who get to know their employees and their situations in order to help them accomplish what they need to, and can have more-meaningful conversation about their work as a result. He believes the role of managers as a glue connecting workers to their banks has become more, not less, important during the pandemic.

“There have been moments [during the pandemic] where we’ve really understood that these human connections are important at work, and that we’re actually able to accomplish so much together when we make those thoughtful human connections,” he says.