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.

The Secrets Behind Diverse Boards

Four women currently serve on the board at Eagle Bancorp Montana, the $1.3 billion asset holding company for Opportunity Bank of Montana. That’s by design, says Chairman Rick Hays.

“[We] decided that we needed to have a larger board,” Hays says, after a 2012 branch acquisition doubled its footprint in Montana and prompted a later increase from seven to nine members. The Helena, Montana-based commercial bank wanted to add directors representing its expanded geography, along with younger board members and women. Maureen Rude, who joined the board in 2010, was the sole female director at that time.

“We had all the board members, all the executive officers, the local market presidents in those communities, all looking for people with the characteristics we were looking for,” says Hays. Expanding its networks worked: Two women joined in 2015, and the fourth, public accountant Cynthia Utterback, in 2019. During that time, the bank also replaced a male director with another man with a technology background.

“We’re looking for the best possible candidates,” Hays says. “If you decide what you want and commit to getting it, you can get it done.” Adding new perspectives and backgrounds benefits the board and the bank, he adds. “I firmly believe that diversity is about the best possible business decision we can make; I’ve experienced it over and over in a variety of organizations.”

Almost 60% of the directors  and CEOs responding to Bank Director’s 2021 Governance Best Practices Survey believe that diversity in the boardroom improves corporate performance. However, fewer than half — 39% — have three or more board members who they’d consider to be diverse, based on gender, race or ethnicity.

The benefits of diversity in the boardroom are frequently touted by corporate governance experts, and many of the survey participants shared their experience. Here are a few of the comments we received:

“[D]iversity has helped shape everything from policies to product positioning.” — Lead director of a public bank between $1 billion and $10 billion in assets

“We have diversity in age, gender, geography, ethnicity and career experience. Creates more robust questioning when discussing products, trends, issues to ensure full vetting, understanding and ramifications of decisions.” — Independent director, public bank above $10 billion in assets

“[Due to diversity] [w]e have re-visited agendas, meeting logistics, and historical approaches to initiatives with a fresh lens.” — Independent chair at a private bank between $1 billion to $10 billion in assets

Sixty-five percent of respondents want to add more directors with diverse backgrounds, but almost as many (61%) believe it’s difficult to identify and recruit them to serve on the board. These candidates may be in high demand, but the survey finds that respondents representing more diverse boards report that it’s easier to recruit diverse candidates with the skills and expertise their organization needs.

 

As Rick Hays at Eagle Bancorp Montana illustrates, diverse boards broaden their networks to recruit diverse, qualified candidates. But an analysis of the habits of diverse boards yields further clues about their practices. They tend to have mechanisms in place to create space on the board, and to identify the skills and attributes they’re seeking.

Board evaluations can be valuable tools to evaluate governance practices and identify disengaged members. The survey finds that diverse boards more frequently use and also make deeper use of performance assessments, from assessing the effectiveness of the entire board, to identifying underperforming directors and conducting one-on-one conversations with directors.

Bank Director offers a board evaluation and peer assessment through its membership program. Mascoma Bank, a Lebanon, New Hampshire-based mutual, uses this evaluation annually. Clay Adams, the $2.4 billion bank’s CEO, says the tool provides a framework for the board to assess its practices, such as ensuring that the board is receiving an appropriate level of detail about the bank’s operations.

“We’re always thinking about how to do things better,” says Adams. “We use the board effectiveness survey to make sure that we’re on the right path.”

Peer evaluations are less commonly used by bank boards — 24% say their board uses one. Respondents representing boards with three or more diverse members (36%) are more likely to use this tool.

Mascoma’s board conducts a peer assessment every other year, under the purview of the governance committee. Adams has served on other boards that used similar assessments, which he believes provide tremendous value in driving conversations with underperforming directors. “Diverse board member or not,” he adds, “if a person is not fulfilling the duties — duty of trust, duty of care, duty of loyalty — then they shouldn’t be on the board.”

Bank Director included Mascoma Bank in its analysis of the Top 25 Bank Boards for Women earlier this year; the mutual has since added two more women to its board, so its composition is now evenly split between men and women. Adams emphasizes the importance of intention in building a diverse, skilled board. “We’re constantly talking about it [and encouraging] board members to think about people they come across in their lives or reaching out to communities where we may not — as a board, as individuals — interact,” he says.

Adams hopes to further diversify the boardroom. “We’d like to have a [person of color] on our board,” he says. “We live in a predominantly white region, northern New England. Therefore, we need to work a little harder to network with people who are members of that community.”

Mascoma also incorporates term limits for directors — 15 consecutive years — and a mandatory retirement age, at 72, as mechanisms to regularly open seats on the board. These policies were last examined by Bank Director in 2020; our survey found that boards with “several” diverse directors were slightly more likely to use a mandatory retirement age or term limits.

Getting the right mix of skill sets, backgrounds and experiences results from a gradual, deliberate process, says Hays. “When we’ve filled any of our board slots, we’ve probably had discussions for a year and a half to two years to get there,” he says, due to the value Hays and the board place on its composition. “It takes time to find the people we were so fortunate to find [and] bring onto the board. We could not have done it any sooner.”

How Banks in Texas Built a Recruiting Pipeline

Banking is an accidental profession.

Some bankers start as tellers trying to pay for college. Others are accountants and lawyers hired by bank clients. Still others are entrepreneurs who get frustrated with banks and start their own.

This is one reason banks face such a challenge in recruiting high-quality candidates.

Well, God helps those who help themselves. That’s Scott Dueser’s philosophy.

Dueser is the chairman and CEO of First Financial Bankshares, a $10.3 billion bank based in Abilene, Texas. It trades for the highest valuation on the KBW Regional Banking Index. Over the past two decades, it’s produced a total shareholder return of more than 2,000%.

Five years ago, Dueser started lobbying his alma mater, Texas Tech University, to launch an Excellence in Banking program that would offer classes in banking to undergraduate and graduate students studying finance.

For years, First Financial hired students from Sam Houston State University’s banking and financial institutions program in Huntsville. It did the same with Texas A&M University’s commercial banking program in College Station.

Why not construct a similar recruiting pipeline, Dueser thought, in First Financial’s West Texas stomping grounds? Other banks agreed. Much of the program’s endowment came from upwards of three dozen banks.

The inaugural group of students started earlier this year, three of whom interned at Dueser’s bank over the summer.

The program’s director is Mike Mauldin, who spent 17 years leading First Financial’s Hereford region.

“Mike is the perfect guy for the job,” Dueser says. “He’s not an academic; he’s a banker. A really good one. He’s also great with kids.”

Mauldin has structured the program around four pillars.

The first is a bank management class, covering the gamut of issues that lower and mid-level managers face in banks. The second is a marketing course, delving not only into traditional marketing strategies, but also into etiquette, teaching students how to navigate a professional environment.

The third pillar is a credit and lending course. This is where the rubber meets the road insofar as banking is concerned. According to the syllabus, students learn how to work with customers, read financial statements and assess credit risk.

Finally, students must intern at a bank. They’re required to write weekly papers as a part of it, Mauldin says, making them reflect on what they’ve learned.

“I don’t think of it as an internship,” Mauldin says. “I think of it as a long job interview. What we want at the end of the process is for the students to get jobs.”

Now, as a publication read by practitioners, we can be honest: No one learns much in college. At least I didn’t. But you do learn how to learn —a critical skill in an industry as dynamic as banking.

The program also acclimates students to banking. It’s a profession that everybody knows about, but few people understand.

Banking is to business what ballet is to dance, requiring a combination of both strength and grace. It’s an art and a science to balance the fragility associated with leverage and the stabilizing influence of capital and prudent credit policies.

“When assets are twenty times equity — a common ratio in this industry — mistakes that involve only a small portion of assets can destroy a major portion of equity,” Warren Buffett wrote in his 1990 shareholder letter. “And mistakes have been the rule rather than the exception at many major banks.”

Programs like the one at Texas Tech are designed to combat this.

A second rationale for the program, Dueser explains, is the need to diversify the industry’s workforce, which has proved to be a perennial issue in banking.

And so far, the program has lived up to expectations. Half the inaugural class consists of minority and women candidates.

Done right, banking is a lucrative and fulfilling profession. No community can thrive without a bank. The more students that appreciate this, the easier it’ll be to recruit them.

The Biggest Priorities for Banks in Normal Times

Banks are caught in the midst of the COVID-19 pandemic sweeping across the United States.

As they care for hurting customers in a dynamic and rapidly evolving environment, they cannot forget the fundamentals needed to steer any successful bank: maintaining discipline in a competitive lending market, attracting and retaining high-quality talent and improving their digital distribution channels.

Uncovering bankers’ biggest long-term priorities was one of the purposes of a roundtable conversation between executives and officers from a half dozen banks with between $10 billion and $30 billion in assets. The roundtable was sponsored by Deloitte LLP and took place at Bank Director’s annual Acquire or Be Acquired conference at the end of January, before the brunt of the new coronavirus pandemic took hold.

Kevin Riley, CEO of First Interstate BancSystem, noted that customers throughout the $14.6 billion bank’s western footprint were generally optimistic prior to the disruption caused by the coronavirus outbreak. Washington, Oregon and Idaho at the time were doing best. With trade tensions and fear of an inverted yield curve easing, and with interest rates reversing course, businesses entered 2020 with more confidence than they entered 2019.

The growth efforts reflect a broader trend. “In our 2020 M&A Trends survey, corporate respondents cited ‘efficiency and effectiveness in change management’ and ‘aligning cultures’ as the top concerns for new acquisitions,” says Liz Fennessey, M&A principal at Deloitte Consulting.

A major benefit that flows from an acquisition is talent. “More and more, we’re seeing M&A used as a lever to access talent, which presents a new set of cultural challenges,” Fennessey continues. “In the very early stages of the deal, the acquirer should consider the aspects core to the culture that will help drive long-term retention in order to preserve deal value.”

One benefit of the benign credit environment that banks enjoyed at the end of last year is that it enabled them to focus on core issues like talent and culture. Tacoma, Washington-based Columbia Banking System has been particularly aggressive in this regard, said CEO Clint Stein.

The $14.1 billion bank added three new people to its executive committee this year, with a heavy emphasis on technology. The first is the bank’s chief digital and technology officer, who focuses on innovation, information security and digital expansion. The second is the bank’s chief marketing and experience officer, who oversees marketing efforts and leads both a new employee experience team and a new client experience team. The third is the director of retail banking and digital integration, whose responsibilities include oversight of retail branches and digital services.

Riley at First Interstate has employed similar tactics, realigning the bank’s executive team at the beginning of 2020 to add a chief strategy officer. The position includes leading the digital and product teams, data and analytics, as well as overseeing marketing, communications and the client contact center.

The key challenge when it comes to growth, particularly through M&A, is making sure that it improves, as opposed to impairs, the combined institution’s culture. “It is important to be deliberate and thoughtful when aligning cultures,” says Matt Hutton, a partner at Deloitte. “It matters as soon as the deal is announced. Don’t miss the opportunity to build culture momentum by reinforcing the behaviors you expect before the deal is complete.”

Related to the focus on growth and talent is an increasingly sharp focus on environmental, social and governance issues. For decades, corporations were operated primarily for the benefit of their shareholders — a doctrine known as shareholder primacy. But this emphasis has begun to change and may accelerate alongside the unfolding health crisis. Over the past few years, large institutional investors have started promoting a more inclusive approach known as stakeholder capitalism, requiring companies to optimize returns across all their stakeholders, not just the owners of their stock.

The banks at the roundtable have embraced this call to action. First National Bank of Omaha, in Omaha, Nebraska, publishes an annual community impact report, detailing metrics that capture the positive impact it has in the communities it serves. Columbia promotes the link between corporate social responsibility and performance. And First Interstate, in addition to issuing an annual environmental, social and governance report, has taken multiple steps in recent years to improve employee compensation and engagement.

Despite the diversity of business lines and geographies of different banks, these regional lenders shared multiple common priorities and fundamental focuses going into this year. The coronavirus crisis has certainly caused banks to change course, but there will be a time in the not-too-distant future when they and others are able to return to these core focuses.

Seven Secrets of Succession Success


succession-1-19-18.pngOne of a bank board’s most vital responsibilities is overseeing the plan of succession for the CEO. Whether driven by a looming retirement or change in the incumbent’s personal timeline, a well-orchestrated plan of succession and leadership continuity reassures employees, investors and communities. Unfortunately, too many bank boards still take a passive approach to CEO succession, rather than acknowledging that as directors, they are responsible for the selection and ongoing evaluation of CEO performance.

Good succession planning for any executive role starts with understanding the potential succession timeline and the bank’s strategy. These seven steps will help to guide the board and incumbent CEO in developing a solid succession plan.

  1. Understand the succession timeline. What is the intended horizon for the incumbent leader to remain at the helm? This timeline is often fluid, which can create a challenge for the board. It is natural for many healthy CEOs to struggle with stepping out of a role that has been so closely tied to their personal identity. Yet, boards must insist on some understanding of the timing in order to maximize the development of potential internal contenders and to avoid frustrating executives who are waiting in the wings.
  2. Strategy informs profile. One of the most critical elements of planning for CEO succession is the bank’s strategic plan. The direction of the bank going forward should help to clarify the skills and attributes required in the bank’s next leader. Given the massive transformation of the industry over the past decade, the old maxim—what got you here may not get you there—may truly apply. Directors need to align around the bank’s strategy to develop a profile for the bank’s next CEO.
  3. Identify key skills. There are countless technical and industry skills needed in a bank leader today—so many, in fact, that it is virtually impossible to find an executive with all of the ideal requisite experiences. So, prioritize the specific banking skills that the bank must have versus those the board would like to have. Key experiences such as commercial credit skills, regulatory experience, balance sheet management, board experience and risk management are often considered critical to success as a bank CEO today.
  4. Determine critical attributes. What are the most important elements of a potential leader’s personal style and leadership philosophy that are necessary at this time for the institution? For example, most community banks see a CEO’s community presence and visibility as critical for success, as well as creating and achieving a strategic vision. Strong communication skills, cultural agility and the ability to attract top talent also rank high these days.
  5. Develop a process. Successful succession at the CEO and other executive levels involves a robust and thoughtful process, not just putting together a list of who the board knows or who the incumbent leader suggests. Boards today not only need to select a superior executive as their next leader, but are often called upon to defend their decision—and how they made it—to investors, customers and their communities. This does not mean that an external or formal search is always warranted, but it does mean that there needs to be a genuine effort to source, screen, assess and validate serious contenders, which ultimately adds credibility to the board and the selected leader.
  6. Make your bank attractive to star talent. Despite the declining number of banks in the country today, the crop of qualified bankers available to fill the growing ranks of retiring CEOs is not deep enough. Thus, the market is competitive for top bankers, and relocating someone to a new and potentially smaller market remains a challenge. Star bankers will ask tough questions of the board and will want to understand the bank’s strategy, as well as the level of support, engagement and strategic value they can expect from the bank’s directors.
  7. Prepare for an emergency. As most boards know, the bank should plan for the best and prepare for the worst. Reviewing and updating the bank’s emergency succession plan on a regular basis is a must for good governance and regulatory satisfaction. There have been too many instances where this backup plan has been called into action. Having a scenario ready to keep the train on the tracks during an unexpected situation is critical to keeping the institution moving forward.

There is no greater responsibility for a bank’s board of directors than ensuring that the organization has the right leader in place. While there are many important elements to successful CEO succession, the most important point is to maintain the topic of leadership succession as a regular and ongoing board-level discussion.

Five Issues Bank Boards Should Consider Now


governance-12-18-17.pngThere are a number of significant issues and emerging trends affecting U.S. companies and the economy, both of which are crucial to the health and vibrancy of the financial institutions sector. In this environment, it is imperative that bank executives and board members think about five key issues in evaluating their strategic plans. These are areas in which changes have already taken place or are on the verge of being implemented.

1. Regulatory changes
Financial institutions face a number of regulatory and accounting changes. First, a new rule under the Home Mortgage Disclosure Act requires 48 new or modified data points, which will allow regulators to determine if unfair lending practices are occurring. The new rules promise to be expensive to implement.

Institutions growing via acquisition should consider how adoption of the CECL model will affect accounting for loans, securities and other affected instruments at the target institution. And the new standard for revenue recognition issued jointly by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) could prove more challenging than many institutions realize.

2. Tax reform
Banks have expanded to new markets to generate loan growth in response to a challenging rate environment. However, many have not considered the state and local tax liabilities for loans originated outside of their physical footprint. To date, certain states have not rigorously enforced compliance, but banks could be on the radar as cash-strapped state and local governments face revenue shortfalls.

If Congress passes a tax reform bill that lowers the corporate tax rate, institutions in a net deferred tax asset position will need to realize the adverse effect that the new rate would have on the value of its assets. The impairment of the value of the deferred tax asset would need to be recognized upon the effective date of the tax change, resulting in a corresponding decrease in regulatory capital. Institutions may consider increasing their deferred tax liabilities as part of their year-end tax planning process to minimize the impact of any rate decrease on the value of the deferred asset. Further, the expected impact should be factored into capital planning. Institutions that have made a subchapter S election should also monitor the outcome of individual tax reform in combination with corporate tax reform to determine if the subchapter S election remains the most tax-efficient model for operations.

3. Data management
Financial technology firms capture the same consumer data that community banks do, but typically are more effective in their ability to leverage and capitalize on it. Large banks are harnessing this data as well, but smaller banks may not have the resources to make the effort profitable. The data may be residing in multiple systems, or it may be inaccurate or outdated. But the ability to efficiently capture and leverage data will fundamentally change how banks go to market and drive profitability. Banks that want to capitalize on the consumer data they already have will need to make a strategic decision to imitate fintech companies or partner with them.

In addition, regulators are increasing reporting requirements for institutions as a way to conduct efficient, ongoing monitoring, which is fundamentally changing the way regulatory exams are conducted. Institutions that can leverage data for risk management purposes will see better regulatory outcomes and improved profitability.

Cybersecurity remains an immediate threat, and regulatory scrutiny in this area has ramped up accordingly. Banks need to have an effective data security plan in place to deal with the threats that come with gathering so much information.

4. Labor and workforce
A lack of qualified workers may constrain growth, service and innovation if not addressed from a strategic perspective. It has become particularly difficult to find qualified and well-trained credit analysts and compliance officers in a tight labor market. Given most community and regional banks’ focus on commercial real estate lending, the projected shortage of qualified appraisers presents a significant challenge. Banks in smaller markets are particularly challenged in attracting and retaining talent, but they can partially or completely outsource many responsibilities, such as those in information technology, asset liability management and regulatory compliance. A thoughtful approach to outsourcing can assist in maintaining core activities while allowing internal resources to focus on strategic activities.

5. Changing consumer preferences
As customers move to digital channels, acquiring new customers—and increasing wallet share of existing customers—should be top areas of strategic focus throughout 2018. Boomers are shifting from accumulating wealth to maintaining and preserving it, and as a group they prefer a mix of in-person and digital interactions. In an effort to retain these customers, many banks are modernizing branches into sleek, welcoming locations with a number of amenities and educating this demographic on the ability to leverage digital channels in a secure manner, while also responding to the digital demands of younger consumers.

Banks need to find the balance between the digital and the personal, and be agile enough to respond to these changing preferences.

The Bank Executive of the Future: Agile and Focused on Talent


bank-executive-1-23-17.pngToday’s bank leader remains under more pressure than at any time since the financial crisis. Tangible skills still matter, such as commercial credit experience, risk management and strategic planning.

Nevertheless, the real challenges may lie in developing the key leadership requirements for institutional success, and in the navigation of the managerial challenges which lie ahead. Here are three intangible but particularly important qualities for the future bank leader’s success.

Cultural Agility and Adaptability
Let’s face it: while middle-aged white men still dominate the C-suite in banking, the growth markets—and new and future employees—do not fit this profile. Consider these points:

  • Women today constitute a majority of bank employees in many institutions, with rising penetration in senior management roles.
  • Non-Caucasian children are now a majority of births in this country.
  • More new businesses are started by women and minority members of our communities than by Caucasian males.

What this says about our bank’s future opportunities for growth is that bank leaders and line personnel need to develop a true appreciation for the varied needs of different customer constituencies. And employees will likely need additional training to be in a position to service a wider array of customer profiles.

Bank leaders, then, need to lead this charge. It takes training to be able to meet differing customers at their comfort level, rather than expecting potential clients or prospective employees to relate to us. After all, your future team members will be just as diverse as your future customers.

Workforce Flexible
The nature of today’s multigenerational workforce is no secret.

Here’s a recent statistic from Gallup and highlighted by the American Bankers Association: of the four current workforce generations, millennials were notably the least engaged, with only 29 percent feeling connected to their employers. Furthermore, according to research from private equity firm Kleiner Perkins and the industry association Independent Community Bankers of America, the millennial generation seeks meaningful work, high pay, a sense of accomplishment, training and development as well as flexibility—in that order. Yet this same generation is known for being empathetic, humanitarian, environmentally concerned and generally caring. So, how do banks connect with these future leaders to attract them and keep them in the fold?

Here’s where I believe banks hold a hidden advantage over many other industries. There is no industry that is more community-minded or supportive of local organizations with time and money than community banks. Yet too often we take this proud and locally minded commitment for granted, when we should be shouting it from the rooftops, especially when we are recruiting up-and-coming talent or even rookies straight from college.

We also need to make sure that banks have revisited the traditional timelines of career advancement that former bankers like me grew up with. While some veteran bankers may disdain the up-and-comer who expects rewards and recognition much faster than previously provided, we need to accept that times are simply different. As a technology-enabled, team-oriented, community-minded industry, we need to reinforce that “this is not your grandfather’s bank” in our recruiting messages and performance feedback.

Talent Focused
Despite the continued consolidation of the industry, the ranks of folks who can capably lead a bank in today’s climate is simply not keeping pace with the need to replace retiring CEOs and C-level executives.

In the battle for new loans in crowded markets, the banks with more and better lenders on the street will win. Remember that stars have the most options as to where they will deploy their talent. “A” players will usually choose an opportunity where they are working with or for a well-known leader, and where they feel they are best set up for success.

Top talent wants to work with other top performers, and a bank CEO who can attract top players gains a significant competitive edge.

Banks that choose to play it safe with regards to talent—whether in the executive ranks or in the hiring of revenue generators—do run the risk of being penny-wise and pound-foolish. Don’t skimp on getting as many difference-makers on your team as possible.

Summary
The difference between banks that will be able to grow and remain independent may come down to the soft skills of their leaders—how the bank adapts to changing employee and customer markets, navigates the different workplace expectations of its up-and-comers, and whether the bank approaches the talent market strategically. Failing to shift focus to these factors may come at a very high price.

A CEO’s Hottest Topics



Before incentive programs can be determined, staffing needs are addressed and a succession plan is developed, a CEO needs to articulate a vision and communicate key priorities to his or her team. Gerry Cuddy, CEO of Beneficial Bank, Kent Ellert, CEO of Florida Community Bank and Chris Murphy, CEO of 1st Source Bank, explore what is capturing the attention and imaginations of bank CEOs today in this panel discussion from Bank Director’s 2016 Bank Executive & Board Compensation Conference, lead by Scott Petty, managing director, financial services at Chartwell Partners.

Highlights from this video:

  • Managing Talent in the Current Environment
  • Incentive Compensation After the Wells Fargo Scandal
  • Rising Cost of Risk & Compliance Talent
  • Competing with Bigger Banks for Talent
  • External Threats to the Industry

Video length: 38 minutes