Community banks are relationship driven – we are people first. A bank’s employees are its greatest asset…in addition to being its greatest overhead expense. In this era of rising personnel costs and difficulty finding qualified employees, how does a bank manage its personnel costs? Here are three simple ideas to help.
- Look at the culture you are creating – assuming pay is comparable, most employees (especially high earning employees) prioritize 1) culture & values, 2) quality of senior leadership, and 3) career opportunities as important factors to their job satisfaction. The number one reason people leave their current job is because of their boss. Great bosses lead to less turnover and better bottom lines.
- Look at the production of your bank’s highest earners – do they earn their paycheck? It is common for bankers to try and save money on/(with) the lowest earning positions, but these positions have the smallest impact on the bottom line. Focus on your high earners and challenge them if they are producing their fair share. And if they are, reward them! They may even produce more and your organization is able to do more with fewer employees.
- Establish career paths – immediately! The problem of baby-boomers retiring started long before COVID initiated “The Great Resignation”. Successful organizations understand that turnover is the most expensive mistake to make…once you find great employees, figure out how to keep them. Delegate responsibility and authority, make employees feel their voice is heard and challenge them to grow.
It is tempting to think money is the biggest, easiest, and fastest fix to an organization’s personnel challenges. Unless your organization pays significantly below market wages (and that is impossible to do long-term), wages will likely be comparable across our industry. Focus on these items that are free to do and watch what happens to employee morale, culture, and profitability.
Ratio Of The Week
Asset/Employee Ratio = Total assets / # of full time employees.
This ratio is measured in assets (million) per employee and is a key indicator of operational efficiency.
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