Layoffs are not the only answer to a bank's cost-cutting goals. Some have found other ways, such as retraining, hiring freezes, and restrictions on overtime.
Commerical Bank, for example, a Salem, Ore.-based community bank with 10 branches and fewer than 200 full-time employees, has saved about $200,000 after just three to four months of experimenting with alternatives to layoffs. For this bank, retraining, unpaid days and hours, itinerant bankers, and hiring and overtime freezes help close the gap when revenues flag.
"When your customer's branch closes and she asks, |What happened to the teller who's been there for 20 years?' you must show that you care," said Dana Gilkison, a vice president in charge of human resources at the bank.
Popular Alternatives
The most-used alternatives to layoffs, according to a recent survey of human resources professionals, are hiring freezes, which had been tried by 70%; restrictions on overtime (45%), and retraining (44%). Strategies that fewer had tried include job sharing (14%), reduced pay (6%), shortened workweeks, and voluntary sabbaticals (9%).
The survey, done by Right Associates, an outplacement company based in Philadelphia, got responses from 1,204 human resources executives in a variety of industries.
Taking the Easy Way
Although the alternatives to downsizing have been shown to cut costs effectively, many companies still avoid them.
"When there's a second-quarter shortfall and things have to be turned around by the third quarter, managers will reduce head count as the fastest way to save money," said Virginia Lord, senior vice president at Right Associates.
"In a time of crisis and upheaval," she said, "managers tend not to try new things. Who wants to take a risk when the organization is seriously challenged? It's easier to lay people off than to be creative."
Nevertheless, some bankers are forcing themselves to be creative rather than lose valuable human resources.
Focusing on containing costs works well for Citizens National Bank, a community institution in Hammond, La.
Through a combination of forecasting staffing needs, managing attrition, placing junior people in jobs previously held by higher-paid employees, and adjusting pay scales accordingly, Citizens National avoided layoffs. Its anticipated savings of $800,000 over five years will be enough to keep all current employees on board.
Senior management is committed to assigning people to other units even if a service is cut.
It may be possible to find alternatives to layoffs even if a bank is acquiring another and consolidating operations. For example, the staff of West One Bancorp grew to about 3,800, from 3,200, when the Boise, Idaho-based bank holding company recently acquired 38 branches. Although some staff cuts were needed, the bank retained many employees through an aggressive strategy built on an assessment of costs, revenues, products, and personnel.
Annual Assessments
"Every bank should do a thorough financial and personnel assessment every year," said Gary Peters, senior vice president in charge of human resources at West One. "It's like people having an annual physical. Isn't it better to prevent cancer than try to cure it?"
Emphasizing that avoiding layoffs is a two-way street, Mr. Peters said, "Employees have to leave their comfort zones and look for new job opportunities if old ones are disappearing."
Caveats
They should take classes and be flexible enough to take a job in another category or location, he suggested. For top management and chief financial officers, Mr. Peters urged constant vigilance for better products and services to boost revenues.
Mr. Peters is leery of such measures as reduced hours or unpaid sabbaticals. In addition to reducing employees' pay and benefits, such steps can hur customer service if the bank winds up short staffed. However, as electronic banking grows in popularity, branch staffing and scheduling might be fine-tuned.
Robert Laggini, director of human resources in the consumer banking division of Chemical Bank New Jersey, echoes many of Mr. Peters' themes.
This unit of Chemical Banking Corp. uses an in-house pool of floating temps hired centrally but deployed where needed. It also hires other temps through an agency for assignments of various lengths; although hourly rates are higher than for full-time employees, the overall payroll is lower.
M Laggini also supports the idea that employess must be cross-trained so they can easily move into new posts if their odl job is phased out.
Practically, this means knowing what skills people have, determining what skills are needed to meet the bank's profit and revenues goals, then matching the two. Employees can broaden their skill base in variety of ways, including taking classes, retraining, rotating jobs, and taking cross-functional and cross-divisional placements.
"We must get away from the thinking that says: |Let's cut 10% of personnel across the board,'" Mr. Laggini said. "Instead, we should look at payroll costs carefully and frequently, noting the surges and troughs. As we develop templates for analyzing the skills that go into competencies for each job description, we will be able to move people into positions where our people resources can increase revenues and profits.
Consultants agree that skills assessment testing maximizes dollars spent on staff.
Aggressive Management
Uncover the skills and potential in people, suggested James Cantor, a senior vice president in Right Associates' New York office. For example, a technology employee in a department slated for downsizing may have the potential to sell retail products, but no one will know that without a skills assessment.
"We all hate to get into large-scale downsizing," West One's Mr. Peters said. "Before being forced into that situation because of loss of earnings, let's look at our costs and revenues, and be more efficient and aggressive in the way we manage our business.
"Every person in an organization has to stop being complacent and look for opportunities to make things happen. We all have to be flexible and to make sure that our employees' skill base matches what we need to deliver on our business strategy."
Ms. Pituro is a freelance writer based in Hastings-on-Hudson, N.Y.
