When it comes to workplace perks, cash is king.
That's the thinking at FirstBank, a thriving Colorado institution that keeps its employees happy — and minimizes turnover — by offering one of the industry's most generous retirement packages. Each year the company contributes 4% of each employee's salary to a stock ownership plan, and another 4% is available in the form of 401(k) matches.
The 8% total is "well above market" and can be a powerful tool for recruiting and retaining employees, says President David Baker. (John Ikard is president and chief executive at the parent company, FirstBank Holding Co., while Baker heads the bank unit.)
According to recent data from the Bureau of Labor Statistics, the average employee tenure at financial firms is five years. By comparison, roughly 40% of FirstBank employees have worked there for at least a decade.
Research suggests that employee stock ownership plans foster loyalty. In a 2010 survey by the University of Chicago, 13% of employees at ESOP firms said that they were looking for new jobs, compared with 24% of employees at other firms. The survey also found that non-ESOP firms are far more likely to have layoffs.
Practically speaking, low turnover is simply good for business, Baker says.
"The more experience we have here, the more efficiently we can run and the better service we can provide to customers," he says.
The numbers speak for themselves. Assets, loans and deposits are all growing steadily, and chargeoffs and delinquencies are practically nonexistent. FirstBank's nearly 15% return on equity at March 31 was well above the industry average and its 55.66% efficiency ratio was far better than that of most regional banks.
Those numbers matter to employees, because the better the bank performs, the more money they earn for retirement. ESOP funds are reinvested into FirstBank's closely held stock and at June 30 its shares were trading at about $6,400. That's up about 33% since 2010 and about 260% since 2000.
"This is a successful, growing company, so when you give employees a piece of the action, that really means something over time," Baker says.