No, that old bait to attract deposits won't be nearly enough to pull in new employees. Even cash bonuses of $100 or even more may not do the trick. Community banks, particularly in rural areas, have a difficult time trying to fill positions from the entry-level to the corner office. As the economy continues to grow, unemployment rates have plummeted in many communities to unheard of levels, leaving positions empty for weeks and sometimes months. "It's very frustrating," says J. Edward Mulkey, chairman of Southern National Bank, a $65 million-asset bank in Marietta, Ga. "We are very thinly staffed, and when someone leaves, it can take us six weeks to six months to replace them. It puts a real stress on the whole organization." It is bad enough that existing staffers have to pick up the slack. On top of that, continual recruitment redirects bank resources from other cash-hungry needs. "Things that should be getting done aren't getting done," Mr. Mulkey says. Putting a job ad in the local newspaper will not do the trick anymore. In their defense, it should be noted that community banks have boosted salaries and sweetened compensation packages. But so, unfortunately, have the companies competing for the same job hunter. Money matters for sure, but the savvy community bank knows it takes more than dollars to attract talented workers. More inventive, nontraditional methods can help snare more hires and boost retention rates at community banks. For bankers who empathize with Mr. Mulkey's plight, many of the hiring tips outlined in this article might be worth considering. Some banks, for example, are taking the long view, creating close ties with high schools and community colleges to start developing employees early. Others, such as Community National Bank in Waterloo, Iowa, target new communities in their regions, such as Bosnian refugees. Community banks have focused on improving working conditions and rewards to keep new hires on board. For some banks, this means everything from looser management hierarchies, with room for input from all employee levels, to flex time and telecommuting. Alex Oponski, vice president of administration at the Iowa Bankers Association in Des Moines, says that hiring frustrations have prompted a major shift in how banks manage internal operations. Some rely more on outsourcing, he says, while other have begun splitting a full-time employee between two locations, and hiring more part-time staff. Many banks pay close attention to salaries, monitoring pay scales locally and at the national level. At Merchants Bank in South Burlington, Vt., president Joseph Boutin says his goal is to pay new hires 15% more than median salaries in the region. The $650 million-asset bank also offers flex time for all employees and grants benefits to part-timers. The teller ranks as the toughest bank job to fill at. Boone County National Bank in Columbia, Mo. As a result, the bank has also boosted these employees' pay in order to attract and retain them. But the $738 million-asset bank's biggest selling point with prospective teller hires is a $500 signing bonus. Not only does this incentive attract new employees, it helps keep them there. Employees who leave within a year must give the $500 back. Mary Hentges, Boone County's vice president of personnel, says employees like the signing bonus better than an extra 25 cents added to their hourly wage. "In a lump sum like that, they really feel like they can do something with the money," Ms. Hentges says. The shrunken pool of job candidates at all levels has also become a cash cow for existing employees. Many bankers grant bonuses to employees whose referrals wind up as a new hire. These fees typically start around $100. The bonus is one reason Boone County employees keep a keen eye out for potential job candidates. "When a manager gets good service at a retail establishment, he hands out a card," Ms. Hentges says. "We've hired some people that way who wanted better hours." Community banks pay more for staff these days, but Houston consultant John M. Floyd says they get more for the money. "One of the measurements in banking is how many assets an employee can handle," Mr. Floyd says, "and the average assets per employee is going up faster as a whole than salaries." When higher salaries attract and retain superior workers, productivity improves, even without incentives. One of Mr. Floyd's community bank clients pays check-processing employees $15 an hour and the encoding cost per check is six-tenths of a cent. The same job at another bank, Mr. Floyd says, pays $8 an hour, and the cost to encode is 2 cents per check. Some banks would pay more for qualified employees, if only they could find them. Failing that, these bankers are taking responsibility for bringing employees up to grade themselves. Merchants Bank's annual schedule of training for new and existing employees is at least 30 pages thick. "We run basically a university," Mr. Boutin says. While training bites a chunk out of the bank's operating budget, the results have been remarkable. The bank now has a 90% retention rate among tellers, an industry high. "We feel the better training we do, the better retention we have," he adds. Some community banks have turned to educators to help them solve the hiring crisis. The Bank of the Rio Grande in Las Cruces, N.M., for example, collaborates with the region's community college to develop staff. One program requires area high school students to complete two years of employment in clerical posts at the bank. After the two years, the school district will help pay the tuition at the community college. The program is now in its third year and nearly a dozen students have participated so far. "It's a wonderful opportunity for these students," says Gwenn Everett, cashier and senior vice president at the $50 million-asset bank. "The benefit to us is, we get a working person." A side benefit to the program is word-of-mouth advertising. Young employees talking about their jobs give other students a perspective on bank employment that Ms. Everett hopes will attract even more applicants. Nevertheless, the bank still confronts stiff competition from other entry-level employers. "People will leave for another 25 cents an hour," Ms. Everett says. "But we try to point out that it's better to stay here than change jobs because eventually they will make more." A similar program is under way in Louisiana, where banks, including community banks, have teamed with Baton Rouge Community College to develop a curriculum that grooms students for jobs in financial services. The plan recently won approval by the state's board of regents. In addition to general business training and behavioral tips such as how to dress appropriately on the job, students can take classes in money counting and other banking-related skills. Special classes designed in collaboration with the Bank Administration Institute and the American Institute of Banking are also under consideration. The program is designed to end the habit among Louisiana bankers of wooing away each other's experienced tellers, a practice that has caused a steady rise in teller salaries. Instead, area bankers will be working together to build their own pool of employees with basic skills, albeit one that will take time as students graduate from the two-year program. For those already on the payroll, incentive pay has become a more common tactic to reward and retain employees. This costly addition to bank overhead has ardent supporters among community bankers, and most say they work to keep employees happy and loyal. But incentives have limitations, Merchants Bank's Mr. Boutin says. While the program performs well at the branch level, rewarding employees in departments such as human resources, facilities management, and accounting has been more troublesome, he says. The problem is tying the incentive to the more intangible delivery of service among the department's non-sales workers. "Our employees don't feel the incentive relates to what they do," Mr. Boutin says. While these employees still get financial rewards apart from their salaries, the incentive is not much help in guiding work habits. "I don't like it but we haven't figured out yet how to change it," Mr. Boutin says. Like low unemployment, constant consolidation is also weighing down on bank hiring efforts. On one hand, mergers have moved thousands of jobs from one community to another, including the management trainee programs that spawned so many of today's community bank executives. On the other hand, mergers continue to release scores of experienced managers ready for a recruitment pitch and the pace of a community institution. When these bankers join a new organization, experts say community banks gain when they reinforce the community pitch that may have landed the executive in the first place. Dick McCarthy, a bank recruiter in New Orleans, suggests community bankers enroll their new executive hires immediately in organizations such as the local Chamber of Commerce, Kiwanis, or Rotary Club. At Marietta's Southern National, community starts within. The bank's employee stock option plan is open to all employees so that "there's no inconsistency between helping the bank and helping themselves," says Frank Roach, the bank's president and chief operating officer. Another method for keeping employees on staff is keeping them involved. Meetings are inclusive and input is encouraged from all levels. "I don't ever change the pricing on deposits," Mr. Roach says, "without talking to my customer service representatives." For Southern National, the hope is that a staff that makes strategy together, stays together. Ms. Monahan is a writer in New York.

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