HomeBanc in Tampa opened a year before the financial crisis began — in Florida, no less — and managed to not only survive, but eventually thrive. In 2014 its assets grew 28%, helping boost earnings by more than 10%. Chairman and Chief Executive Jerry Campbell attributes its success largely to a workplace environment that keeps employees feeling happy and engaged.
The $950 million-asset bank offers a generous stock ownership plan and puts no limits on incentive compensation, but Campbell says the most powerful factors in its formula for strong financial performance are of the softer kind — the open communication, the recognition events, the fun employee gatherings.
"It's hard to quantify, really more of a gut feeling," Campbell says. "But our belief is that happy employees make for happy customers, which makes for happy shareholders."
Campbell's belief is common across the institutions in our "Best Banks to Work For" ranking. These 50 banks put a lot of time, effort and money into making their work environments fun, comfortable and stress-free. They show their appreciation to employees on a regular basis with recognition programs that range from the simple to the elaborate. And they demonstrate genuine concern for employees' health and well-being. Live Oak Bank has a two-story gym with three full-time personal trainers in its Wilmington, N.C., headquarters, while employees based elsewhere get a $550 a month stipend to stay in shape. Capital City Bank in Tallahassee, Fla., covers hotel rooms and food for its employees when they are affected by weather disasters.
In our survey of employees, 93% of those who work at banks in the ranking "strongly" or "somewhat" agreed that the executives care about their well-being, compared with 84% for banks that did not make the ranking.
Some might question the payoff for lavish parties, fitness centers and even career-development programs. But a growing body of academic evidence suggests that there is a link between employee happiness — or engagement, which is different from happiness, but along the same lines — and bottom-line results.
A 2015 study at the University of Warwick in England found that happiness — in this case inspired by "interventions" of 10-minute comedy films and chocolate — boosts a person's productivity in solving complex problems by 12%.
"I was doubtful at first, but the data suggest the gains for a company could be quite substantial," says study co-author Andrew Osborne, a Warwick professor who studies the intersection of economics and psychology. "If you can make people 12% more productive just by making them laugh for 10 minutes, that's pretty powerful."
American Savings Bank in Hawaii actually incorporates fun into its workweek. Every Friday, it has an activity such as an online trivia challenge, scavenger hunt or holiday potluck, which allows employees to take a break from work and unwind.
Noelle Nelson, author of the 2012 book "Make More Money by Making Your Employees Happy," points to Alcoa as a case study in how to treat employees. In 1987, Paul O'Neill took the helm of the struggling steel company and made worker safety his primary focus. Investors were initially unimpressed, but over O'Neill's 13-year tenure, profits, income and market capitalization soared as accident rates plummeted.
"He showed his employees that they mattered, and then they worked harder and became more productive," Nelson says. "It doesn't go 'happy employees equal happy customers.' It goes 'happy employees equal better productivity and performance,' which then leads to happy customers and shareholders."
Others say "happiness" might be too simplistic a way to think about unlocking workers' earning potential. Amenities like on-site dry cleaners or day-care centers might make people happy, says Adam Zuckerman, a senior consultant at Towers Watson, but they really don't benefit the organization. A better objective, he says, is higher employee "engagement," which involves fostering an emotional attachment to the company so people feel invested in its success.
"You can be happy because you're not asked to do anything but read magazines," Zuckerman says. "Engaged employees have a connection to the firm. They are willing to exert discretionary effort" to do their job well, which powers performance.
In a recent study of 41 global companies, Towers Watson found that companies with high levels of employee engagement — as well as a supportive work environment and good employee training and wellness programs — saw their annual earnings jump 18.3%, compared with 8.2% for companies with low engagement levels. Gross profits and assets showed stronger relative growth too.
The science on all this remains a work in progress, but the pursuit of happiness (or engagement) is drawing a growing number of banking disciples. While their efforts take different forms, the underlying message is: banking is a competitive commodity business, and one of the only true differentiators is people.
At $1 billion-asset Avenue Bank in Nashville, Chairman and CEO Ron Samuels says having a culture that is "owned" by employees, not handed down from the top, brings a "whole different level of commitment and passion" to the organization. "The bank does better if people are happy and aren't being forced to be something they're not," he says.
Zions First National Bank, the largest of the banks operated by Zions Bancorp. in Salt Lake City, recently launched an employee wellness program called "zFit" that company officials are confident will produce a good return on investment. The program focuses on four key areas of employee well-being: physical, mental, spiritual and financial.
When those four areas are clicking, morale and productivity rise, producing stronger returns, says A. Scott Anderson, the $19.2 billion-asset bank's president and CEO. "Customers tend to bank with people, not institutions," Anderson says. "When employees are feeling satisfied and challenged, when they have the opportunity to excel and are recognized, they work harder for us."
Like some of the other banks in our ranking, Live Oak has an on-site gym for employees at its headquarters. Less common amenities include a dog park and a restaurant. Live Oak also pays the entire cost of employees' health insurance and has two corporate jets on call for traveling lenders, who make Small Business Administration loans nationwide.
James "Chip" Mahan, Live Oak's chairman and CEO, says his efforts to keep employees happy might look over the top, but they're not. "The top 10% in our peer group generates about $200,000 in annual revenue per employee; we generate $500,000," Mahan says. "We work hard and we play hard. That's what makes us successful."
Mike Solberg, president and CEO of the $3.5 billion-asset Bell State Bank & Trust in Fargo, N.D., isn't apologizing either. Bell throws a big bash for employees every year and gives each one more than $2,000 to give away to someone else. "It's counterintuitive, but the more we invest and give away, the more money we make," Solberg says. "By focusing on employees first, not the dollars, we perform much better."