In these turbulent times, with some banks being swallowed up by healthier competitors and others disappearing altogether, it is vitally important that banks develop deeper insights into their work forces.
What are their employees' skills and potential? How profitable are they? Are they at risk of leaving?
With the recent downsizing wave — well over 100,000 positions in the financial sector were cut last year — thousands of skilled bankers are suddenly in the job market.
Whether your bank is considering layoffs, striving to keep key people from jumping to a competitor, looking to upgrade skills in areas that are lacking, or even contemplating hiring in anticipation of a healthier economy down the road, you must know the quality and depth of your talent pool.
Unfortunately, many banks fall short in this quest, because they don't take a strategic approach to strengthening their work force. As a result, critical decisions — whether and how many employees to cut, whether to redeploy workers from one unit to another, and which business lines need skill updating — may not be made astutely.
Banks collect mountains of data on their work force, but few analyze it in ways that can suggest which employees are most profitable or how to improve performance. Individual business lines may know their talent strengths and weaknesses, but few banks assess or share talent across the enterprise to determine where they can leverage or realign workers. Instead, they engage in costly cycles of severing and hiring personnel.
Consider a national credit union that compiled skill-based data and performance reviews independently for each business line but had not consolidated the information at the corporate level. It decided to hire several recruits for its expanding consumer business while laying off sales personnel in its business-to-business unit.
Only later did the credit union realize that, with a better understanding of its talent pool, it could have easily shifted some of the business salespeople to the consumer side, instead of laying them off, thereby accelerating time to market while avoiding the expense and hassle of recruiting and hiring employees.
True, most banks take an enterprise view of leadership development: identifying future leaders from among the top few performers in each business line. But few banks follow that practice with the rest of their work force, leaving huge pools of talent untapped. With today's emphasis on flat organizations value is distributed throughout companies. Leaders are certainly crucial, but so are middle managers, front-line supervisors, and the rank and file.
What can banks do to manage talent?
Align strategy. Talent decisions should be closely aligned with business strategy. A community bank that seeks to differentiate its brand through improved customer service will clearly have different priorities than a large bank with its eye on global expansion.
In light of the market turmoil, banks may need to think differently about the mix of their workers — traditional full-time employees, long-term contractors, and short-term contingent workers. In a volatile business such as mortgage finance, banks typically cut personnel in a down cycle and then quickly rehire many of the same people when a stronger housing market returns. A more cost-efficient way to manage such volatility is through a combination of full-time and contingent workers.
Identify critical work forces. To prioritize investments of time, money, and attention among the entire employee population, banks should identify which workers are most vital in carrying out its strategy — jobs having a significant impact on the bottom line or in maintaining business performance.
For example, in this difficult environment, customer retention is a key short-term strategy for many banks. The sales and marketing department would be the likely critical work force to calm anxious customers and keep them engaged, but that may not be the complete answer. Select aspects of the information technology unit may also be needed to provide marketing personnel with new tools to reach out to customers. Branch tellers may also need to help implement the strategy.
Assess talent. Banks must determine the key jobs within its critical work forces — tellers, customer service representatives, and regional sales managers, for example — and analyze the talent pool for these jobs. Assess employees in terms of performance, criticality of role, risk of leaving, and readiness to advance. Often, top talent is stuck in less critical roles, and conversely, weaker performers are found in key jobs.
Most banks know who their high performers are, but not why they outshine others. With talent assessment tools and other technologies, banks can identify the attributes and day-to-day activities of their best employees to understand what they do differently.
Once the qualities, skills, and work patterns of high performers in critical work forces are understood, banks will be in a much better position to recruit, hire, train, and promote in step with their business strategy. Further, it will be easier to decide whether underperformers should receive additional training, be redeployed to another unit that can better leverage their skills, or be downsized as nonessential to fulfilling that strategy.