Who you hire can make or break the bank.

If the new employee turns out to be incompetent, antagonistic, or hostile, he can hurt morale in the bank, public acceptance, and the entire banking culture. This problem is made even more difficult by the details involved in trying to fire anyone today based on cause.

Conversely, one bright new star can boost operating effectiveness all through the organization - especially in a community bank where each person's job links with everyone else's.

But how do you determine who to hire?

It is a tough decision. For in a couple of interviews, you make a decision that can have serious long-range implications.

Sometimes decisions are made by outside pressures. An officer has a friend or a relative looking for a job. This is "relationship banking" at its worst. And some banks have actually been killed by the long-range results of this policy.

In other cases, the hiring process is used to ingratiate the bank with some strong customer. Again, this can be a disaster. For should it become necessary to fire such a person, the bank can lose more good will and business than it gained from the hire.

What about references?

As a professor who provides written references for students, I must say that they are a laugh.

This is an era in which everyone is afraid of being sued.

If a reference is strong and the candidate turns out to be weak, the writer has damaged the bank. But if the opposite occurs, and the reference letter hurts the candidate, we frequently see lawsuits.

This is why writers of references try to use ambiguous phrases like: "I can recommend the man with no qualification whatsoever" or "I can say with pleasure that I formerly was associated with this individual."

In my case and that of many other professors, I recommend that the potential employer get the reference in an informal phone call, in which I can tell the truth without buying an insurance policy first.

What about college degrees?

Sometimes they are a drawback. The candidate is so full of himself that he thinks having graduated from a prestigious college is all he needs once he is on board.

Show me someone who is hungry, salivates at the thought of employment here, and will do any task, and I'll take him or her over the better trained individual who feels he is doing the bank a favor.

In this regard, bankers can take a leaf from the policy of a major airline, as described in Incentive magazine.

The company brings all candidates into a room and asks each to make a presentation. But instead of evaluating the presenter, the airline's officials are evaluating the reaction of the other candidates as the presenter talks.

If a person in the audience is attentive, supportive and seems to care, the airline knows it is getting someone who naturally has the ability or disposition to care about others.

If someone is totally self-absorbed or bored before or after making his or her presentation, having no sense of rapport with the person up there struggling, that's a strong signal not to hire the individual.

Some bankers look at what candidates have done in the summer or in free time as a valid indication of their drive and human interest attitudes, while others look at the hobbies as the best test.

And always the key is to make sure the applicant will enjoy the type of work the bank has in mind.

One dilemma: What if the applicant is overqualified for the job?

In today's downsizing environment, this happens often.

Should you hire such indivduals anyway and risk them being so bored that they become ineffective and demoralize everyone they come in contact with?

Or do you assume that they will change the job, push the bank forward, and create positions that utilizes their skills more fully - thus making the bank a better place?

These then are some of the issues in hiring today. And this is our new contest topic.

Specifically, we are asking: What does your bank look at in deciding whether or not to hire an applicant?

Of course if the job requires specific skills, the answer is obvious.

But if the job requires someone who will move up in the bank and play a major role in the bank's future, the techniques your bank uses may be of great help to some other readers with similar challenges.

Please write or fax us your suggestions. The address is below. As always, the winner will become president for a day of the Schmidlap National Bank with the power to use his or her hiring skills in our fictitious bank's behalf.

Mr. Nadler is a contributing editor of the American Banker and professor of finance at the Rutgers University Graduate School of Management.

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