Bank tellers are about as well paid as kids tending a McDonald's deep fryer.
While tellers have some of the industry's lowest salaries-even compared with those of mail clerks and couriers-meager pay isn't the only culprit for turnover rates as staggeringly high as 30 percent at some banks. Though salary is a top concern for tellers, bankers find that providing flexible schedules and adding health benefits for part-timers-or simply showing some respect-can dramatically thwart teller defections.
As retail branch banking mushrooms, banks of all sizes acknowledge the crucial and difficult role of the teller. Alan Levan, CEO of Ft. Lauderdale-based BankAtlantic says tellers are the lynchpin in a service-centered brand experience his firm aggressively pursues to stand out. "People in the branch and particularly the tellers are the ambassadors of what we call the 'wow customer experience,'" he says. "They not only have to be efficient at processing transactions, but also have significant demands on them to provide the branded experience we want customers to feel with every interaction."
But is this mere lip service? Tom Moseman, svp at Envirosell, a behavioral market research and consulting firm, recalls a study he did for a bank in its home market, with line waits of 20 minutes. The branch manager told him: "'It's insane. The bank manager won't allow me to hire anyone for more than 19 hours a week because they don't want to pay any benefits, and I can only pay 25 cents over minimum wage.'"
That attitude, which Moseman says is pervasive, relegates teller staffing to the same labor pool as fast-food companies. Bank execs justify this in part by arguing that the teller position doesn't require much education: Some on the front line haven't finished high school. "Bankers don't want to talk about it, because it's an easy win from the bean counter's point of view," Moseman says. "Labor is a significant portion of cost. So anything that is saved on the labor side of the sheet goes right to the bottom line."
The median base salary of a teller is $19,138 annually, or an average of $9.20 an hour-according to an America's Community Bankers survey, whose respondents were mainly banks with less than $1 billion in assets. That salary is 25.4 percent less than a loan-servicing escrow clerk's base pay and 44.2 percent less than the lowest rung in the human resources department. Compared to these, only the role of teller carries the burden of constant customer interaction, yet it pays the worst. Even couriers average $462 more a year than tellers, and a mail clerk's base pay tops that of tellers by $1,288.
Though some banks are adding benefits for part-timers and retooling incentive plans to better reward positive customer interaction, bankers interviewed agree their tellers are appropriately compensated. That may be part of the problem. "Historically, banks have abused the front line and I think the marketplace has abused those banks in return," says Darryl Demos, CEO of Demos Solutions, a Norwell, MA-based bank consulting firm. "We know there are banks that have been seriously dinged with customer service because of long lines, not enough people and bad service."
Fleet Bank is one example. Francis "Frank" McIntyre, in charge of branch staffing for Fleet Bank (now part of Bank of America) until last July, says that after a spate of mergers, service to Fleet's 20 million customers had decayed so much that Consumer Reports rated it worst among its peers for customer service in the mid- to late-'90s. McIntyre, now a managing director at Transcend International, a bank consulting firm, says internal analysis revealed poor teller service and high turnover were among the key culprits. "We increased salaries where there were market pressures to do so," he says. But with pay rates already at their upper thresholds in many markets, the bank started offering benefits like health care to part-timers in an effort to retain top talent. It worked. Attrition tapered off significantly over time, McIntyre says.
National turnover rates are hard to quantify, but anecdotal evidence suggests they're much higher than the Bureau of Labor Statistics' average for all jobs, which is around three percent. "Somewhere near one-third of all tellers leave every year," says Sharon Haas, a managing director at Fitch Ratings. "Especially when you're talking about part-time positions, it tends to attract a lot folks who aren't going to be in it for the long haul."
Demos Solutions research found that the attrition rate for tellers with less than a year at a mid-sized Midwestern bank was a whopping 34 percent. The bank paid its starting tellers $8.50 an hour, only 35 cents more per hour than other local retailers.
Seventy-five percent of the bank's tellers said salary was the most important aspect of the job. A flexible schedule was most satisfying for part-time tellers, whereas full-timers thought benefits brought the most satisfaction. Demos says many bank HR managers make the mistake of paying part-time tellers less than, or the same as, full-time tellers. "If you hire people for fewer hours, you need to pay them more on an hourly basis," he says. "Otherwise, you're not meeting the market demand." Based on productivity versus idle time, it makes financial sense to pay part-timers more, he says.
Incentive pay also affects job satisfaction. Demos recommends offering new-hire referral bonuses and quarterly performance bonuses as retention tools. Bonuses for tellers have risen much less than for other capacities over the last five years. According to the ACB survey, the average bonus/profit sharing a teller received in 1998 was $773, versus $809 in 2003, a 4.7 percent rise. By contrast, loan-servicing escrow clerk bonuses/profit sharing shot up 40 percent over that time period, from an average of $1,000 in 1998 to $1,402 in 2003. Chief operating officers saw their bonuses/profit sharing increase 73.7 percent in that timeframe, from an average of $11,000 in 1998 to $19,108 in 2003. Commissions for tellers-typically based on productivity and handing off sales leads-have increased at the same rate as their salaries over the last five years (18 percent), according to the ACB survey, from an average of $307 per teller in 1998 to $453 in 2003.
Raleigh Seay Jr., president of Seay Management Consultants, says the role of the teller has been evolving from transaction processing and general customer service to include more business-referral efforts. "That's a pretty big change, and what that means is that you have to look for different kinds of people to be tellers," he says. "So, often people who are really good with numbers are not really good with sales."
One reason the median teller salary may be so low is that the vast majority of tellers are women (89 percent), according to the Bureau of Labor Statistics, and women on average earn 11 percent less than men. "I think that men tend to only see the [teller] position as a stepping stone," says one bank executive, speaking on condition of anonymity. "You don't find many men who will say, 'Just leave me here forever,' and women you do." Another factor that may make teller salaries seem lower than comparative jobs is that 37 percent of tellers in ACB's survey are part-timers. Since they work fewer hours, their smaller annual salaries skew the median lower than in other posts where most work full time.
High teller turnover could also be affecting salary statistics, sources say. The longer an employee stays, the higher his or her salary. With so much turnover, salaries tend to stay in the lower ranges compared to positions with less churn, says Lynne Kay, a consultant at the Hay Group management consulting firm.
Most bankers agree that recognition and respect, not higher pay, are the keys to keeping good tellers. "They may feel like they're the low people on the totem pole, but we try over and over and over to prove to them that they're not," says Becky Huckabee, a cashier and svp at San Antonio-based Frost Bank, who's proud to have started her career as a teller 28 years ago. The bank threw a Teller Appreciation Day last year where every teller received a gift from a wish list. The $10 billion bank also holds yearly regional teller rallies with live entertainment.
BankAtlantic uses random acts of kindness with tellers-popcorn in the afternoon or executive management serving sundaes. But the bank also attacks turnover on the front end by being choosy when hiring tellers. BankAtlantic seeks extroverts and it's not unusual for interviewees to prove their mettle by singing a favorite song. "It's not for shrinking violets," Levan says. New hires get three days of immersion into an upbeat corporate culture-limbo contests, hoola-hooping, skits, delivering doughnuts-before technical training begins.
Employees who feel appreciated directly affect the bottom line, says the Hay Group's Kay. "For the same number of dollars going out to compensate that person, you get a better return. They're much more energized and happier to come to work."
Bankers also try to elevate the appeal of the teller post by promoting it as a springboard for climbing the corporate ladder. More than one executive tried to justify tellers' low salaries through the potential for advancement. "It has the opportunity for growth," says Frost Bank's Paul Olivier, a retail banking exec. "I can't say that about every position, but I can say that about tellers without reservation." Frost Bank promotes heavily among tellers. "Just about everyone in our operations center-data processing, loss prevention and back room-the managers there nearly all came from teller area," Huckabee says.
Bank of America emphasizes career advancement when recruiting tellers-certainly more than it did five or 10 years ago, says Brad Dinsmore, Southeast consumer executive for the bank. "When I started my career, if you were a teller, you basically weren't going to go any further," he says. "And now we have examples all over the company of tellers that moved very quickly to different assignments." In fact, he says tellers are the most important people on the payroll. "We have more than 500 million store visits a year. A very high percentage of those are to a teller and, in many cases, that's the only associate a customer is going to see."
