Retention's Business Case for Banking Industry Training, Study Shows

By Theresa Minton-Eversole Sep 8, 2009
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As if the banking industry isn’t already grappling with an overwhelming set of problems, a new industry report reveals that banks are under-developing high performers, which in turn is increasing the likelihood of losing them and putting long-term productivity at risk.

U.S. banks spend an average of just $650 per employee on training, while successful companies in other industries spend an average of $1,100 per employee, according to a recently released talent management study conducted by the American Bankers Association (ABA) and the Corporate Executive Board (CEB). A survey of more than 3,500 bank CEOs asked about their organization’s talent management practices revealed that while banks fill 60 percent of their openings from within, 40 percent of responding bank CEOs believe that they are not doing enough to help their employees grow. Respondents said they believe that this is hurting succession planning.

Respondents were asked to rate their organizations with regard to the following talent management-related topics:

  • Current talent management practices.
  • Retention and succession planning.
  • Developing high performers.
  • Assessing talent gaps.
  • Future talent management priorities.

They used a scale of one to four to indicate whether the following staffing management strategies were in place in their organizations:

  • Talent reporting and analysis.
  • Talent management programs.
  • Workforce planning.
  • Coaching.
  • New-hire training.
  • Succession plans.

“The study raises the question, ‘What is being done to prepare the next generation of bank leaders?’ ” said Doug Adamson, executive vice president of ABA’s Professional Development Group, which sponsored the study. “High-performing employees have told us that in order for them to stay and be more productive, they need to be recognized as top performers and have well-defined development plans in place.”

The survey demonstrates that banks’ dependence on internal talent makes continuing development critical to prepare employees to take on bigger roles, he said.

CEO Ratings of Staffing Management Strategies

Talent Reporting and Analysis—2.1

Talent Management Programs—2.2

Workforce Planning—2.3

Coaching—2.5

New-Hire Training—2.5

Succession Plans—2.6

Rating Scale:

1—not at all in place

2—somewhat in place

3—mostly in place

4—extremely in place

Source: Talent Management Survey, American Bankers Association, 2009.

“We were surprised to learn that while bank CEOs are acutely focused on the importance of talent in today’s market and clearly link talent management practices to their institutions’ overall success, most banks have talent management practices that are only partly in place,” said Adamson, whose organization’s membership represents approximately 95 percent of the industry’s $13.5 trillion in assets and employs over 2 million people. “Banks will continue to compete on the quality of their employees and must help talented employees reach their full potential to build talent pipelines for the future.”

The report revealed that a majority of banks are unable to assess employee training needs and outputs, running the risk of making continued investments in underperforming programs. To generate demonstrable returns on training investments, notes the report, banks must focus programs on applied learning, which increases employee engagement and productivity levels.

Tactics critical to training success are:

  • Emphasize learners’ ability to apply the skills learned through training.
  • Communicate the payoffs of training to employees.
  • Engage managers in employee training to make learning application effective.

Retention Factors

To find out which factors inspire high-performing employees to stay with their institutions and increase productivity, CEB researchers conducted a separate poll of 11,000 employees and their direct managers from 59 successful businesses across the globe. They found that the following factors are most likely to increase employee potential:

  • Talented managers who provide leadership—37 percent.
  • Good working relationships with fellow employees—35 percent.
  • Recognition for good work—28 percent.
  • Intelligent support staff—22 percent.
  • Exposure to senior management—21 percent.

“Engaging your employees will drive retention and bottom-line results,” said Russell Davis, managing director of the CEB’s Financial Services Practice. “One-quarter of high-potential employees is considering leaving their organizations, and those folks put forth 21 percent more effort than their disengaged peers. Today, every bank [is at risk of] losing its future talent base.”

Other report recommendations:

  • Invest in high-potential employees to increase output levels, develop a leadership pipeline and retain these key performers.
  • Help high-potential employees build professional, information-rich relationships with managers, peers and direct reports.
  • Build customized and achievable development plans that are coupled with visible executive-level commitment.

“As a service industry, we all recognize that employees are our most important asset,” said Adamson. “We know that high-performing employees contribute to financial performance, create a competitive advantage, contribute to sustainable growth and differentiate the organization as an employer of choice. When we pull out of this current economy, employees will remember how they were treated. If they were treated well, banks will be even stronger than before.”

Theresa Minton-Eversole is an online editor/content manager for SHRM.

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