The staff of a supplier's bank, or their customer's bank, can often serve a vital role in the extension of credit, whether it's to reduce risk or just to iron out the wrinkles in the transaction and hopefully create the most profitable solution for all parties involved. In the wake of the financial crisis, however, training budgets have fallen by the wayside and a new study, conducted jointly by the American Bankers Association (ABA) and the Corporate Executive Board (CEB), shows that the nation's banks are at risk of losing their top talent, which could have negative ramifications far beyond the banking industry.
The study showed that while successful companies in other industries spend an average of $1,100 per employee on training, banks only spend an average of $650 per employee. This underdevelopment of top-performing staff increases the risk that they'll leave the industry and, in the long-term, reduce overall productivity. "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. "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."
Additionally, the survey showed that training and development should mean more to the banking industry than it might to other industries due to the sector's heavy reliance on internal hiring. A hefty 60% of banks hire their employees from within, according to the study, which also noted that 40% of bank CEO respondents believed that they weren't doing enough to help their employees grow.
One culprit of underdevelopment was half-established talent management policies. "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. "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."
In addition to surveying CEOs, the study also involved employees themselves and their opinions of their occupation, industry and overall productivity. "One quarter of high potential employees are considering leaving their organizations, and those folks put forth 21% more effort than their disengaged peers," said managing director of CEB's Financial Services Practice Russell Davis. "Today, every bank risks losing its future talent base." The study also showed that the economic downturn has fundamentally reduced employee productivity, with the number of employees exhibiting high levels of discretionary effort declining by 53% over the past four years.
More on the study can be found at the ABA's website (www.aba.com).
Jacob Barron, NACM staff writer. Follow us on Twitter at http://twitter.com/NACM_National.