The summer of 2021 rang in some poignant themes for people everywhere: freedom, mask-less fun and a greater trust in society again. But this understandable return to normalcy also brought unexpected results — all summer people have been quitting their jobs to enjoy the freedom as they continued to receive unemployment support introduced during Covid-19.
This made it difficult for all employers across the United States — financial institutions included — who were already struggling to attract and keep employees. “Now Hiring” signs have flooded small towns and big cities alike.
The data is stark: nearly four million people quit their jobs in June 2021, which brought the number of job openings in the United States to 10.1 million that month, according to the U.S. Bureau of Labor Statistics.
People have higher expectations from their job in the modern world than they used to. BankRate, in an August 2021 survey, found that more than one out of two Americans (55%) admit in the next year that they’re somewhat or very likely to look for a new job.
Others may not be seeking work immediately. There were 2.9 million fewer people in the labor force in August 2021 than before the pandemic hit in February 2020, as The Wall Street Journal reported.
The CEO of Citizens Financial, Bruce Van Saun, explained to Business Insider there are numerous factors, ranging from Covid-19 exposure to vaccine rollout to closure of schools and enhanced unemployment insurance, which are keeping people away from the traditional worklife.
“Never in my 40 plus years in banking have I seen labor shortages at the level they’re at now,” Huntington Bancshares CEO Steve Steinour told Insider Intelligence. “The job openings exceed the supply. The economy is booming.”
While Steinour was referring to the economy at large, financial institutions are being impacted, especially at the lower end of the employee range.
Bruce Paul, Managing Director of Banking Research at Rivel Banking, has seen the trend at its worst. Paul explains that, when asking community bank and credit unions what their biggest concerns are, 80% say “it’s a staffing issue.”
This has affected the customer experience.
“‘We’ve seen big drops in staff training’ — this is what customers are saying,” Paul reports. “Obviously, they don’t know what’s going on behind the scenes, but they say ‘Gosh, my favorite teller isn’t there anymore’ or the branch manager.”
Not Just A Microtrend:
Four out of five financial institutions are worried about staffing.
In addition to surveying community institutions, Rivel runs thousands of surveys to gauge what consumers are most frustrated with as well. Based on 229,000 interviews in Rivel’s Benchmark reports, Paul says that the percentage of households who say their primary banking institution is just not responsive has gone up by 212% during the pandemic.
Additionally, the percentage of households who say their banking institution does not understand their needs has shot up by 333%. While these figures may not be solely a function of staff shortages, they likely are a key factor.
Read More: Branch Staff Unprepared as Offices Become ‘Advisory Centers’
A Struggle Finding Talent
Stanton Davis, the Chief Experience and Innovation Officer from Avidia Credit Union, reached out to The Financial Brand about the staff turnover and recruiting issue.
“I have really never seen anything like it currently,” Davis says. “It is very disruptive. This impacts stress levels and employee morale.”
“Never in my 40 plus years in banking have I seen labor shortages at the level they’re at now. The job openings exceed the supply. The economy is booming.”
— Steve Steinour, Huntington Bancshares
The phasing out of extra pandemic-related unemployment support could ease the struggle many financial institutions are facing when it comes to worker shortages. Paul says there are community institutions he’s talked to who hope that “maybe things will change after the summer.”
However, what worries many financial institutions is that there may have been a permanent culture shift regarding employment. Joe Sullivan — CEO of MarketInsights — agrees, telling The Financial Brand he thinks “one of the biggest misconceptions is that we can get back to business as usual, that we’re going to get back to what was.”
Even if your financial institution wants to “get back to normal,” it’s important to peek behind the curtain and find out what employees want to see more of in their work environment. Many banks and credit unions are already doing this. Below we look at some responses grouped in four broad themes.
1. Increase Employee Wages
Rivel’s Bruce Paul says, too often, bank employees are getting paid terribly.
“I remember when I first started working [in banking], I said: ‘Really? A teller on this side of the street is paid about as much as the McDonald’s server on this side of the street?” Paul tells The Financial Brand.
Bankrate’s survey found that, when it comes to income levels, about 72% of those who earn under $30,000 per year are planning to look for a new job, compared with 44% of those who make $80,000 and more annually. BankRate breaks it down by income levels and reports that 72% of people earning under $30,000 annually plan to look for a new job in contrast with 44% of people earning $80,000 or more.
Compare that with what Glassdoor says an average bank teller makes: a little over $30,500 a year, or between $14 and $17 per hour.
Banks and credit unions of all sizes are responding. Bank of America in May 2021 announced it would be raising its companywide minimum wage to $25 an hour, only a little over a year after it raised the minimum wage to $20 an hour.
Credit Union West, based in Glendale, Ariz., announced in early September it would be raising its minimum wage to $20 per hour, in addition to rolling out a suite of other bonuses, which include full-time employees receiving 100% paid health, dental and vision insurance; 401k plan with employer matching funds up to 5%, as well as tuition and gym membership reimbursements.
Ning Duong, Senior Vice President and Chief Operations Officer at Credit Union West, says hiring has been more challenging during Covid-19 and that the hardest positions for CU West branches to retain are the frontline positions. “These are member facing roles that do require physically being in the office,” she explains.
Truliant Federal Credit Union took a slightly different approach from other financial institutions and announced in mid-August saying it would offer a one-time bonus — $1,000 for full-time positions and $500 for part-time — for any new branch and contact center employees, according to the Charlotte Business Journal. At this time, wages for TFCU employees start at $15 per hour.
2. Paid Time-Off
People will always appreciate paid time-off, but there are different ways to go about it. Credit Union West, for one is letting people take a paid day off for their annual work anniversaries. Duong adds that “in the event they cannot take it on the exact day, the team member will have a full month to use it.”
Other institutions are trying to come up with other ways to attract and retain employees. Sullivan says that one credit union recruited him to lead an all-day retreat for their staff. The theme of the retreat is resilience, he says, and is a way to try and “bring the teams back together.”
“Dealing with people’s financial, emotional and physical health is what this organization feels is front and center,” Sullivan explains. “They believe the well-being of their employees is the most important job and then, that will radiate out to their members.”
Out Of The Box:
Many employees at the end of the day want to feel appreciated and heard. How your institution meets that need is critical.
Read More: What a Hybrid Workplace Means for Banking
3. Remote Work Options
Remote work options very well may be the future of the traditional work environment. Global Workforce Analytics believes that 25% to 30% of the global workforce will be working remotely by 2021. Forbes cites a 2020 Growmotely study that says 74% of professionals expect the remote work lifestyle to soon be standard.
Google “remote workplace survey” and the hundreds of results you see will point to the same trend: People want the option to work from home.
In addition to incorporating remote work options, Sullivan recommends that financial institutions also try spreading out their staff by incorporating video conferencing tools.
“One mortgage person could handle all the branches in one territory via zoom conferencing,” he explains, adding that institutions can also put a video conference room in a branch, so if a customer does come in, they can have an expert help them in the physical branch.
Sullivan also recommends outsourcing any positions that can be done remotely, suggesting that community institutions “take geography out of the picture.” The talent is everywhere, he says, and banks and credit unions need to get their heads out of the geographical limitations.
“If I had a dime for every time a bank or credit union said to me ‘Well, we really need a good chief marketing officer but no one wants to move to a small town in Illinois,’ I’d be rich,” Sullivan says. “Now, you can hire that person either in Atlanta or LA or Guam.”
While this works — on several fronts, like IT and call centers — Rivel Banking’s Paul says financial institutions should keep in mind the community element when outsourcing employees. Many people who still bank with their local bank or credit union enjoy knowing who works at the branch.
4. Break Down Traditional Banking Hierarchy
Fintech models have won over the likes of banking employees everywhere as even many executives step down from megabanks to launch all-digital neobanks. There are several characteristics that helps this model succeed Sullivan argues: a lack of hierarchy and a drive for innovation.
“Fintechs are built around their laser sharp focus on solving one problem at a time and using data to do that,” he maintains.
Part of what creates that innovative mindset, Sullivan explains, is how their internal business model is set up. The consultant equates the way banks and credit unions are trying to re-establish teller staffing models right now to “rearranging the deck chairs on the Titanic.” He says that, instead of trying to go about banking the old way, initiatives must be sped up: i.e. not taking two weeks to decide on a simple change when you need to be agile and responsive to the market.
One way to do this is to empower employees from the bottom up, Sullivan continues. “Financial institutions need to flatten the organization structure — it’s too hierarchal, people can’t get things done. You need to empower people to make decisions.” That would help attract and retain employees.