The old adage that credit quality is king is as true as ever. And while fewer banks these days are failing (three failed in the United States in 2017) and fewer turn up on regulators’ lists of troubled banks, there has been a slight uptick in the issuance of MOUs and board resolutions. That’s according to David Kemp, president of Atlanta-based Bankers Management Inc.
Kemp was one of several speakers to address the Bank Holding Company Association’s 2018 Spring Seminar, held May 7-8 in Bloomington, Minn.
The problem with focusing resolutely on managing credit risk, Kemp proffered, is that it leaves little time to develop the people inside the bank. Talent is a community bank’s greatest challenge, Kemp said. “You can have a spectacular strategic plan but without the right talent, you wont be successful.”
Banks need to become the employer of choice and should be recruiting talent at every level of the bank, with compensation a key factor in supporting bank performance, Kemp said. “Too often there are nice but unproductive employees in the bank,” he said. “If you allow dead weight to stay, they will taint the high performers.”
Management has to identify the high performers and compensate them. Further, it’s up to the board to evaluate the CEO to ensure he or she has what it takes to evaluate and train their people and has the ability to find the right people.
Jay Tuli and Jessica Santana of Leader Bank, Boston, also touched on bank talent in their breakout session on developing a culture of entrepreneurship and innovation at the bank. Getting the right people in the bank is often a function of hiring not on experience or education but on potential, Santana said. This approach allowed Leader Bank to experience rapid growth: it went from having one lender to having 40 lenders in the span of nine months.
Leader Bank is “younger and its staff comes in without extensive banking experience,” Tuli explained. The bank hires for experience in areas of compliance but found it prefers people who bring “fresh ideas and perspectives, a clean slate, an eagerness to learn and a strong desire to contribute, and tech savvy” when hiring for sales-type positions.
Tuli encouraged bankers to not look only outside the bank for talent. “Sometimes, it makes sense to pull from other departments,” he said. His experience has proven that many people have untapped potential. He said one of the bank’s former tellers now leads a product development line.
“Let go of employees who haven’t added value,” Santana encouraged. “It is hard but but it’s instrumental to building out the team.”
All three speakers said that bank management should leverage the natural strengths of each team member. Kemp encouraged bankers to hire people who demonstrate both high IQ and common sense. Tuli and Santana said hiring employees who think differently from the CEO allows a community bank to become more entrepreneurial. All underscored the importance of getting the hiring right: it is necessary to achieving high performance.