ABA Banking Journal 5/08 - (Page 22) Community Banking ees can sometimes be troubling. One such instance is seen at Steve Goodenow’s Bank Midwest, Minnesota Iowa, NA, Okoboji, Iowa. Goodenow’s organization has purchased insurance agencies as well as investment firms and this has changed the compensation dynamic in the bank. “Our highest-paid folks are selling insurance and investment products,” says Goodenow, because they came into the organization being paid for production. The bank chose to leave their traditional pay plans as they were, so it has quickly become apparent to the bank’s traditional employees that people who sell nontraditional products are doing well. “We all know that if you incent for loans, you can end up with a pile of loans that you really don’t want,” he says. What this leaves is a puzzle: “Keeping the good commercial loan officers compensated in the same realm as the other producers in the company.” So far, a solution has eluded him. The curse of zero turnover Meanwhile, the aging of the banking workforce concerns both those who have had some “youthening” among their staffs as well as those who have more static employee populations. “We’re in somewhat of a unique position, in that we’re in slow-growth markets and have almost zero turnover,” says John Klebba of Legends Bank, Linn, Mo. In one sense, that’s a blessing. Zero- turnover keeps training costs low. But it’s a curse, too, says Klebba, because his workforce is aging, especially on the lending side. “There’s a bunch of us that are in our late 40s and early 50s. That’s OK for now, but in ten or 15 years the real danger is that a big group is going to leave at virtually the same time.” Other bankers in the roundtable report similar concerns. At Merchants & Farmers Bank, for instance, the average age for upper and middle managers is about 60. “It kind of slapped us in the face a few weeks ago,” Ken Hughes admits, “when our investment officer, a senior vice-president, suddenly died of a heart attack.” Frank Carson, at Mulvane State Bank, Mulvane, Kan., says a strategic planning exercise underscored his family-owned bank’s age challenge. There’s a cadre of senior bankers there who were hired roughly four decades ago who are gradually retiring now. “Bit by bit, we’re replacing those people with younger people, but we’ve been lucky so far in that the people that we’ve been able to bring in have actually not been in banking before,” says Carson. These newcomers worked in other fields, and, being interested in financial services, were willing to come aboard at reasonable salaries. “I don’t expect that to continue in the future,” says Carson. “There’s a bunch of us in our late 40s and early 50s. That’s OK for now, but in 10 or 15 years, the danger is that a big group will leave at the same time” —John Klebba President and CEO Legends Bank, Linn., Mo. ent kind of business,” he explains. “You have to multi-task, you have to be willing to give up some of your own time for your customer’s time, and I’m not feeling that with the new generation.” Something else that Hillyer has noted is a workplace “generation gap” that goes to the heart of the culture issue. “We have a lot of 15-to-20-year employees, and they do a wonderful job and they made the bank very successful,” says Hillyer. “However, they are not greeting the new folks with open arms.” Meshing different ways of working, and looking at the world, is proving to be a challenge. Hillyer’s big concern is that he’s not seeing a top management prospect in the mix of potential employees he interviews. “Ultimately, I’m looking for my own successor,” he explains, “and that’s not going well.” “We have a lot of 15-to-20-year employees, and they do a wonderful job, and they made the bank successful. However, they are not greeting the new people with open arms” —Blair Hillyer President and CEO First National, Dennison, Ohio Not my bag, Mr. Banker Also facing a future of “serial retirements” in a low-growth area is Blair Hillyer, First National Bank, Dennison, Ohio. “I always knew this was going to happen, because everybody I hired was older than I was, at one time,” says Hillyer. “I’ve been with the bank so long now that we’ve had a retirement in ’04, ’05, ’06, and ’07, and in about three years I’m going to lose several more key people.” What worries Hillyer is that, when he interviews prospective bankers, he relates, “I hear more about the things that they don’t want to do, than the ones that they do want to do.” This concerns Hillyer. “This is a differ- Look two or three moves ahead Alabama’s Robert Jones thinks the key to meeting this kind of staffing challenge is strategic thinking. “HR is kind of like a chess game— you’ve always got to be looking ahead, two or three moves. Keep in mind who’s got talent and where they are. You’ve got to be flexible,” says Jones. Indeed, Jones says he has started to rely on the appeal that a rural area can have for some big-city professionals. “Often, we’ll find someone like that, and we don’t even have a position for them. But when somebody good like that Subscribe at www.ababj.com 22 MAY 2008/ABA BANKING JOURNAL http://www.bankmidwest.com http://www.legendsbk.com http://www.mulvanestatebank.com http://www.legendsbk.com http://www.fnbdennison.com http://www.fnbdennison.com http://www.fnbdennison.com http://www.ababj.com
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